DraftKings Inc. is preparing to launch online sports betting in Ontario, but before it does, the company plans to block customers in Canada’s most populous province from playing in daily fantasy contests.
Boston-based DraftKings received a key approval from an Ontario regulator last week, and in recent messages sent to Ontario-based users, the company says it will soon launch its online sports betting and casino products in the province.
“However, shortly before the launch of Sportsbook and Casino, users physically located in Ontario will be restricted from playing in both free and paid daily fantasy sports contests on DraftKings,” the message says. “Until that time, you can continue to play daily fantasy sports on DraftKings as normal.”
DraftKings sent another message to users Monday evening saying that, as of 10 a.m. ET on Tuesday, they will only be able to play daily fantasy sports with the company when in eligible Canadian provinces and U.S. states.
"While we know this is unfortunate news for our passionate daily fantasy sports players, we will continue to work with the provincial government to try to bring daily fantasy sports back to Ontario as soon as possible," the message said.
An expected development
DraftKings did not respond to a request for comment from Covers before this story was published, but the company had warned such a move was coming. It will not be the only company that has ended fantasy operations in Ontario either, as others exited after internet-gambling regulations came into effect requiring players to be in the province to participate in games.
The rules are connected to Ontario's new market for online sports betting and casino gambling, which launched on April 4. The framework is the first of its kind in Canada, where provinces have historically allowed government-owned lottery and gaming companies to control the legal market for online gambling.
There are now more than a dozen different gambling brands in Ontario competing for business with each other and Ontario Lottery and Gaming Corp. More companies could join as well, as there is no limit on how many can participate.
But Ontario's DFS exodus shows the new iGaming market can be a double-edged sword.
While the regulatory framework now allows private-sector firms to offer legal sports betting and online casino gambling to Ontario residents, the fantasy business has become less attractive, and the loss of contests has grated on fans of the game in the province. An industry group, the Fantasy Sports & Gaming Association, has said an estimated two million fantasy sports players in Ontario will be locked out of paid contests because of the province's rules.
A major DraftKings rival, FanDuel, has already pulled the plug on its fantasy contests in the province because of the rules requiring Ontario-only player pools.
"This would severely limit the size of future contests, and lead to significantly smaller prizes - a product we know will not be attractive to our players in Ontario," FanDuel says on its website. "FanDuel is hopeful that in the coming months regulations will change to allow larger contests, and should this change happen, FanDuel plans to bring our DFS product back to our players in Ontario."
Any change to Ontario's iGaming regulations may not happen for some time, too. The new gambling framework has been live for just over a month and a provincial election campaign is ongoing, making a quick change in government policy unlikely.
In the meantime, Ontario regulators continue to consider “pay-to-play” fantasy sports a form of gambling and not a “game of skill” as in some U.S. states.
Even so, the Alcohol and Gaming Commission of Ontario (AGCO) has maintained companies can still offer paid fantasy contests in the province, but that they must first receive an iGaming registration from the regulator and execute a contract with iGaming Ontario, a government agency and AGCO subsidiary. Regulated operators will also have to follow the province's rules, including those for player pools.
“Choosing whether or not to offer pay-to-play fantasy sports is an individual business decision that rests with registered operators,” an AGCO spokesperson told Covers last month. “Free-to-play fantasy sports have been, and will continue to be allowed to be offered, now that the new igaming market has launched.”
The arrival of DraftKings in Ontario has been highly anticipated as well, as the company is one of the biggest DFS and online sports betting operators in the United States. However, DraftKings did not enter Ontario's iGaming market on day one like some of its rivals. Meanwhile, the company has continued to offer its popular DFS contests in the province, making it one of the few remaining options for Ontario players.
DraftKings CEO Jason Robins told analysts and investors during a conference call on May 6 that they expected their online sportsbook to go live in Ontario "in the near future," pending regulatory approval. Robins also downplayed the importance of the timing of the company’s Ontario launch.
"Due to the presence of grey-market operators, many of which have been present in Ontario for several years, we do not believe that the timing of our launch will have any impact on the share we are able to achieve in that province," Robins said.
This story has been updated from its original version to include details about the message DraftKings sent users on Monday.