Welcome to the party? Assessing the challenges other provinces face when following Ontario

WELCOME TO THE PARTY?

ASSESSING THE CHALLENGES OTHER PROVINCES FACE WHEN FOLLOWING ONTARIO.

VIXIO GamblingCompliance reporter Matt Carey examines the state of play across Canada and explores the challenges and opportunities for other provinces that may follow in Ontario’s footsteps.

“Following Ontario’s lead into a more open market is a more complicated proposition than it may seem”

BY MATT CAREY

The excitement surrounding Ontario’s launch of a competitive, regulated sports betting and online casino market has naturally led to many observers, both in Canada as well as internationally, asking if, and when, other provinces will follow suit.

Those observers have reason to be excited about the potential of a more open Canadian online gaming market.

According to VIXIO Gambling Compliance projections, Canada’s online gaming market could reach $5.8bn by 2026 with only some liberalization for online sports betting in Alberta, British Columbia, Manitoba, and Saskatchewan.

However, Ontario’s open market alone would be responsible for more than $3.2bn of that, despite only accounting for just over 38% of the country’s population.

Following Ontario’s lead into a more open market is a more complicated proposition than it may seem from the outside, particularly for international operators.

The expansion of liberalized online gaming through Canada faces a myriad of challenges, including political roadblocks and addressing the effect on the entrenched gaming structure that exists in many provinces today.

The impact of single-event sports wagering remains a relatively new concept in Canada’s regulated gaming space. Provincial lottery corporations have only just begun to see the effect of single event wagering on their own products, particularly in competition with grey market operators that remain in operation.

Grey market operators loom large over the conversation regarding almost every province, and Ontario’s decision to allow those operators to transition into the regulated market without ever halting their operations may not be a one-size-fits all solution that other provinces can easily replicate.

Other provinces, like British Columbia, have taken harder stances against some operators regarding alleged illegal activities, and many operators entering the Ontario market have complained that the decision to permit the grey market operators to transition has made it difficult to compete with the entrenched operators in the early stages of the market.

Moreover, lottery corporations in other provinces provide different structures and different levels of success that make it more difficult to implement a private operatorbased system that either challenges or supplants existing products. In Quebec, the lottery corporation directly operates all forms of gaming, including landbased casinos, and British Columbia’s lottery corporation includes the most successful government-run online casino product in the country.

And while the four Atlantic Canadian provinces are banded together through the Atlantic Lottery Corporation, each province remains entitled to make its own decision on reform, adding an additional degree of complexity to any decision.

Alberta will likely be the next to pursue a competitive model of some kind, already holding a request-for-proposals to select two commercial operators to compete with its PlayAlberta product.

The remaining provinces will also undoubtedly be looking at the early returns from Ontario’s new model for themselves, including revenues, how the government-run PlayOLG product performs as a challenger to the private operators, and the effects of regulators ultimately dropping the proverbial gate on grey market operators who have yet to transition into the regulated space.

Ultimately, those returns will have to show a result worth upending the existing structure. Even in Ontario, with a conservative government that favors privatization as general policy, it still took three years for Ontario’s eventual model to go from an idea to a launch.

The end result is that while change will likely come to Canada’s other provinces over the next five to 10 years, it likely will not be overnight, and when it does come, the reforms may not be as sweeping and as hospitable to potential new market entrants as Ontario’s new model.