A competitive market for internet-based sports betting and casino gambling in Ontario is now scheduled to launch in early April. But what's going to happen to the “grey market” websites that players in the province are currently using?
According to their government, Ontarians are doing a lot of gambling at those sites, which may be licensed and regulated somewhere, but not by the province. A press release issued last July said provincial players were spending almost $1 billion a year on online gambling and that an estimated 70% of that was being wagered at sites not supervised by Ontario authorities.
Capturing some of that money to help fund education or health-care services is one of the reasons why Ontario is opening a new iGaming market on April 4.
The market will be the first of its kind in Canada and will allow private-sector operators of online sportsbooks — not just government-owned Ontario Lottery and Gaming Corp. — to legally take bets in the province. First, though, those operators must receive the go-ahead from the Alcohol and Gaming Commission of Ontario (AGCO), a regulator, and iGaming Ontario (iGO), a government agency and AGCO subsidiary.
In setting up this framework, officials are aiming to shift at least some of the wagering that's currently happening at out-of-province and offshore gambling sites into a channel the Ontario government can oversee and tax. Furthermore, it appears provincial regulators are hoping to pull off this migration without much disruption for companies or customers — a "seamless" transition from grey market to white market.
“Beginning on April 4, operators that are registered with the AGCO as an Internet Gaming Operator and have signed an Operating Agreement with iGO will be able to go live in Ontario’s new market,” iGaming Ontario said in an email on Friday. “For online sports betting, this date can allow customer accounts to be transitioned ahead of major events in the Spring sports calendar including the NHL and NBA playoffs.”
IGaming Ontario told Covers on Tuesday that operators with "pre-existing players" in the province will have to take certain steps to move them over to the new market to meet iGO's requirements.
"iGO will provide information to support Operators as they guide their players through the transition smoothly," the agency added in an email.
Announced today: Launch of the new igaming market in Ontario will begin April 4, 2022. Follow this link to see the full press release https://t.co/Cnx7EWjf8r
— iGaming Ontario (@iGamingOntario) January 28, 2022
A smooth transition to white-market gambling will likely be important for operators looking to make the move without losing players. It could also be significant for provincial bean counters who are hoping to generate new revenue for the government by tapping into ongoing grey-market wagering. Any bumps in the road might put iGaming-related revenue at risk.
U.K.-based Entain Plc boasts sports-betting brands such as bwin, in addition to being a 50/50 partner in BetMGM with casino operator MGM Resorts International. During a January 20 conference call for analysts and investors, Entain chief executive officer Jette Nygaard-Andersen was asked if grey-market operators expect Ontario to shut them down for a while before they can start up their licensed businesses in the province.
“We expect that we’ll be able to pretty seamlessly continue operations,” Nygaard-Andersen said.
Seamless seems to be the watchword for Ontario regulators as well.
"The AGCO has developed a regulatory framework to ensure honesty and integrity for igaming in Ontario and to protect Ontario consumers while, at the same time, facilitating a business-like transition from unregulated to regulated igaming scheme that is fair for registrants," the watchdog said in its application guide for internet gaming operators.
The AGCO added that it wants to "ensure a smooth and efficient transition" to the new iGaming market and that it will be "as practical and pragmatic as possible" with applicants.
To that end, the AGCO said it will coordinate its registration of operators with the operators' signing of contracts with iGaming Ontario, which will "conduct and manage" online gambling in the province when it's done by private-sector firms.
“This includes confirmation of data exchange so that these three events coincide and the transition to the regulated igaming scheme is as seamless as possible — with the goal of having no ‘blackout’ period,” the AGCO’s guide said.
Limited patience
Where things might not be as seamless is if grey-market operators refuse provincial regulation, even for a short while.
The AGCO said last year that all who apply before the launch date of the new iGaming market must stop any unregulated activity in Ontario once they are issued a registration. Registered applicants must also cut any ties they might have with other companies still operating in Ontario's unregulated market.
Someone who hasn't applied to register with the AGCO by Ontario's launch date and keeps operating in the province's unregulated market runs the risk of having their registration application rejected as well. They could find themselves in a much more awkward situation too, with potential police involvement.
“As part of this transition, the AGCO is committed to taking strong action to address any remaining unregulated Ontario market activity in partnership with law enforcement,” the watchdog’s application guide said.
But Canadian Gaming Association CEO Paul Burns fielded a question in December about offshore operators during an Ontario-themed panel at the SBC Summit North America conference.
In answering, Burns noted the AGCO and provincial government did not want to interrupt the customer experience. He also said the province was trying to make it "very conducive" to join the new market, such as by avoiding blackout periods and by allowing for a wide variety of betting options, including in-play wagering.
Coming soon, Ontario. ????
— theScore Bet (@theScoreBet) January 31, 2022
Sign-up for updates from @theScoreBet. https://t.co/Uf9IAVfPoV pic.twitter.com/IznicqfbB1
Ontario's new iGaming market could still run into legal turbulence, though.
The province's auditor general warned in December that lawsuits were a possibility. And last Friday, soon after the launch date of the iGaming market was announced, the Mississaugas of Scugog Island First Nation (MSIFN) issued a press release saying the Ontario government had failed to hold formal consultations with Indigenous governments as required by the Canadian constitution.
The First Nation has a casino located on its lands, which the Mississaugas say has helped provide jobs and charitable donations in the community.
"The government completely and utterly failed to consult our First Nation – leaving their iGaming launch open to constitutional challenge," said Kelly LaRocca, chief of MSIFN, in the release. "We intend to challenge the province's iGaming scheme in court."
