DraftKings and FanDuel Shutting Down Daily Fantasy Contests in Ontario Ahead of Online Sports Betting Launch

Ontario's planned market for online sports betting could be causing some liquidity concerns for daily fantasy firms, with two major operators taking a pass on offering DFS within the province's regulatory framework.

Geoff Zochodne - Senior News Analyst at Covers.com
Geoff Zochodne • Senior News Analyst
Mar 28, 2022 • 18:38 ET • 4 min read
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Daily fantasy sports as Ontarians know it is about to be disrupted, as the province's new market for online wagering may be more hospitable for OSB than it is for DFS. 

Bookmaker and daily fantasy sports (DFS) operator FanDuel has said that “due to a change in government regulations,” it will not be able to offer free or paid DFS contests in Ontario beginning on April 1. FanDuel added that entries submitted before April 1 will run as usual and that any winnings will be withdrawable.

The cutoff is just days before a new market for internet-based casino gambling and online sports betting in Ontario will open on April 4. FanDuel was one of more than a dozen operators poised to participate in that market as of Monday morning. 

“Ontario residents can participate in daily fantasy contests while physically located in other provinces and within US states where daily fantasy is permitted,” a FanDuel support article says. “Additionally, Ontario residents will be able to utilize the FanDuel Sportsbook and Casino products launching in Ontario beginning April 4th.” 

FanDuel’s main rival, DraftKings, also plans to launch online sports betting (OSB) in Ontario next month. According to a message from DraftKings' customer support department, the company will shut down its DFS offerings in the province shortly before that happens.

"Upon our sports betting and iGaming launch, customers physically located in Ontario will not be eligible to play in paid or free Daily Fantasy Sports contests," the message said. "However, you can continue to play on DraftKings as permissible when located in other Canadian provinces or U.S. states."

DraftKings' website says its online sportsbook and casino will be available in Ontario in April. Customers in the province will be able to keep playing in the company's DFS contests until shortly before then.

An illiquid situation 

Canadian Gaming Association President and CEO Paul Burns said there are two main issues regarding DFS in Ontario, Canada's most populous province.

One problem is that DFS was included as a gambling product in regulatory standards, forcing operators that want to offer daily fantasy contests to pony up a $100,000 licensing fee every year and to hand over a 20% share of their revenue to the province. This could discourage smaller, "pure-play" DFS operators. 

The other, larger issue is that there is no "liquidity" allowed in the province's new, regulated market, Burns said. This is a change from the current market that is not regulated by the province. 

"So you can’t 'mingle' players from other jurisdictions with players from Ontario," which affects both DFS and other pooled products, such as poker, Burns said in an email. "There are legal issues unresolved around having international liquidity in Ontario which we [hope] are resolved in the coming months. This is the most significant barrier to offering DFS." 

Even so, the Alcohol and Gaming Commission of Ontario (AGCO) says a key objective of the province's new iGaming market is to bring sites already offering gambling to Ontarians under provincial regulation. In Ontario, the regulator told Covers, "pay-to-play" fantasy sports are considered a form of gambling and will be allowed by the AGCO's iGaming standards. 

"At this time, Ontario players can only participate in games with other players located in Ontario," the AGCO's communications team said in an email. "Choosing whether or not to offer pay-to-play fantasy sports is an individual business decision that rests with registered operators. Free-to-play fantasy sports have been and will continue to be allowed to be offered after the new igaming market launches on April 4, 2022."

A DFS loss, a sports-betting gain

The loss of DFS options in Ontario could come as new avenues for internet-based gambling open up. 

Ontario’s iGaming market scheduled to launch on April 4 will allow private-sector operators of online sportsbooks and casinos to legally offer their games in the province. The only entity currently able to do so is the government-owned Ontario Lottery and Gaming Corp. 

At least 30 operators have applied to join the new market, as Ontario’s sizable population and its plans to allow both online sports betting and casino gambling have proven popular with bookmakers. Ontario is also the only province in Canada publicly planning such a move. 

As of Monday morning, 15 non-OLG firms had received an iGaming operator registration from the Alcohol and Gaming Commission of Ontario, a key approval that’s needed to take part in the province’s framework.

Operators need to execute an operating agreement as well with iGaming Ontario, a government agency and AGCO subsidiary. If they do, and all their other regulatory conditions are met, new online gambling firms could legally go live in the province as early as April 4. 

"To complete these steps, these organizations will have met rigorous standards of game integrity, fairness, player protections and social responsibility," iGaming Ontario's website says. "Their sites will have controls preventing underage access and measures to enable more responsible gambling. They have entered legal agreements ensuring compliance with applicable laws, including anti-money laundering."

Are you in Ontario? Come join our Ontario Discord channel to chat with Covers personalities in real time to get all the information you need to know ahead of and during launch week.

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