Canadian Gaming Summit: Navigating the rollout of single-event sports betting

June 15, 2023 11:47 AM
Photo: CDC Gaming Reports
  • Mark Keast, CDC Gaming Reports
June 15, 2023 11:47 AM
  • Mark Keast, CDC Gaming Reports

It’s been nearly two years since the federal ban on single-event sports betting was lifted, but the roll out across Canada has been far from uniform.

Story continues below

Ontario introduced a hybrid model involving the provincial lottery and licensed third-party private operators, after the provincial government decided to go down the road of regulation in 2019 – now at 47 licensed operators at last count, over 70 gaming sites, and more than 500 games approved.

In a Canadian Gaming Summit panel discussion, it was pointed out that the gray market in Canada has been far more robust than in the U.S., going back decades, which made the Canadian market rollout unique. Governments like Ontario sought to bring in-house those revenues while building in more player protection programs. The panel featured Bruce Caughill, managing director Canada for Rush Street Interactive; Mike Maodus, associate at Blake, Cassels & Graydon LLP; Salim Adatia, vice president of client services for GLI; Brent McCurdy, deputy COO of AGCO, and Charmaine Hogan, head of regulatory affairs at Playtech,

“The sports-betting piece [of the Canadian rollout] has really overshadowed what was the more fundamental launch, the igaming piece, because that piece is more important from a revenue perspective in the overall business context,” Caughill said.

Canada has a unique legal framework that requires provinces to conduct and manage gambling.

Caughill added significant untapped demand in jurisdictions throughout Canada has been met by the gray market, which hasn’t been a reality in the U.S., as a comparable. The best way to extend player protections, he added, is to regulate the gray market, like the Ontario model.

Maodus was asked about new prospects and opportunities for interprovincial conduct in management today.

“The Canadian criminal code criminalizes all gaming and betting subject to certain exemptions,” he said. “The most common exemption … says the provinces can conduct and manage offerings within their jurisdictions.”

The interprovincial lottery corporation that conducts national lotteries with provinces as the shareholders is a good example of mutual agreements between provinces in Canada around mutual operations and liquidity.

Can igaming, as it grows and evolves in the country, remain patchwork? Or can there be a more synergistic set-up? “I think we have a potential legal pathway there, but it’s complex,” he said.

Provinces have their own models to deal with and issues with their populations, Caughill added, but what’s new is the pervasiveness of the digital product, which goes beyond the traditional model, and that lends itself to interprovincial opportunities. Will provinces take advantage of that?

“It’s going to be really interesting to see how provinces deal with this product,” he said. “There are certainly synergies to this and there’s a product that lends itself to it, so it will be interesting to see how it all unfolds province by province or maybe national.”

What happens in the rest of Canada is what people will focus on now, as the Ontario market settles after just passing the one-year anniversary mark.

Rush Street Interactive is part of a coalition (that also includes Betway, Bet99, DraftKings, Entain, Flutter, Games Global, and Apricot Investments) aiming to change the regulatory framework in Quebec to a model similar to Ontario’s, which will help address growing concerns about consumer safety, responsible gambling, and advertising, all while increasing government revenues based on a new licensing regime.

As of today, the only regulatory entity for online gaming in Quebec is Loto Québec. The new coalition aims to change that. A lot of provinces are now looking at the Ontario model.

“At the very least, there needs to be serious discussion province by province about the experience in Ontario and what elements of that, if any, should play a role in their respective provinces,” Caughill said. There’s a player protection story, economic development, a revenue story – and there’s a lot of commonality province by province.

The idea of enforcement against the gray market has always been an issue nationwide.

“You have two options: try to do something on the enforcement side or regulate and migrate like Ontario did,” he said.

At the one-year regulated-market anniversary in early April, the Alcohol and Gaming Commission of Ontario quoted an IPSOS survey showing the success the province has had in shifting players from gambling on unregulated sites to regulated sites – 85.3 of respondents to the survey released in March who gambled online in Ontario over the previous three months did so on regulated sites.

According to Maodus, with the pace of technological advancement around sports betting, we will continue to see more cooperation in matters like sports integrity among provincial regulators. A recent example was the temporary pausing of betting on the UFC after concerns were expressed about suspicious patterns. First in Ontario, then Alberta, operators were ordered to stop offering and accepting wagering on the UFC. After an investigation and changes implemented by the UFC, betting on the sport was reinstated in those markets.

McCurdy said with over 20 applicants still wanting to get into the Ontario market, the AGCO is looking to let the market settle more. “It’s still a new market here. There’s still a lot to sort out.”

With over 10 million hits being made on Ontario sites from B.C. in Q4, there is demand for more compelling products and options and there are obvious benefits from repatriating funds from the gray market, Adatia said, especially in areas like player protection.

“There are obviously benefits that can be had from interprovincial agreements,” he said.