Ontario Regulated Online Gaming Market Celebrates Six Months
After the checkered flag went down on a regulated online gaming market in Ontario April 4, many were projecting the province to fast establish itself as one of the larger markets in North America in terms of betting volume.
But it’s been a “walk before we run” scenario in Ontario. That’s been suggested in many corners. Part of that has to do with how the province’s regulator, the Alcohol and Gaming Commission of Ontario, rolled out the market – implementing a transition period, allowing for “grey market” offshore operators that had been doing business in Ontario for years to get their license.
Regulated vs. Grey Markets in Canada
That transition period ends Oct. 31. The Ontario government said in July 2021 that Ontarians spent close to $1 billion a year on online gambling with an estimated 70% taking place on unregulated, grey market websites with limited consumer protection and responsible gaming measures.
With a population of 14.5 million people, Ontario’s market size was estimated at $800 million GGY going into all this. The Auditor General of Ontario said the provincial government was anticipating iGaming Ontario to earn a net profit of $18 million CAD for the 2022-23 fiscal year.
There were indications it was heading in that direction, looking at the number of operators seeking licenses, but it also took almost five months before iGaming Ontario, which conducts and manages the industry (the AGCO regulates it), released its first public market report that shone a light on gaming revenues in a legal market. Handle ending June 30 was just over $4 billion, with gaming revenue of $162 million.
Those numbers were seen as disappointing by some, but they didn’t include data from the Ontario Lottery and Gaming Corporation, the province’s crown corporation (not regulated by iGaming Ontario), operating the PROLINE brand, for one, and new and formerly grey market operators have been steadily joining the legal market since April 27 are now legally operating here.
Related: Sports Betting Hall of Famer Johnny Avello Talks Ontario Gaming 6 Months In
How to Evaluate Canada's Gaming Market?
Some people in the industry, with the six-month mark for the industry here, will tell you it’s too early to be doing any kind of accurate analysis on where the market sits, especially as it relates to other regulated markets in the larger volume U.S. states.
Amanda Brewer, Kindred Group’s country manager Canada, told Gambling.com that Ontario needs at least until Q1 2023 before we see how strong the channelization is, since there are still many operators working their way through the iGaming Ontario side, and operators like BetRegal are awaiting their license.
Same with Canadian Gaming Association president & CEO Paul Burns, who told an audience at the recent SBC Barcelona Summit that people need to factor in the transition period when assessing where the Ontario market currently stands. Plus the fact that operators can’t advertise inducements to bring in new customers, unlike in U.S. jurisdictions.
“I think when you look at it's going to take two more a couple more quarters to fully realize what the market is,” Burns told Ontario Bets earlier in September. “Let’s see when everyone gets to market what it’s going to mean.”
How the Ontario Market is Viewed
A cross-section of comments to Gambling.com from people in the industry bear all of this out.
This, from Dave Pridmore, OLG’s chief digital and strategy officer: “Despite the opening of the Ontario online gaming market and many new competitors in the market, OLG continues to experience sustained growth in terms of both customers and financial performance. We have been actively adding new products and experiences to make OLG.ca a prime destination for online gaming entertainment in Ontario. Since market opening, we have added many new online casino products including the introduction of live game shows and many new games with new and existing game suppliers.
“With regards to sports betting, we are thrilled the NFL season is in full swing and have expanded our sports product offerings with new player props for both PROLINE+ and our in-store PROLINE and will be launching our popular game POOLS on our digital platform in the coming months. OLG looks forward to continue refining our online experience to meet the changing needs of the Ontario customer base.”
Brandt Iden, head of government affairs, U.S., for technology provider Sportradar, had this to say about Ontario six months in:
“At six months into the regulated sports betting and iGaming market in Ontario, we’ve seen a lot of positive progress and I believe that we are headed for even more success. As expected, gaming operators are slowly transitioning out of the grey market and into a regulated environment. This process takes time and there may have been an unrealistic expectation about how quickly operators were going to transition.
“After months of delayed reporting, the AGCO released its initial revenue figures in August, which showed $3.1B (USD) wagered in the first quarter of legalized betting with a hold of $124M in revenue for operators. On the surface, this was quite low compared to a state like Michigan, which has almost 5M fewer people than Ontario and in the same time period had a hold of $465M.
“However, there were several reasons that it was difficult to compare the initial success of the market, not the least being that the Ontario numbers didn’t include revenues from the state-run lottery corporation. I believe it was to be expected. Asking operators to simply flip the switch, move to a regulated marketplace and pay taxes, takes time. Give this market another six months and I think you’ll begin to see some considerable advancement.”
Aly Lalani, BetRegal’s head of marketing, and a long-time observer of the market here, says he was surprised at those iGaming Ontario numbers.
“I understand that some of the larger players weren’t in the space, and the seasonality of our business really kicks in around now, but I was still expecting to see larger reported numbers given the big bang launch of April 4,” he told Gambling.com. “The other surprise is how much some of the larger brands have been spending in terms of marketing dollars. I’m not only speaking of sponsorships, but even top-of-funnel media channels like linear TV. The real winner over the last six months have been the media companies who have sought partnerships with the larger brands. Somehow those two pieces of information don’t seem to add up.
“Higher-than-expected marketing spend, and lower-than-expected GGR sounds like it could make for some tough decisions. I’ll be especially interested to see what reported numbers look like once we have NFL, NHL, NBA and World Cup all going at the same time.”
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