The market for illegal and unregulated forms of sports betting in Ontario is starting to dry up, according to the province’s chief law officer.
Ontario Attorney General Doug Downey told Covers that Canada's most populous province is "seeing a shift," which comes after the government and regulators there wanted to offer internet-gambling operators time to migrate from the unregulated market to a regulated one.
“And notice has been sent by the regulator that it's time," Downey said in a short interview this week. "So we're starting to see the grey market, black market, atrophy, as people are coming into compliance, and we have such a robust [regulated] market now. It's really very heartening to see how the market’s come alive.”
Ontario is currently the only province in Canada to enact a framework in which private-sector companies can offer legal sports betting and casino gambling over the internet within its borders.
More than $10 billion has been wagered in the province's private iGaming market since April, which doesn't include the action accepted by government-owned Ontario Lottery and Gaming Corp. through its website and online sportsbook, PROLINE+.
But Ontario opened the regulated market for internet casino gambling and online sports betting sites after years of “grey market” operators taking wagers from residents despite only being overseen by authorities abroad or outside the province.
Snuffing out that activity was one of the main reasons for the creation of Ontario’s new iGaming market, and the province and its regulator offered “grey” operators an opportunity to join. Entirely extinguishing the unregulated market has proven tricky, however.
Trust the process
The Alcohol and Gaming Commission of Ontario (AGCO), which reports to Downey’s ministry, said it set up a process for private-sector operators taking bets in the unregulated market to shift into the regulated one without destroying their preexisting customer base. The application process began in September 2021.
To launch in Ontario’s iGaming market, a company needs a registration from the AGCO and a signed contract with iGaming Ontario, a government agency.
Yet even after the launch of the regulated market in April, some iGaming operators continued to take bets from Ontarians despite only having their registration, or that had only applied for their registration and were still working towards that approval.
The monthslong “transition period” allowed by the AGCO after the launch of the regulated market irked some operators that were already live within that framework.
And, eventually, the AGCO decided to bring the transition period to an end, announcing last month that a new standard would come into force on October 31 requiring operators and suppliers currently active in the unregulated market in Ontario to stop if they wanted to avoid risking their registration. The requirement is being applied to mere applicants as well.
The AGCO said that 17 operators exited Ontario's unregulated market within two days of the new standard coming into force. Those operators, the regulator added, were companies still working their way through AGCO and iGaming Ontario requirements to join the regulated market.
There may be, however, iGaming operators doing business in Ontario that are not provincially regulated and that have no plans to be provincially regulated. The AGCO and attorney general have likely not forgotten about them, either.
“As always, the AGCO will take appropriate regulatory action when dealing with non-compliance, including enforcement measures where appropriate,” the regulator said earlier this month. “The AGCO will also continue working with government, law enforcement, and international regulators to address residual unregulated market activity in Ontario.”
Downey reiterated to Covers this week that “enforcement will follow” for operators that try to remain unregulated and accepting bets in Ontario. Exactly how the AGCO or Ontario government intends to police wagering with companies operating outside the province remains to be seen.
Taking Ontario up on the offer
Still, Ontario has arguably been pretty successful in convincing formerly unregulated iGaming operators to accept provincial oversight.
The AGCO said that out of the 36 operators live in the province’s regulated iGaming market as of November 2, 28 had previously been active in the unregulated market. All of them, though, had since exited.
Ontario has recently added another retail channel to its legal sports betting offerings as well, with casinos in the province opening up brick-and-mortar books and installing kiosks. That is in addition to the sports gambling that Ontarians can do via OLG and lottery retailers.
“I think we're going to pay attention to what consumers want, and, at the same time, be able to protect them,” Downey told Covers. “That's the responsible gaming part that is so important, and Ontario is striking the right balance.”
Building a strong & responsible igaming market in Ontario.
— Doug Downey (@douglasdowney) November 9, 2022
Pleased to visit @fallsviewcasino for an excellent tour of the NEW investments made in entertainment on-site & online — investments that directly support this incredible economic activity.
Great progress so far! ???? pic.twitter.com/7zyEmqAsp0
The attorney general spoke to Covers at a celebration for the opening of GeoComply Solutions Inc.'s office in downtown Toronto. GeoComply's technology is used by many online sportsbooks in Ontario and across the United States in determining the location of customers, to ensure they are in a place where wagering is legal.
For the Ontario government, a thriving tech company setting up shop in its backyard is a welcome knock-on effect after the launch of the iGaming market.
Vancouver-based GeoComply currently has 30 of its almost 600 employees at its new Toronto location, some of whom relocated from the company's office in Kharkiv, Ukraine, in the wake of the Russian invasion of that country.
“Our company seeks top-level talent to fill every role, and we are so impressed with our growing Toronto team,” GeoComply CEO Anna Sainsbury said in a press release. “They will drive our mission to instill confidence in every online interaction and deliver leading solutions and services to our customers.”
