Ad Restrictions, Grey Market Transition Help Create Unique Ontario Market

May 11, 2022
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Top U.S. gaming executives have said that promotional restrictions and existing grey market operators have made Ontario’s sports betting and online casino launch a different one than typical American state launches.

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Top U.S. gaming executives have said that promotional restrictions and existing grey market operators have made Ontario’s sports betting and online casino launch a different one than typical American state launches.

With major operators such as bet365 and Bwin transitioning from grey market to regulated operators with existing customer bases, the impetus was not as strong for American-based firms to invest heavy capital in advance of the province’s opening day on April 4 to chase a first-mover advantage.

“Ontario is a unique animal given the grey market that existed there before and the restrictions on what you're able to do, so we're building our capabilities in Ontario, but you shouldn't expect to see us throw a lot of money in Ontario,” said Tom Reeg, CEO of Caesars Entertainment.

“We expect to be a player. We expect the market to grow steadily, but that's not going to be a big needle mover one way or another for us,” Reeg said.

“With a well-established and long tenure grey market, there isn't the same level of initial pent-up demand for online gaming at launch as we've experienced in other markets,” added Richard Schwartz, CEO of Rush Street Interactive.

One of the American leaders, DraftKings, has yet to launch in the province, although it expects to do so “in the near future,” and CEO Jason Robins said that the existing grey market operators are a big reason why the company was not set on a day one launch.

“Due to the presence of grey market operators, many of which have been present in Ontario for several years, we do not believe that the timing of our launch will have any impact on the share we are able to achieve in that province,” Robins said.

On the other hand, Jay Snowden, CEO of Penn National Gaming, was pleased with the performance of the company’s theScore brand, which has been entrenched in Canadian media for a decade as a media brand rather than a gambling brand.

“We didn't really know what to expect because people have been playing with grey market operators and apps for many years in Canada,” Snowden said.

“But given our ability to quickly penetrate and convert people from the media app to the betting app and to grab people through our other relationships throughout Ontario, we've been very pleased.”

Snowden touted the company’s product as being strong enough to break the customer habits of the existing operators.

“There's going to be some people in Ontario that have been betting with bet365 in the grey market for a long time, and that's what they're just going to continue to do, because that's what they've been doing,” Snowden continued.

“And so, I'm confident that, people who have been betting with grey market operators … we're very confident that they're going to continue to come back to us at least as one of their options as we move forward because the player experience and how seamless everything is integrated between media and sports betting makes what we're doing there very unique.”

In addition to the grey market operator transition, Ontario’s regulations ban advertisements that include inducements, such as a sign-up bonus or free bets, on any public advertising, as well as limitations on offering “risk-free” bets, both of which are favored approaches by many of the top brands operating in the United States.

Two companies, BetMGM and PointsBet, have already been sanctioned by the commission for violations of those regulations.

Some companies, including Rush Street Interactive, have touted that the altered promotional environment could be a positive.

“Because you're not able to offer enticements such as the aggressive free play bonuses, which typically our numbers that we offer are smaller than what many other competitors promote, it actually gives us an advantage to really market things that we think matter most to the user experience, which are the unique selling points for a player,” Schwartz said.

“It is helpful for us, to market that way,” he added. “I think it does reduce some of the focus of many of our competitors, which historically have focused very much on promoting a larger dollar amount than everybody else to try to get attention.”

“So in this market, it's less about the dollar amount on the offer and more about the user experience that we plan to offer to the player.”

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