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Will Other Provinces Copy Ontario’s Online Gambling Market?

For a long time, Canada operated a grey approach to online betting, permitting Canadians to gamble at overseas casinos but having very few in Canada itself. Now Ontario has changed that situation, and the question is whether other provinces will follow in Ontario’s footsteps

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The Launch of Ontario’s Online Gambling Market

In the first half of 2022, Ontario officially launched its online gambling market, formally known as iGaming Ontario (IGO), which is a subsidiary of the Alcohol and Gaming Commission of Ontario (AGCO). As might be expected, this pro-betting move met with the approval of many in the industry as it opened new options for bettors to place wagers, and for online operators to generate profits. From the provincial government side of things, it also means betting revenues will stay domestic rather than either benefiting overseas operators or taking place in the black market.

This is, however, not the first time online betting has been done by Ontarians. Before IGO launched, it’s estimated about half a billion dollars of wagering occurred online, it’s just that the bets were placed with non-Canadian sites. The big change with IGO is that regulation, betting, and taxation will occur within the province, offering greater legal protection for bettors and more revenue for local government.

Playing video games and casino games on mobiles has never been more popular, and with over 30m Canadians owning a smartphone, the number playing at casinos on their mobiles is only going to rise. And if wagers are being placed, so Ontario’s logic goes, then the revenue is best served to stay within Canadian borders rather than enriching overseas coffers.

Concerns and Opposition

As always with increased betting possibilities there has been some opposition, and not just from those who habitually oppose gambling. Canada has, until recently, had a slightly weird view of betting as differing provinces have mostly embraced various ways of wagering, such as racetracks, brick-and-mortar casinos, and lotteries while shunning online casinos for the most part. However, real-world casinos are concerned that the online version could cost them custom because playing online will always be more convenient than visiting a location in the real world.

There’s also a divergent approach to the tax rates applied to online and real-world casinos, with the former paying just 20% of earnings compared to a hefty 55% for the latter. That means that it’s possible this could actually decrease revenue overall for Ontario. Whether this different approach continues remains to be seen. The reasoning behind it is a fear that higher taxation would reduce the incentive for online firms to be located (as it were) in Ontario.

As might be expected, other opposition stems from concerns regarding the potential for increased gambling addiction.

Will Other Provinces Follow?

The chance to increase revenues in a way that does not require Canadians to alter their behavior (except for betting at a domestic rather than offshore online casino) is obviously appealing to politicians, and other provincial governments will be watching closely to see how Ontario’s situation develops. In Alberta, for example, around $350m is wagered each year, and if taxed, would provide a helpful injection of cash for the province while also affording bettors greater protection and regulation.

British Columbia is in a slightly better position than most places in Canada because its official online casino (PlayNow) is highly regarded. Ironically, this means it would benefit far less from opening up to private online casino operators. Some residents do still play overseas but many opt for PlayNow, reducing the potential upside of an Ontario-style market.

Meanwhile, the 2021-2022 fiscal year saw Quebec residents wager $390.9m (lotteries and casino betting combined), and the online potential for more is present across Canadian provinces. Assuming Ontario’s approach proves a success, then other provinces will do likewise and profit from the income made by online e-commerce in the casino sector.

The success or failure of Ontario’s new market remains to be seen but if it proves a positive for the province then the odds are others will be quick to jump aboard the bandwagon to avoid getting left behind.

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