If all goes according to plan, the next gold rush for the online gambling industry could be in Alberta.
The government of the Western Canadian province is preparing to launch a competitive market for online sports betting and internet casino gambling similar to that of Ontario, which means multiple private-sector operators could participate.
And that, according to one stock analyst, could provide a sizable opportunity for the likes of bet365, DraftKings, and FanDuel, among others.
Citizens JMP Securities’ Jordan Bender said Wednesday that the investment banking firm calculates a competitive Alberta iGaming market (based on numbers reported by Ontario) could generate around $709 million to $734 million US in annual revenue by the third year of its existence.
“If $700M of gaming revenue is met, it would represent the eighth-largest gaming market in North America,” Bender wrote in a note to clients.
Alberta's forthcoming iGaming market could eventually generate more than US$700M a year in revenue, according to Citizens JMP Securities analyst Jordan Bender.
— Geoff Zochodne (@GeoffZochodne) June 26, 2024
"If $700M of gaming revenue is met, it would represent the eighth-largest gaming market in North America." pic.twitter.com/E6IJX9DASe
The bulk of that revenue would flow from online casino play, Bender said, with around $514 million to $533 million US generated by internet slots and table games. Another $194 million to $201 million US would come from online sports betting.
The comments come after Dale Nally, the Minister of Service Alberta and Red Tape Reduction, confirmed at the Canadian Gaming Summit in Toronto last week that his province plans to move to an “open and free” iGaming market, similar to what Ontario has done.
While there is no hard timeline for an Alberta launch, when it happens, it would unlock for private-sector operators a jurisdiction similar in population size to states such as Kentucky and Louisiana, but with both online sports betting and internet casino gambling on offer. Those states have legal sports betting but no iCasino.
“Once the province legalizes what we assume to be online sports betting and iGaming, if truly the Ontario model, major global players in the industry would enter Alberta or emerge from the grey market, in our view,” Bender wrote. “The existence of a significant grey market will pose a similar uphill battle for customer acquisition for new entrances to Alberta. That said, we see the market opportunity as an upside catalyst for stocks.”
There is just one legal provider of Alberta sports betting and iGaming at the moment, the government-owned Play Alberta.
The Alberta Gaming, Liquor and Cannabis Commission (AGLC) reported recently that there are more than 313,000 registered player accounts with Play Alberta, which it projected would handle $5.36 billion in total bets for the fiscal year ended March 31. That would be a more than 20% increase over the $4.4 billion handle reported for the 2022-2023 fiscal year.
Play Alberta also generated $179.7 million in net sales for the fiscal year ended March 31, 2023, up from $144.9 million for 2021-2022 and $37 million for 2020-21, the site's first year.
Yet that revenue may be less than half of what’s already being collected in Alberta. The AGLC, citing estimates from H2 Gambling Capital, said earlier this month that Play Alberta had captured more than 45% of the province’s overall iGaming market, leaving around 55% in the hands of offshore and illegal operators.
A lot of green for 'grey'
The estimate of a 55% market share for illegal operators could be low, too. In Ontario, the provincial government projected in 2021 that “unregulated, grey market websites” owned around 70% of the online gambling market.
However, that was before Ontario launched a competitive market for iGaming in April 2022. Now, dozens of private-sector sites are legally taking bets from Ontarians and around 86% of players are estimated to use operators regulated by provincial authorities.
An Ontario government agency reported the province's competitive market handled $63 billion in total wagers for the fiscal year ended March 31. It also generated $2.4 billion in total gaming revenue.
And Ontario sports betting is the example Alberta intends to follow, although there will likely be some tweaking around the margins before a launch either later this year or early 2025.
“We’re committed to working with our partners to finish an online gaming strategy that supports responsible gaming as well as provincial and Indigenous revenue generation,” said Brandon Aboultaif, Nally’s press secretary, in an email to Covers. “As part of our policy development process, and as we look at moving to a more open regulated online gaming market, we will continue to examine best practices from other jurisdictions, including Ontario, which has built a roadmap that has been shown to work within our Canadian context.”
