In April 2022, the Canadian gaming landscape changed dramatically with the opening of the Ontario iGaming market to private gaming operators. Aside from Ontario, all other Canadian provinces use their government-owned lottery and gaming corporations as the exclusive legal provider of iGaming. On behalf of Gaming America, Kevin Dennis, Senior Vice President, Canada for The Innovation Group, sat down with his colleague Troy Ross, Presidentof TRM Public Affairs, to get his take on the opening of iGaming in Ontario –and what’s next across Canada.
Kevin Dennis: So, Ontario opened its doors to iGaming in April 2022. Coming out of the recent ICE show in London, what was the talk about Ontario? What are people saying?
Troy Ross: People have been talking about Ontario’s iGaming regime since the Government announced its intent to consult about a regulatory regime back in the summer of 2019. More recently, after the launch of the regulated market in April 2022 and throughout the ICE show, the majority of the iGaming industry has been speaking favorably about the extensive and transparent consultation process the Ontario Government conducted, and the sensible regulatory approach it has taken.
That process led to one of the most commercially attractive regimes in the world. The Ontario approach has resulted in a very successful first year for the Alcohol and Gaming Commission of Ontario (AGCO) and iGaming Ontario (iGO).
Closer to home, there seems to be a growing recognition that the regulation of private-sector gaming operators is commonplace in Europe and in the United States. Ontario’s move to regulate private sector iGaming operators is revolutionary in Canada. It is the first of its kind. That is a big deal and the Ontario Government, the AGCO and iGO deserve a great deal of credit for changing the approach and introducing what has become one of the biggest, and most successful, iGaming regimes in North America.
That is a big deal and the Ontario Government, the AGCO and iGO deserve a great deal of credit for changing the approach and introducing what has become one of the biggest, and most successful, iGaming regimes in North America.
Troy Ross, President of TRM Public Affairs
KD: Would you say Ontario has been a success?
TR: Ontario took a practical approach to regulation. It introduced sensible standards, a reasonable tax rate and did not limit the number of registrants that could enter the market. This approach has led to a commercially attractive regime. There is no question, it is a huge success. The iGO Q3 numbers speak for themselves. It reported nearly CA$12bn (US$8.79bn) in wagering, CA$457m in total gaming revenues, with 40 different registered operators, offering more than 70 regulated websites.
I’d estimate that the tax revenues to the Ontario Government, over the past quarter, are about CA$30m a month. Annualized, that’s a significant amount of new tax revenue. And these figures do not include the revenue from the Ontario Lottery site, PlayOLG. I think it’s also a huge success because it is rare that a government policy achieves everything it sets out to do, namely: Drive more money to the treasury; create more choice for players; introduce strong responsible gaming standards; and channel the vast majority of iGaming play away from the grey market into a proper regulated environment. All of these operators coming into a compliance regime, including all of the big brands, means an impressive channelization rate in the province, likely in the neighbourhood of 80% – 90%.
That level of channelization means nearly 100% of Ontario players will enjoy the benefits of a well-regulated space, including world-class responsible gaming standards, and consumer protection measures for all Ontario players. The model is not perfect, but it is very good and the first of its kind in Canada. I hope it will become a case study for other provinces to duplicate.
KD: Do you see any changes happening in Ontario? Or things that need to be tweaked, either in the near term or long term?
TR: I expect that the Government, the AGCO and iGaming Ontario will continue to make adjustments to the regime, as needed, over the coming months and years. It is no secret that there has been a level of public frustration with the volume of advertising during sporting events. As the market evolves, advertising standards may be adjusted, and I think most observers expect some consolidation in the market.
There are a couple of specific policy areas that I hope will be tweaked. First, allowing for shared liquidity for poker. That would allow Ontario operators to participate in poker games with players from other jurisdictions, either in Canada, or elsewhere in the world. This makes the poker ecosystem much more attractive. Second, the options to permit daily fantasy sports to return to Ontario. Finally, I think there will also be an appetite to deal with the small number of clearly illegal operators who remain engaged in the Ontario market, as well.
KD: As we now look outside of Ontario, what are the other provinces thinking after having watched that market for almost a full year?
TR: As I said, the Ontario model is a great success and a model for others to follow. I know other provinces have been monitoring the developments here, but I wouldn’t want to speculate about what other provinces may or may not be thinking. However, we spoke earlier about the monthly wagering, total gaming revenues and the new tax revenues generated in Ontario. Those revenue numbers are impossible to ignore, particularly during a recession.
I think Ministers of Finance across the country will be obligated to start asking questions about the Ontario regime, and how their provinces could produce similar results. The revenue numbers will create political pressure to explore a similar model, but I expect that will take longer than people might think. The process from start to finish took nearly three years in Ontario.
Ontario introduced sensible regulation, a reasonable tax rate and did not limit the number of registrants. That has led to a very commercially attractive regime.
Troy Ross, President of TRM Public Affairs
KD: How might the framework look in these other provinces? Would they follow Ontario’s model, would it look drastically different or be something in the middle?
TR: I hope the other provinces do take a similar approach. Ontario introduced sensible regulation, a reasonable tax rate and did not limit the number of registrants. That has led to a very commercially attractive regime. The most successful regulatory regimes in the world share three common characteristics:
- A) They license enough operators to ensure a competitive marketplace – one state operator or a select few operators cannot meet consumer demands.
- B) There are no major restrictions on the choice of products; meaning they allow for a broad range of iGaming business verticals like poker, sports and casino.
- C) And, finally, they feature reasonable taxes and reasonable regulations to ensure operators choose to submit for a license. There are tremendous benefits to a proper regulatory regime for iGaming. I think as the other provinces become better acquainted with those benefits, and hopefully learn from the Ontario process and model, they will embrace this approach as well.
Kevin Dennis, Senior Vice President, Canada, brings more than 25 years of experience in the Canadian hospitality sector to The Innovation Group, including time in KPMG’s Hospitality, Leisure & Tourism group, as well as more than 15 years with the Ontario Lottery and Gaming Corporation (OLG). Kevin supports the Canadian land-based and iGaming markets, hospitality, F&B, and entertainment and attraction sectors from Toronto.
Troy Ross founded TRM Public Affairs in 2012. He has been advising gaming industry stakeholders in Canada since 1995 and at the forefront of the iGaming lobby in Canada for the past 17 years. He has played a pioneering role in successive iGaming milestones, beginning with the defeat of prohibitionist legislation in Ontario in 2006. Since that time, he has engaged with provincial governments across the country, to educate the public sector about the benefits of regulated online markets and the successful characteristics of license and tax regimes.