By Julius Melnitzer | April 25, 2022
By all accounts, Ontario got it right when it became the first province to open its Internet gaming market to the private sector on April 4.
“The government should be commended for its commitment, especially because of the noise from some people opposing the move,” said Cameron MacDonald, the Toronto-based co-chair of Borden Ladner Gervais LLP’s sports and gaming law group. “It would have been easy to backtrack in an election year, but the government stuck to its guns.”
Not only did the government get it right, but it acted quickly.
“iGaming Ontario [iGO], the new regulator, didn’t even have a name a year ago,” MacDonald said.
Legalization is especially significant because Canada is known for having allowed offshore offerings to operate with impunity, leaving billions on the table for illegal operators.
“The launch of a regulated igaming market will be a boom for the province as it will make Ontario one of the biggest and most important regulated gaming markets in North America,” MacDonald said.
Whether other provinces will follow Ontario’s lead is unclear. What is clear is that there’s no shortage of interested parties in the private sector: 17 betting sites have already been registered and approved in Ontario, and a government press release advised that there are many more in the application process.
There’s no question that there is a huge public appetite for online gambling. New York, where online sports betting opened in early January, saw US$150 million bet in the first weekend and $1.3 billion in the first month alone. This despite the fact that New York, unlike Ontario, only permits sports betting and does not yet allow online casino game gambling, or igaming, for favourites like blackjack, roulette and poker.
“New York’s implementation has been haphazard, whereas Ontario has created an organized, competitive marketplace that is driving consumer choice,” MacDonald said.
And while the motivation for allowing igaming appears to mirror the motivation for decriminalizing the recreational sale and use of cannabis, in the sense of creating a safer market for consumers, the Ford government appears to have done a much better job in implementing legalized online gambling.
“The government has been far more collaborative in setting up igaming,” MacDonald said. “For example, gaming companies can advertise relatively freely apart from prohibitions against things like underage gambling and against inducements and bonuses to encourage excessive gambling, whereas cannabis companies are very restricted in their marketing and have found it difficult to establish their brands.”
MacDonald is also dismissive of concerns that opening the market to private operators will “cannibalize” demand for the government-run Ontario Lottery and Gaming Corporation’s (OLG) products.
“A rising tide lifts all ships,” he said. “iGO will be complementary to OLG, because going to a casino is a different user experience than betting on phones.”
Damian Goodwin, the U.K.-based chief operating officer for Kings Entertainment Group Inc., an international online gaming company based in Vancouver, is of similar mind.
“Ontario is now providing a safe and secure way to game, and that makes gaming more acceptable as a legitimate activity,” he said.
Kings is a holding company whose operating subsidiaries have so far focused on Latin American gaming markets.
“But with the legalization in Ontario, we could be interested in acquiring an operating company here in Canada,” Goodwin said.
Indeed, MacDonald predicts that the emergence of iGO could prompt a wave of capital market transactions embracing new entrants, IPOs and a “ripple effect” engaging a “myriad of suppliers,” like pay providers.
“All the more so if other provinces also open up their markets,” he said. “We already have overseas clients looking at IPOs.”
Particularly significant in this regard is the presence of MGM, one of the world’s largest gaming companies, as one of the first operators licensed in Ontario.
Equally significant, MacDonald says, is U.S.-based Penn National’s US$2 billion purchase in August of Toronto-based Score Media and Gaming Inc. Score is the owner of the popular theScore mobile sports news app and betting services in four U.S. states, while Penn National boasts dozens of gaming and racing properties across 20 states. The venture has registered theScore.bet as one of the original operators in iGO.
“The acquisition is a major show of confidence in the Canadian market,” MacDonald said. “Penn could have registered themselves, but wanted an iconic Canadian brand.”
However it eventually plays out, there’s no questioning iGO’s launch as historic.
“The birth of a new sector doesn’t happen all that often in a generation,” MacDonald said.
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Julius Melnitzer is a Toronto-based legal affairs writer, ghostwriter, writing coach and media trainer. Readers can reach him at [email protected] or https://legalwriter.net/contact.