Offshore sportsbooks and casino gambling websites that continue to dodge regulation in Ontario may soon be targeted by new regulatory tactics.
The Alcohol and Gaming Commission of Ontario, the regulator of legal sports betting and online casino gambling in Canada’s most populous province, says it is developing a strategy to restrict access to sites operating outside its oversight.
That disclosure was one of the “key achievements” listed by the AGCO in its annual report for the year ended March 31, 2024, which the regulator published on Wednesday.
“Collaboration with international jurisdictions on tackling the Unregulated iGaming Market continued in 2023-24 and a comprehensive strategy is in the process of being drafted to limit industry access to the unregulated market and increase public awareness by delivering a second generation of high impact, coordinated and relevant regulatory activities,” the document stated.
The AGCO 2023–24 Annual Report is now available: https://t.co/TbsN1Cf9Ai pic.twitter.com/m3rB0ts2CX
— Alcohol and Gaming Commission of Ontario (@Ont_AGCO) January 15, 2025
An AGCO strategy for going after the unregulated market echoes the interest among operators and regulators in the United States. Some U.S. regulators have even hit offshore and allegedly illegal operators with cease-and-desist letters.
For example, the Maryland Lottery and Gaming Control Agency reported on Wednesday that it sent C&Ds to 11 such operators and that six had responded, albeit none of which agreed to block access to their sites. Officials in Virginia recently said they are mulling over similar steps.
The AGCO can't issue cease-and-desist letters that carry the same sort of legal weight on its own, although others in the provincial and federal government might. The AGCO can, however, communicate with operators and suppliers, as well as regulators in other jurisdictions, to try to disrupt unregulated activity.
MOU > IOU
In 2022, for instance, the AGCO updated its iGaming standards to require that operators and gaming-related suppliers in the unregulated market must end those activities in the province if they ever want to join the regulated system. Moreover, the AGCO entered into a memorandum of understanding with the Malta Gaming Authority last year that could assist in curbing offshore participants.
“The new MoU aims to further strengthen the long-standing collaboration between the two regulatory bodies, as it facilitates the exchange of crucial regulatory information and best practices, and mutual operational assistance concerning gaming operators,” a press release noted.
Unregulated operators used to control most of the market for online gambling in Ontario, which long had a sizable "grey market" for sports betting and iCasino. That changed in 2022, when the province launched a competitive iGaming market that permitted private-sector participants.
The bulk of online gambling in Ontario now takes place on sites regulated by the AGCO and governed by contracts that operators signed with another agency, iGaming Ontario (iGO). Using that structure, there are now 50 private-sector operators of online sports betting and casino sites in Ontario, in addition to the iGaming site of the government-owned Ontario Lottery and Gaming Corp.
Changing the channelization
Research suggests more than 85% of online gamblers in Ontario now use provincially regulated sites, which, since 2022, include bet365, DraftKings, and FanDuel.
“This represents considerable success in shifting players from gambling on unregulated sites to choosing regulated sites that provide Ontario’s high standards of game integrity and player protections,” said Dr. Karin Schnarr, the AGCO’s registrar and CEO, in the annual report. “The regulated market has also provided gaming industry participants with a clear framework to enter the market, fostering innovation and economic opportunities for businesses.”
However, 85% still means around 15% of the iGaming population is using unregulated options, and the AGCO’s latest report indicates the regulator plans to push to get that latter number even closer to zero. Indeed, iGO's annual report (included in the AGCO's) shows one of its goals is to increase the "channelization rate" of players to 90% by 2026-27.
“iGO is developing a more comprehensive definition of channelization as part of its fiscal 2023-24 market sizing research plan,” the agency’s report states.
iGO's financial figures show operators generated almost $2.2 billion in gaming revenue for the year ended March 31, 2024, $438 million of which was kept by the agency. During 2023-24, iGO’s net income was nearly $176 million, and the agency paid dividends to the province of $149 million, “which supported provincial priorities.”
After expenses and accounting for federal sales refunds to the province, iGO said its total contribution to the Ontario government was $261.1 million for the fiscal year, up $115 million from the year before.
