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With more operators transitioning from the grey market into the regulated space ahead of an October 31 deadline, revenue performance improved to $267m in the second quarter of regulated online gaming in Ontario.
iGaming Ontario (iGO), the province’s conduct-and-manage entity, reported $6.04bn in total handle and $267m in gross gaming revenue in the quarter from July through September, with 24 operators in the market and 42 total websites.
The figures improved on a first quarter that saw the province produce $162m in revenue on just over $4bn in handle, with 18 operators overseeing 31 websites.
“A common question is are you pleased with what you’ve seen in the Ontario market so far. Yes, definitely,” said iGO director Martha Otton during a panel appearance at the Global Gaming Expo Wednesday (October 12).
“We really thought success from day one would be having one operator live and in fact we had 12, so my response is yes, we’re thrilled with the way the Ontario market is going.”
The impending October 31 deadline marks the end of the free transition period for grey market operators to complete their migration into the regulated space.
The Alcohol and Gaming Commission of Ontario (AGCO) allowed companies that were operating in the province prior to its April 4 regulated launch to continue doing so without facing penalty provided it had applied for registration to enter the licensed market.
“That was a huge selling point, I think, enormous, and I think very few jurisdictions would be pragmatic enough, frankly, to offer that, because that brought everyone in,” said Danielle Bush, senior counsel for Toronto-based McCarthy Tetrault, which represents several operators in the Ontario space, many of whom, she noted, were existing grey market operators.
“It made perfect sense for them to come in and get regulated,” she added. “It certainly helped larger ones that are publicly traded in other jurisdictions. They were begging to be regulated and licensed and taxed.”
“You are not ever going to see the small offshore sites who don’t even bother to get licensed in other jurisdictions, they’re going to be sitting out there no matter what."
Otton said iGO has more than 40 operators that remain in the queue for potential operating agreements, although not all are existing grey market operators.
“We’re just really thrilled that there’s a cut off and we’ll be transitioning to these markets, because the whole point is just to bring everyone into the regulated markets and end that transition period,” she said.
Another key talking point in Ontario has been advertising, where the volume of advertising has remained high despite AGCO restrictions on offering any type of inducement in public advertising, such as risk-free bets, deposit bonuses and other incentives.
“Whatever your feeling of [the bonus restrictions], the reality is it’s forced operators to talk about their product, and I think that’s fantastic,” said Bruce Caughill, managing director, Canada for Rush Street Interactive. “As we move forward, we want to make sure we’re continuing to be able to speak to product-related information outside of the bonusing restriction.”
Bush called AGCO a “smart, politically astute” regulator that saw the building backlash to advertising in European jurisdictions, as well as one that understood Canadian culture and blowback that gaming in Ontario had received.
That understanding, she said, caused the regulator to take a more proactive look at advertising, one she predicted may see further tightening.
“My guess is we may see some throttling as time passes,” she said. “They let the industry run with it during the market opening, but they are now starting, and they expected this, but they’re starting to hear some complaints about the volume of ads showing up in all of the sports broadcasts.
“But they are ready to manage it already because they can say we are extremely rigorous in managing the messaging … and we have standards in place to ensure that there is no call to action or encouragement to commence gaming to people who may be vulnerable in the advertising.”
AGCO may have already launched its opening salvo in that conversation, announcing a consultation last week regarding a potential prohibition on promotional partnerships that would ban the creation of physical venues to encourage placing bets, such as sports-betting lounges at sports facilities or branded bars and restaurants designed to encourage wagering.
