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While operators have flocked to Ontario due to its large market, varied product options and unlimited licensing opportunities, the first year-plus of operations has not come without its challenges, gaming company executives say.
Almost 50 operators have launched mobile sports betting and/or online casino platforms since the regulated market launched in April 2022.
However, the market has come with some quirks that operators have faced that have not been as present in other markets, including advertising restrictions, extensive reporting requirements and higher-than-expected banking and insurance costs, operators said during a panel at the Canadian Gaming Summit in Toronto last week.
“I think there was a kind of gold rush mentality early. A lot of operators threw the kitchen sink at it, and they're feeling the pain of over investing early,” said Will Woodhams, CEO of British-based bookmaker Fitzdares. “It's a slower build than everyone thought it would be, and I think that land grab was probably a bit messy at the beginning.”
“I think if I'd spent $50m launching in April last year, I probably wouldn't be on this panel, I’d be hiding somewhere from my board,” he added.
Roxana Zaharia, head of Canada for Rhino Entertainment Group, which operates under the Casino Days brand in Ontario, said the hyper competitive rush impacted their launch strategy.
“It’s forced us to sort of reflect on what we wanted our launch plans to be,” Zaharia said. “We actually did want to go with, you know, the big bang investment.
“Knowing what we know now that would have been a massive mistake,” she said. “It would have hurt us, and it would have hurt our players as well in the process, so we didn't know what we didn't know.”
One thing many operators agreed on was, at an early stage of the market, one of the biggest challenges for operators, particularly smaller ones, was the high costs of things like cyber insurance.
“I remember spitting my coffee onto a guy who had just given me the quote,” Woodhams said. “A half a million dollars? What am I paying for? Nothing.”
“For a company of our size, it was prohibitive as a cost,” Zaharia added.
“We're trying to be a little bit creative on our side, to be able to meet the needs of what's required, but the cost of that has just gone through the roof since the pandemic,” added Marina Bogard, managing director, North America for Betsson Group.
Woodhams added that some of those challenges have lessened as the market has matured.
“No one wanted to bank our sector,” he said. “Luckily, like all things, like cyber insurance, the market settles.
“I think any nervousness from the financial sector, or the insurance sector has calmed, so we’re in a much better place now.”
Bogard highlighted reporting requirements as another challenge for operators to manage.
“There's 80 different reports that have to be provided on a regular basis, which is much different than our experience in other territories, so really understanding what is required and understanding you know, the delivery timelines and how it should be delivered,” she said. “Some of this sounds really basic and simple, you know, put an Excel sheet together and pass it on, but it's an enormous amount of work.
“My hope is some of the things that are in place will start to ease off, because… who is looking at those [reports]?” she continued. “When you think about 60 operators providing 'x' number of reports on a daily, weekly, monthly basis, is that really necessary? What is the true essence that needs to be reported on?”
The operators also discussed the ongoing debate over advertising restrictions, with some highlighting the market’s restrictions, such as a prohibition on inducements in public advertising as a positive, and others hoping for a less restrictive rule in the future.
"I think it took the UK digital sports betting and casino market ten years to have an ick factor about mass advertising,” Woodhams said. “It took the good people of Ontario about two weeks to feel that the market had oversaturated advertising and that's kind of good.”
“It’s good that everyone’s said calm down, we can’t all be addicted to gambling immediately, and so we need to calm down, grow the market at the right pace,” he continued. “We shouldn’t complain because it means you don’t bully your way in by spending $100m having Wayne Gretzky as your face or whatever.”
Bogard compared the climate to the U.S, where significant bonus offerings have made it difficult for operators outside of the heavy-spending market leaders to compete.
“Being a smaller player, we will never compete in the types of bonuses that were being thrown around,” she said. “So, from an industry perspective, that’s good, because you can’t sustain that type of spend and ever think you’ll get to break even, let alone profitability.”
Zaharia, on the other hand, said she hopes at some point the Alcohol and Gaming Commission of Ontario will rethink the prohibition on inducements.
"The player is actually torn between two, which is the few with a big spend that are live everywhere, and the black-market guys that still exist,” she said. “Whether we want to acknowledge it or not, they still exist, they’re still all-over black hat [marketing], and we’re trying to differentiate but it is difficult to compete.
“It is all about the product, but it is easier to bring players on board where you do have more of an incentive,” she added. “But with guardrails in place, just really strict rules about where and when you can advertise.”
Despite the challenges, Woodhams said he feels Ontario has become a new model for other jurisdictions considering legalization to follow.
“I think this is the benchmark for other places that go legal, this is the benchmark of how you do it now,” he said. “So, it used to be Holland or the UK or whatever, I think this is where it's at, and I think it's really interesting.”
