Alberta wants a competitive market for online sports betting and internet casino gambling, and the government minister in charge of the effort says private-sector operators should be ready to move fast in the Western Canadian province, even if there is no specific launch date yet.
Dale Nally, the Minister of Service Alberta and Red Tape Reduction, confirmed last week during the Canadian Gaming Summit in Toronto that his province is moving toward an “open and free” iGaming market.
While the exact timing of that transition is still being worked out, Nally told Covers in an interview on Thursday that private-sector operators should keep on their toes.
In other words, the likes of bet365, DraftKings, and FanDuel are on notice that they may be in a position to legally offer mobile sports wagering and online casino gambling in another Canadian province in relatively short order.
“I can't commit to a date other than to say we are not going to spend the next two years planning this,” Nally said. “We want to move sooner as opposed to later. There's certainly some important work that has to happen. But I have advised all the operators that we are doing that work now, and I would like them to be prepared to move quickly.”
Alberta's forthcoming iGaming market could eventually generate more than $700 million US a year in revenue, according to Citizens JMP Securities analyst Jordan Bender.
"If $700M of gaming revenue is met, it would represent the eighth-largest gaming market in North America." pic.twitter.com/E6IJX9DASe
— Geoff Zochodne (@GeoffZochodne) June 26, 2024
There are some important dates for any launch involving online sports betting that could offer hints as to when that could occur, such as the start of the football season in the fall. The Canadian Football League’s championship game, the 111th Grey Cup, will be held in November as well, another possibly important date for an Alberta launch.
In the meantime, though, operators have been warned and the province will continue to work on its model for a new, competitive iGaming market, which is expected to borrow from what was done in Ontario.
There, the provincial government launched a new iGaming market in April 2022 that has allowed around 50 private-sector operators to legally open 80 or so websites offering online sports betting, casino gambling, and poker to residents. That is in addition to the iGaming business run by the government-owned Ontario Lottery and Gaming Corporation (OLG).
“We're not going to be capping the number of operators,” Nally told Covers. “We're not going to be mandating ‘tethering.’ We want a free and open market and allow the operators to compete.”
A fresh face for oversight
The comments from the minister in charge of the iGaming overhaul follow the passage of legislation in the provincial parliament that clarifies both the Alberta Gaming, Liquor and Cannabis Commission (AGLC) and the Alberta government can conduct and manage gambling.
At the moment, the AGLC enjoys a legal monopoly for iGaming in Alberta via its Play Alberta site.
However, it will not be the AGLC that will be legally responsible for the new gaming sites offered by private-sector operators of casinos and online Alberta sports betting. Rather, a new entity will oversee the new iGaming market, Nally noted. That is due in part to the fact that the AGLC will become just one of several competitors fighting for business in the province when the competitive market launches.
Ontario took a similar approach with its iGaming market, where it is not OLG in charge of “conducting and managing” the activity of private-sector operators. Instead, a government agency, iGaming Ontario, is the entity operators contract with before they can offer their products to bettors in the province.
“To be clear, AGLC has done a good job with Play Alberta, but we heard from the operators loud and clear that because of AGLC’s relationship to Play Alberta, they're not comfortable sharing information with them and it’s important that they are not the regulator for iGaming in Alberta for that reason,” Nally said. “We're just in the process of working out those details now. But it will be government or the ministry as opposed to AGLC that conducts and manages.”
The technical details of the Alberta market are important to operators because of the sizable opportunity the province presents for the industry. With the ability to offer both online sports betting and iCasino to residents, there is the potential to generate significant revenue that can be shared between the province and operators.
Play Alberta alone reported generating $179.7 million in net sales for the fiscal year ended March 31, 2023, up from $144.9 million for 2021-2022. The contributions of private-sector operators would be in addition to that, and in Ontario, the province saw approximately $2.4 billion in total gaming revenue produced by its competitive iGaming market for the year that ended March 31.
Nevertheless, while Alberta is following Ontario in many ways, there are certain aspects of its forthcoming iGaming market that will be different or tailored to address Alberta-specific concerns.
Out of the 'grey'
In Ontario, one point of friction had to do with so-called “grey” market operators, which were entities that were not regulated locally yet still taking bets from locals. That activity was sizable before Ontario sports betting switched to a competitive legal market, with the provincial government estimating in 2021 that roughly 70% of what residents spent on online gambling was in the grey market.
Ontario allowed operators to transition from the grey market to its new regulatory framework and gave companies more than six months to wrap up any unregulated activity before doing so. Alberta may not give operators the same amount of time to transition, as firms that are not already present in the province could be disadvantaged by bookmakers that are already acquiring customers.
The AGLC’s estimates suggest more than half of iGaming already takes place illegally in the grey market. As a result, Nally said they are looking at the transition timeline closely.
“What we heard from the operators is that when it was done in Ontario, those companies that came on board on day one were at a disadvantage for the next six months, because those in the grey market had a bit of a ‘Wild West’ approach when it came to advertising,” the minister said. “So we're probably going to have a tighter window than they had in Ontario.”
What’s more, even with a shorter transition timeline, operators that intend to join Alberta’s regulated market may also have to follow stricter advertising rules the province could roll out in advance of the market’s launch. That would limit grey market operators from locking down customers before their competition can do the same.
“So that there's an equitable playing field,” Nally explained. “We can't have a scenario where the grey market goes in and has an advantage during the window that they have to come in to the legal and regulated space.”
That tracks with the legislation the Alberta government passed last month, which clarified both AGLC and the government could conduct and manage gaming. https://t.co/enUEzvpNyS
— Geoff Zochodne (@GeoffZochodne) June 20, 2024
Advertising was another contentious subject in Ontario. There, the province prohibited the widespread promotion of free bets, bonuses, and other gambling inducements. Residents can instead view them on an operator’s site or by opting in to receive those promotions.
Furthermore, after initially allowing operators to use athletes and certain celebrities in the marketing for iGaming sites, the Alcohol and Gaming Commission of Ontario (AGCO) mostly banned the practice after pushback from the public over advertising.
It’s not set in stone yet that Alberta will go the same route with advertising. Nally said they are currently collecting feedback from Albertans and operators and will use that input to inform the government’s decisions on the “guardrails” for the iGaming market.
“People have different perspectives when it comes to things like advertising bonuses, as well as the use of celebrities,” the minister said. “So we haven't landed anywhere. But we’re in the process of going through that right now.”
Sharing is caring
Another aspect of Alberta’s market currently being considered is how to divide the proceeds between the province and private-sector operators. In Ontario, that split is approximately 80% for operators and 20% for the province.
While Nally and others are still collecting comments from the industry, it sounds like a 20% “tax” rate is the floor for Alberta’s iGaming market.
“I can't envision a scenario where our revenue share is lower than Ontario, because we still have to have the revenue generated to pay for the regulation, and then [social] responsibility and things like that,” Nally said.
Alberta has other stakeholders to consider beyond the province and operators as well. Most notably, Alberta allows charitable organizations and Indigenous communities to participate in casino gambling, and Nally must weigh the concerns there when it comes to iGaming.
For example, the minister is consulting with Indigenous communities ahead of the iGaming launch and it’s possible a share of the revenue generated in the province is dedicated to them. The provincial government is making a point of trying to partner with First Nations on economic development projects, and iGaming may well be grounds for additional partnerships.
“Perhaps there are Indigenous communities that also want to participate in iGaming,” Nally added. “And so that's why right now we're just listening to see what role they want to play.”
