Last month, Deloitte issued a report on the Ontario sports betting and casino market looking at the “Economic Contribution of Ontario’s Regulated iGaming Market.”
While released in June, the report, commissioned by iGaming Ontario, is dated April 2023 and appears to shine a little light on the province’s numbers. Particularly from the ON sports betting side, some have been left puzzled as to just how the market is doing, given that the province only releases aggregate numbers that combine both online sports betting and iGaming.
The Ontario market has been highlighted by a seemingly endless number of operators on both the sports betting and iGaming side. But because the province does not release numbers by operator, observers are left speculating through secondary sources like earnings calls.
What Ontario sports betting report says
The Deloitte report was a largely glowing account of the first year of the Ontario market.
The report notes that iGaming Ontario commissioned the report in October 2022 and that it was crafted to look forward at one, five, and 10-year marks.
A look at some of first-year highlights
The report estimates that the combined iGaming and online sports betting market has had a total contribution of $1.58 billion and resulted in 12,072 jobs. Wow. Those are some numbers alright.
The report argues that there is a direct contribution of $308 million to the province and 1,803 jobs created. Indirect contributions total $937 million in gross domestic product contribution and more than 7,900 jobs,.
Not to be left out is an induced contribution of $332 million in gross domestic product and 2,353 jobs. These are the estimated numbers for the past year, April 2022 to April 2023.
The report notes that at the time of writing Ontario had 45 licensed igaming operators, who operated 76 sites and generated $1.4 billion in revenue.
What are these categories that the report breaks down? The first is GDP, which is effectively defined as the total economic value added. The contribution categories are broken down by:
- Direct Contribution – these are contributions directly from operators, this includes things like salaries to employees, as well as the government’s share of igaming revenues.
- Indirect Contribution – these are contributions from those serving the igaming and sports betting industry, think of advertising agencies and suppliers.
- Induced Contribution – the spending by those who profit from the igaming industry.
It obviously becomes more challenging to derive a clear estimate the farther down the rabbit hole you go from direct revenues from operators.
Ontario grand experiment paying off?
Many seem to be quite happy with the Ontario market and have been vocal in their view. Despite praise from many stakeholders, there has been seemingly little movement from other provinces looking to open up their monopolies and let white- or gray-market operators in.
While there has been some speculation that Quebec may follow Ontario’s lead, PlayCanada wrote those in Quebec should not get their hopes up. Indeed, given some of what we see from the numbers reported by the Ontario Lottery and Gaming Corporation (OLG), the question of whether Ontario giving up its monopoly was the best model in terms of revenue dollars to the province is likely still open.
Not all sunshine and lollipops
The Ontario launch of sports betting and iGaming has had challenges, as there has been near-continuous questioning surrounding advertising policy, and what content those ads can or should contain. There has been a particular focus on the use of current or former athletes in the advertisements.
While Ontario seems like the North American jurisdiction most likely to act on revising advertising guidelines, it is unclear if the province is seeing something else (e.g. an uptick in calls to problem gambling services) or if some just view the ads as distasteful or otherwise problematic.
What to make of Ontario sports betting report?
The report produces some truly astounding figures that would make it seem as though the Ontario market is the model that should be replicated everywhere. There are, however, several reasons readers should try to keep in mind that these are merely estimates.
The first is that the report projects continued growth; given what we have seen elsewhere, these projections would require a lot of things to go right, especially with regard to the increased GDP and government revenue projections. The report seemingly expects continued rapid growth through the next 10 years, which would seem optimistic.
There seems to be a fairly strong likelihood that the Canadian market will consolidate in the coming years, much like the US market and other markets globally. If that happens, it seems like a fairly reasonable expectation that there will be fewer jobs supported by the industry in the coming years.
New Ontario sports betting data or no?
While the Deloitte report notes that they had access to iGaming Ontario data, it is not clear if they had data beyond what is publicly provided. Unfortunately, without more detailed information provided by iGaming Ontario at regular intervals, it makes it difficult to assess the market, or even assess reports like the one produced by Deloitte.
In the interest of transparency, there is no reason that the province should continue to release reports that blend sports betting and iGaming revenue, and do not provide a breakdown by operator.