B.C. Lottery's Online Sportsbook Facing Costly Competition from ‘Grey Market’ Operators

The fight for customers in the online gambling world remains fierce, grey-market bookmakers continue to take bets in Canada, and some of B.C.’s fellow provinces are beginning to broaden their authorized offerings.

Last Updated: Feb 28, 2022 7:08 PM ET Read Time: 3 min
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The only legal provider of online sports betting in British Columbia says “grey market” bookmakers are increasing their spending in Canada and driving up the cost of advertising and sponsorship opportunities that can attract new customers. 

British Columbia Lottery Corp. (BCLC) recently published its latest three-year “service plan” that shows how the company will support the priorities of its owner, the provincial government. 

BCLC is a Crown corporation that conducts and manages commercial gambling on behalf of the government via lottery games, bingo, brick-and-mortar casinos, and its PlayNow.com website and online sportsbook.

PlayNow has been growing both its revenue and number of users during the COVID-19 pandemic, BCLC’s service plan says. However, the lottery also says the website is facing increased competition from out-of-province and offshore operators for marketing opportunities, which is driving up the cost of doing business.

“While we are projecting continued growth, online gambling sites that operate illegally in B.C. (characterized as ‘grey market’) are increasing their investments in sponsorships and advertising here and across the country,” the service plan says. “As a result, it is becoming more costly for PlayNow.com to compete for advertising and sponsorship opportunities that enhance the brand’s presence and draw players to the only legal option in our province – the only one that delivers profits to fund healthcare, education and community programs.”

A spokesperson for BCLC said the corporation could not disclose specific marketing expenditures for competitive reasons but that they do expect to increase their marketing to continue competing with grey-market sites. 

"Further, while we can’t provide specifics on how BCLC plans to continue tackling grey-market gambling websites, we know these sites present significant risks to British Columbians relating to gambling addiction, gaming integrity, money laundering and lost revenue for the Province and people of B.C.," BCLC's Matt Lee said in an email. 

Provincial peer pressure

The comments from the Crown corporation come as it does indeed remain the only legal provider of online sports betting in Canada's third-most populous province. The company continues to act as a key source of public-sector revenue as well, but its recent disclosures show the type of challenges facing government-owned lottery and gaming entities in a country where grey-market wagering activity is estimated to be worth billions of dollars annually.

BCLC is trying to protect its turf in a fast-moving industry, too. Competition in the online gambling world remains fierce, grey-market bookmakers continue to take bets in Canada (despite possibly being licensed and regulated in another jurisdiction), and some of B.C.’s fellow provinces are beginning to broaden their authorized offerings. 

Ontario currently has the most ambitious plan, which would allow private-sector operators of online sportsbooks and casinos to take bets in the province starting on April 4

BCLC said the Ontario government’s plan for a competitive iGaming market is having an impact out west. Moreover, some of the potential operators in Ontario are already operating illegally in B.C., according to the service plan.

“In preparation for their legal entry into the Ontario gambling market, some operators are developing national partnerships with media companies and sports leagues, resulting in further competition and challenges for PlayNow.com when it comes to B.C.-based media and marketing partnerships,” the document states.

Still, BCLC said a recent study found 64% of the province’s online gamblers prefer to play on a provincially regulated website, while just 6% favour offshore operators.

Online gambling also remains a profit-making pillar of BCLC’s business, which helps fund health care, education, and other government programs. 

The corporation said net income from its e-Gaming business unit was $252 million for its 2020/21 fiscal year and is forecast to increase to $288 million for 2021/22 and $308 million for 2022/23. BCLC's overall profit is projected to climb from $430 million for the particularly pandemic-stricken 2020/21 to $1.45 billion for 2022/23.

“PlayNow.com, the only regulated website in B.C., will continue to make investments to enhance our online entertainment options in order to grow our market share,” BCLC added in its service plan.

That plan lines up with the priorities of the provincial government. One of the marching orders in B.C. Finance Minister Selina Robinson’s most recent mandate letter to BCLC was to “as appropriate, and in alignment with responsible gambling practices, explore options to increase and/or enhance PlayNow.com’s online gambling offerings to increase revenue from this product stream.” 

Sports betting is a cornerstone of PlayNow. BCLC said it plans to focus on growing its single-game wagering product on the website, which follows the legalization of singles in Canada last summer.

BCLC says the legalization “creates a significant opportunity” to acquire customers for PlayNow from grey-market websites. The company has begun testing out “sports-betting concepts” at brick-and-mortar locations as well, namely, a dozen bars and pubs and one casino. 

“With the legalization of single-event betting, BCLC will focus on growing the sports betting business,” the company noted in its service plan.

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