Ontario Operators Wrestling With Lack Of Supplier Licensing

July 15, 2022
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Companies active in the Ontario online market have said that the burden placed on operators holding them responsible for the actions of their partners has created a range of challenges throughout the province’s complicated licensing process and subsequent launch.

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Companies active in the Ontario online market have said that the burden placed on operators holding them responsible for the actions of their partners has created a range of challenges throughout the province’s complicated licensing process and subsequent launch.

The Alcohol and Gaming Commission of Ontario (AGCO) does not require non-gaming suppliers or vendors to obtain a license to offer their services to regulated operators in the province, but it also holds operators accountable for any compliance violations by their partners.

That arrangement has led to some challenges, said Chantal Cipriano, vice president of legal, compliance, and people for Pointsbet Canada, particularly when it comes to monitoring the compliance of marketing affiliates with the province’s standards that restrict inducements in advertising.

“We are effectively policing our affiliates and it’s very difficult to do because they change their content on a regular basis, and I’m talking even hourly they change their content, so we are telling them to change their business model,” she said.

Cipriano said PointsBet has a team of six people dedicated to monitoring, tracking and analyzing affiliate content on a daily basis.

“It’s extremely onerous, and it’s workable right now, but most operators work with hundreds and hundreds of affiliates, and so it becomes unmanageable unless you have a team of, I don’t even know how many you would need to monitor that on a regular basis.”

Another challenge for suppliers, particularly during the early stages of the process, was following the requirements of both the AGCO’s registrar’s standards for internet gaming, as well as the commercial agreements reached between the operator and conduct-and-manage entity iGaming Ontario, said Kathryn McCall, chief legal officer for payment processor Trustly.

The contractual agreements were confidential and subject to a non-disclosure agreement signed by registered operators, which meant they could not share the full requirements with their suppliers such as payments processors.

“We eventually worked it out where we got a portal where all of these things were released to us that we could actually look at, but it was tense couple of months there for a while where we’re looking at things like, how can we really operate in Canada when we’re subject to requirements that we can’t see touch, feel, figure out, look at, dissect, and we’re relying on our gaming operators to interpret them for us, who by the way, are interpreting them in different ways.”

That difference of interpretation has also led to operators making a wide range of different requests to Trustly as part of their compliance efforts, she said.

“It led to some differences between how our merchants approach this, so we’d have one gaming operator who wasn’t asking us any questions about what we were going to be doing, and then we had other gaming operators who are into the deep details and into the weeds and, ‘we need this from you’,” McCall said. “So it led to a lot of differences across the board in how we deal with our gaming operators.”

Dave Phillips, chief operating officer of the AGCO, said that the decision not to license non-gaming vendors was a deliberate one made after consultation with stakeholders, but one of the driving factors was ensuring a quicker launch.

“What’s really driving that at the end of the day, was at first instance, where we’re looking to stand up a new market and move pretty quickly to do so,” Phillips said.

“The extent to which we can alleviate burden both on the regulator but also on the industry in terms of the number of people that have to go to the expense and the effort of obtaining a license with us, it was going to improve speed-to-market.

“But then from our standpoint, from a regulatory standpoint, we really assessed which individuals, which entities do we really need to have that full menu of regulatory authorities in order to be able to compel information, engage in compliance activities and eligibility assessments and things like that, in order to achieve the compliance outcomes that we want to achieve as opposed to having that managed through the commercial relationships that exist between operators, and that’s really what drove the decision.”

Phillips said the regulator is open to reassessing the process “if it doesn’t work out, but so far, we’re seeing relatively good performance.”

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