Ontario Regulator Lauds Focus On Suppliers To Keep Out Offshore Market

May 16, 2023
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Ontario gaming officials continue to tout the success of the province’s transition of grey-market operators into a competitive online gambling market.

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Ontario gaming officials continue to tout the success of the province’s transition of grey-market operators into a competitive online gambling market.

The Alcohol and Gaming Commission of Ontario (AGCO) permitted existing grey-market operators to freely transition into the legal market for about six months following the province’s April 2022 launch, enabling them to retain valuable customer databases accrued prior to regulation.

However, in enforcing the legal market following the completion of that free transition, AGCO chief operating officer Dave Phillips said an important strategy has been targeting suppliers and preventing them from servicing both regulated and unregulated operators.

“What we found is that if our overriding goal is to remove the oxygen from the unregulated market, the best way to do it was actually by addressing suppliers because if you had a supplier coming into the market, an Ontario regulated market, and they perhaps are supplying ten regulated operators that are coming in, but they have relationships with 50 unregulated operators that are still in the market,” Phillips said.

“You have a rule in place that says if you’re going to come in, you stop doing business on the other side, and in turn, the games are being turned off,” he continued.

“In some cases, those operators are exiting because the oxygen is completely removed, and what we found was that hundreds upon hundreds of sites went dark as a result of really just focusing on the supplier, so it’s proven very effective.

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Another entity that claims to have benefitted from the transition to a fully regulated online market is the government-run Ontario Lottery and Gaming Corporation (OLG).

OLG had operated its own online casino platform since 2015, but, as Andrew Darley, vice president of iCasino and iLottery for the office admits, had yet to roll out its best product.

“We were sort of slowly growing, and I don’t think that we had necessarily really put our best foot forward in terms of how to really compete with what we call sort of the tier one,” Darley said. “When you’re competing with the folks who are operating in the gray market, and they’re not the true regulated big guys like BetMGM FanDuel etc., it was a little bit easier for us to continue to grow market share without having to really put a ton behind it.

“When the potential market open was coming along it forced OLG as a company holistically to go, ‘Okay, we’re not going to win if we just sit on our hands and continue to do what we’re doing’,” he continued. “We have to overhaul, I’ll say, pretty much everything.”

Darley said OLG has restructured its operations entirely to act more like a tech company than a slow-moving government agency.

“We can turn stuff around now in weeks that would have taken us months normally once before,” Darley said. “So it was really about that whole holistic view of restructuring the tech stack, restructure the company and give us a license to really go ahead and compete and take risks.”

The regulated market launch, he added, also gave OLG the opportunity to compete on a level playing field rather than having to be the only operator in the market held to specific regulatory standards.

“As the provincial agency, we’re held to a different standard and we were battling against people who had no rules, right?” he said. “They could do whatever they wanted whenever they wanted, versus now we’re all equal.

“We're all fighting the same fight and we’re all trying to figure out how to get customers and drive those experiences that are great, but we’re all at the same level, and so I think it helps a lot that way as well.”

OLG has yet to release any data about how it has performed since the launch of the regulated space, but executives have spoken favorably about its performance in recent months.

“I would say confidently, if you add our number to the to the [iGaming Ontario] numbers, we are the number one market in the world,” Darley said.

“And I think that that’s important to underpin the importance of having both the provincially regulated group as well as the operators from all around the world, allowing us to sort of work together to have that even playing field but still be able to compete.”

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