Ontario will miss its targeted 2021 launch for regulated online gaming and sports betting, with the lack of a clear launch date one of several complexities causing heartburn for operators preparing to enter a uniquely attractive market in North America.
Ontarian officials had intended to launch a first-in-Canada market for competitive online gambling at some point by mid-December, but that is not going to happen and industry representatives say they are not sure when the new regime will be able to go live.
Sometime in the first quarter of 2022 is “the working point” as things stand, Paul Burns, CEO and president of the Canadian Gaming Association, told delegates at last week’s SBC Summit North America in New Jersey.
“But it’s still TBD,” Burns said.
There is still a lot of work to do for prospective operators who not only have to be registered with the Alcohol and Gaming Commission of Ontario (AGCO) and come into compliance with the agency’s regulatory standards, but also must execute a commercial contract with the AGCO’s iGaming Ontario independent subsidiary that has been established to manage the Ontario market in conformity with Canadian federal law.
Not all the rules and policies have been written yet, Burns said, and it is unlikely that all of the operators actively preparing for the Ontario market will be ready to launch on day one.
“I think it will be more of a gradual transition in the market,” Burns told SBC delegates. “I suspect it will be more of a slow roll.”
The lack of a defined launch date is one of several challenges for operators, making it difficult to make key decisions on hiring and marketing, said Chantal Cipriano, vice president of legal, compliance and people for PointsBet Canada.
Another challenge is having to pivot to new rules as they continue to be released, she said.
The AGCO approved final regulations for internet gambling and sports betting in September, but required procedures on anti-money laundering (AML) and responsible gaming to be defined and implemented by iGaming Ontario, with recent indications that they will be far more prescriptive than the regulatory agency’s standards-based rules.
Joining Burns on an SBC panel on Ontario, Cipriano also highlighted the challenges of entering into confidentiality agreements to engage with iGaming Ontario, as well as the province’s marketing and advertising restrictions that “make it very difficult to compete with offshore operators.”
But if the regulatory process is complicated for pure online companies, then it is more so for incumbent land-based casinos in Ontario who are planning to become omni-channel operators, said Rich Roberts, president of digital for Mohegan Gaming & Entertainment, which runs the Fallsview Casino Resort in Niagara Falls.
Mohegan and other Ontario casino operators will have to go through iGaming Ontario for online but partner with the Ontario Lottery & Gaming Corporation (OLG) as the province’s crown agent for retail sports betting, said Roberts, who expressed concerns of a higher tax rate being imposed for land-based sportsbook operations.
No Blackout For Grey Market
Still, there is little doubt that the Ontario market overall is attractive and continues to draw a lot of interest, according to Burns and various other speakers at the SBC summit.
Among other features, there are no limits on market access nor restrictions on iGaming products in Ontario, as is the case in most U.S. states.
“They’ve not been trying to limit the market in any place, in any way,” said Burns.
The fact that game servers or studios will not have to be in the province is another advantage, said Jeff Millar, commercial director North America for Evolution Gaming.
Evolution is speaking to more than 20 operators about providing live-dealer games for Ontario, including via its larger studios in Eastern Europe that will allow for a “broader portfolio of content.”
“We’re very bullish about Ontario not only because of the size of the market; it’s the first jurisdiction in North America that has allowed suppliers and operators to use infrastructure outside of the country,” Millar said on a separate SBC panel.
Gamesys owner Bally’s is another operator excited about Ontario, said Adi Dhandhania, chief operating officer of Bally’s Interactive, while Rush Street Interactive recently launched a free-to-play site in the province and is preparing to go live on day one of regulated internet gambling, according to CEO Richard Schwartz.
Unlike in the U.S., Schwartz noted that those operators not currently taking bets from Ontarians will have to compete with a contingent of large grey-market operators that are already active in the province.
“So it will be interesting to see how those players are able to be transitioned over to the regulated market, how smooth or not smooth that will be. That’s still a to-be-determined factor,” Schwartz said.
Both Burns of the Canadian Gaming Association and Cipriano of PointsBet similarly cited the transition of currently grey-market operators into the regulated system as a pivotal issue to watch in the coming weeks and months.
The AGCO has stated that it does not want a blackout period for those offshore operators it is seeking to attract to the legal marketplace, Burns noted.
“The Netherlands experience won’t be replicated,” Burns said. “They definitely say that; let’s see if they follow through with it.”
Another theme of SBC summit discussions on Ontario was that the market promises to be unique from U.S. states or more established European jurisdictions not only in its competitive dynamics, but also in terms of customer preferences.
OLG’s newly launched online sportsbook suggests Ontarians prefer to loyally bet on their favorite teams more than star players, with hockey and other Canadian sports particularly popular, said Andy Wright, CEO of Sporting Group, sports-betting partner of both OLG and the PlayAlberta online gambling platform.
“Canada’s a very particular market that’s very nuanced,” Wright said.
As for PointsBet, Cipriano explained that the company has decided to build a specific team and product from within Canada rather than leverage its expanding U.S. operations, and is “keen on identifying passion points for Canadians,” for example by agreeing to become the official sports-betting partner of Curling Canada.
“We’re not treating Ontario as another state of the United States, because it is not that,” Cipriano said.
Additional reporting by Matt Carey.