Province has 66 registered websites after market launched in April
The $6.04 billion in total wagers recorded by iGaming Ontario in its second quarter of operations has been disappointing to some. Still, others say the online market’s potential has yet to materialize.
“Some players say these numbers are short of expectations, but we won’t have a real sense of the market’s true potential until we have stats for 12 months,” says Cameron MacDonald, the Toronto-based co-chair of Borden Ladner Gervais LLP’s national sports and gaming law practice
Ontario officially launched its online gaming market on April 4. The first quarter, ending on June 30, saw total wagers of just over $4 billion, meaning that the market grew 48 percent in Q2. But critics note that Ontario’s performance pales beside the numbers from the US, where per capita spending on online gaming is much higher.
Still, MacDonald’s colleague Galen Flaherty says the comparison to the US isn’t entirely fair.
“Canada permitted offshore companies to operate with impunity, leaving billions on the table for illegal entities. The situation is very different from that in the US, where gaming laws were actively enforced. What that means is that the transition to a regulated market represents a much bigger leap here than it did there.”
Flaherty maintains the Ontario numbers are “promising” and points to the accelerating growth in the number of gaming websites entering the market.
“There were 31 gaming websites registered in Ontario by the end of Q1, 42 at the end of Q2, and 50 by mid-October. Given that we’re entering into the meat of the betting season for major professional leagues and that Q3 is usually the busiest quarter for sports betting, we could easily get north of 70 websites soon.”
Current numbers bear out Flaherty’s prediction: Ontario boasted 66 registered websites at press time.
Particularly encouraging, according to MacDonald, is the evidence that Canada has a “tremendous appetite” for online gaming.
“The Canadian Gaming Summit has reported some 15 million fraudulent attempts by Canadians living outside of Ontario to access our market.”
Peter Czegledy of Toronto, chair of Aird & Berlis LLP’s gaming group, also sees significant potential for growth.
“The amount bet increased significantly in Q2, the amount spent per account also increased by about 26 percent, the number of player accounts climbed from 492,000 to 628,000, a 28 percent increase, and more operators came on board. I doubt such increases will continue ad infinitum, but the trend is certainly a good one.”
The Alcohol and Gaming Commission of Ontario’s decision to end the “transition period” on October 31 could well hasten growth. Before then, unregulated operators could move into the regulated market without incurring risks associated with earlier unregulated activities.
“While the authorities have purposefully not made clear their specific plans after October 31, 2022, the general expectation is that enforcement action may commence in relation to those still waiting on the sidelines, or at the very least, their ability to participate in the unregulated market down the road may be negatively impacted,” Czegledy says. “I think everyone appreciates that one of the likely goals of this position is to further prod operators to move to the regulated market, which inevitably will impact its size and value.”
Also auguring well for the market is the September launch of Mohegan Digital by Mohegan, which owns multiple casinos in North America. Mohegan Digital created PlayFallsview, a digital gaming experience for Niagara Falls’ Fallsview Casino, the largest land-based gaming resort in Canada.
“Mohegan’s move demonstrates that iGaming is not cannibalistic of land-based operations,” Flaherty says. “So now all the land-based operators will want to integrate their operations in a similar fashion.”
MacDonald is of a similar mind.
“A rising tide lifts all ships,” he says. “iGaming will be complementary to land-based gaming because going to a casino is a different user experience than betting on phones.”
Finally, there’s growing global interest in the Ontario market.
Damian Goodwin, the UK-based chief operating officer for Kings Entertainment Group Inc., an international online gaming company that has so far focused on Latin America, says Ontario expansion is intriguing for the company.
“Now that Ontario has provided a safe and secure way to game, we could certainly be interested in acquiring an operating company here in Canada.”