×
Home Avoid Betting Scams Bonuses Payments Review News Legal Ontario Betting

iGaming Ontario will not require operators to stop serving other provinces from the 'grey market': What does it mean?

September 29, 2021

Last week, we learned that the Alcohol and Gaming Commission of Ontario (AGCO) and their iGaming Ontario branch would not look to mandate that iGaming license applicants forego serving other Canadian provinces from the 'grey market'.

This is a crucial point of interest for the industry and industry-watchers, as there was speculation that the AGCO might have proceeded to act as 'the police' for other Canadian provinces, even though it is only tasked with gaming regulation for Ontario.

Such a mandate would have been a non-starter for potential license applicants that are dominant incumbent brands that have been operating across Canada from the 'grey market' for over ten years and that have tens of thousands, even hundreds of thousands of players that are resident in Canada. 

 

Why was this decision key to the future success of iGaming Ontario?

No rational 'grey' operator with a significant database of Ontario and Canada-based players would trade their current addressable 'grey market' of Canada and 38 million people, including their existing database of players, for the newly 'legal' addressable market of just 15 million in Ontario. 

This sort of trade-off was exactly what would have been on offer had the AGCO looked to act as police for other provinces.  The record shows that most of these incumbent 'grey' operators want to be part of legal, regulated systems, but not at any cost.  Clearly, the AGCO wanted to bring as many incumbent operators to the table as possible. 

With no risk of losing their Canadian market and existing players outside Ontario, these providers will be happy to on-board all their existing Ontario players to the new legal system so that all their gaming revenue can become taxable and the players can have access to new Responsible Gaming (RG) tools and support.

If the AGCO had mandated that any license applicant not serve the other Canadian provinces from the 'grey market', this would have been a highly unattractive proposition, and the dominant incumbent brands with a history of gaining market licenses would simply choose to stay in the 'grey market' for Ontario and the rest of Canada.

Which sportsbook brands will look to apply for iGaming Ontario licenses? SNBET intel & analysis has been combined to assess the providers that will or will not become legal Ontario betting sites come market launch in early 2022.

 

What will likely happen in other provinces after the iGaming Ontario market opens?

It is hard to know in every case, given complications that come with particular provincial regulators or the local First Nations communities that have rights over gaming.  Despite these complications and rights, the fact remains that the 'grey market' will still be well-entrenched in all of these provinces, but iGaming Ontario will hold some important cards since most of these 'grey' providers for other provinces will soon be 'business partners' of the Government of Ontario.  

Soon after the dominant brands are on-boarded to the Ontario legal market, the AGCO will have a full understanding of exactly how many players have been and will continue to play at these top, formerly 'grey market' brands.  It has always been a bit of a guessing game, but in early 2022 they will finally know the size of their market and they will learn just how much gaming revenue will be flowing through these brands, and through new market entrants.

Ontario will be able to share this newfound transparency with regulators in BC, Alberta, Saskatchewan, Manitoba, Quebec and the Atlantic provinces, which will then be able to properly weigh up the benefits of joining the Ontario iGaming market or perhaps open their own similar market if scale allows.  It appears that Ontario has already been planning for the former, as Ontario Attorney General Doug Downey has been quoted about the possibility of creating liquidity agreements between provinces that would allow funds to cross provincial borders. 

Furthermore, these top 'grey' brands may decide to share exactly how many players they have in these other provinces, so that the regulators there may get an idea of how much revenue they could expect, and how many people would get the benefit of playing in a system with heightened RG systems as in the Ontario market.

Existing lottery corporation and First Nations iGaming offerings may of course continue as they wish.  However, the ability to on-board the vast majority of a given province's 'grey market' players should be too good to refuse.  It would be irresponsible of any province to eschew the benefits of vast, instant tax revenue & increased RG systems for their existing players, especially when it appears that iGaming Ontario is developing a system that will quickly make room for any province that wants to take part in its market.