Aggressive, Confident Ontario Steels For Next Online Milestone

October 19, 2022
Back
Ontario province is days away from becoming a sizable, fully regulated online gaming market, and its top regulator warns it will “aggressively pursue” non-compliant operators despite reluctant police and politicians.

Body

Ontario province is days away from becoming a sizable, fully regulated online gaming market, and its top regulator warns it will “aggressively pursue” non-compliant operators despite reluctant police and politicians.

Tom Mungham, CEO of the Alcohol and Gaming Commission of Ontario (AGCO), said on Tuesday (October 18) that the regulator is using a “multi-pronged approach” to monitor operators amid unsteady support from law enforcement and the financial sector.

With a deadline to transition from the grey market on October 31 nearing, Mungham promised heightened surveillance of an expected 70 or more regulated operators, including some 40 operators in a licensing queue, as well as unregulated activity.

“As we think about moving into that marketplace, we will aggressively pursue any kind of charges” against violators, he told the International Association of Gaming Regulators (IAGR) annual conference in Melbourne.

Mungham said numerous unregulated and uncooperative operators have “gone dark” ahead of the deadline.

For regulated and prospective regulated operators that remain, Mungham will be writing to overseas regulators for information on “their standing” in these jurisdictions.

AGCO compliance officers have also set up accounts on “as many unregulated sites as we can find” to “understand them”, he said.

However, Mungham noted that the road to a fully compliant market had suffered several “unexpected challenges”, ranging from bank reticence and police and political reluctance to enforce the law, to federal government ennui in regard to payment blocking.

“I was quite surprised, and certainly we underestimated, the resistance to this industry that we encountered from Canada’s banking institutions,” he said.

Despite casinos operating in Ontario since 1993 and bank familiarity with multinational and private equity involvement in the industry, “the banks would not go near” land-based interests that moved into online gaming, he said.

The banks’ “risk thresholds and their own anti-money laundering policies proved to be a real challenge when it came time to establish a financial infrastructure needed to launch the [online] market”, Mungham said.

“As an example, the banks wanted to conduct their own due diligence of applicants — and I totally understand that — even after we had done ours, and even after we had offered to share at a very high level, at a very high level, our assessment and the results of our work.

“All the issues and concerns were ultimately overcome, but [with] a few of the institutions, the effort and delays were ones that we had not counted on,” Mungham said, adding that uncertainty had “threatened” the April 4 go-live date for operations.

A second challenge was that land-based gaming companies were fearful that online operations would cannibalise their revenue.

“Some of these operators would have preferred to see igaming sites tethered to land-based casinos, as is the case in a number of jurisdictions in the [United] States,” Mungham said.

This problem became a “very hot topic in the media” because government relations staff at some casinos “ramped up pressure on us and certainly ramped up pressure on the government”.

The third challenge involved consultation with Ontario’s First Nations communities on revenue sharing and other matters, a process that is continuing, he said.

But wider difficulties involving state and federal governments exacerbated these problems, not least relating to law enforcement.

“This has been the trouble in Canada. This has been the trouble in Ontario. Up until this point we [had] not been successful in convincing our police service to investigate illegal internet gaming, and we have not been successful in talking to the attorney general to be able to prosecute that even if the police did investigate,” he said.

“It does not rank very highly on the spectrum of use of police resources.”

However, the AGCO has had a “successful discussion” with the solicitor general of Ontario, although even this took one year to secure.

“We did not nail that down until a couple of weeks before the go-live date,” Mungham said.

Since that time, Ontario police forces and the solicitor general — a post beneath the attorney general — have agreed to investigate online operators upon referral from the AGCO, while the attorney general has also agreed to cooperate, Mungham said.

“Now, I’m not trying to be naive, I don’t know the speed these things will move, but we only need to do one [prosecution to have an impact], and we will not be shy at letting the community know that we have initiated an investigation, and I believe that will have a significant deterrent value.”

Problems with provincial law enforcement also extended to federal agencies.

“We have not had as much success with our federal government, who oversee the [four major] federal banks … . We want to have a discussion with them about payment blocking, and we have not been able to get to the table with them quite yet.”

Mungham added it is not clear if major banks are capable of geo-blocking Ontario to prevent external users from accessing online operations.

And he noted that Quebec province’s attempt to block internet service providers (ISPs) was held to be unconstitutional, so ISP blocking is “not an option”.

Within the AGCO, Mungham noted that long-standing work practices have had to evolve, with granular issues such as gaming inspector protocols needing to undergo a cultural shift.

Notwithstanding a shopping list of past, and likely ongoing, headaches for the regulator, the AGCO anticipates a “very successful launch” for its online market, he said.

Our premium content is available to users of our services.

To view articles, please Log-in to your account, or sign up today for full access:

Opt in to hear about webinars, events, industry and product news

To find out more about Vixio, contact us today
No items found.