How Big Could Single-Game Canada Sports Betting Market Become?

Posted on April 13, 2021
Canada sports betting
Posted By on April 13, 2021

The steady drumbeat toward single-game Canada sports betting continues this month.

Canadian hopes for single-game sports betting appear to be approaching realization. Just what single-game betting will look like in each province remains uncertain, but there is at least seemingly great support for a repeal of Section 207(4)(b) of the Criminal Code of Canada in Parliament.

After Committee meetings, the Bill was sent back to Parliament to consider the minor adjustments made in Committee. While in Committee, amongst a brief filed by Canadian media giant, Rogers Communications was a report prepared by PricewaterhouseCoopers (PwC).

The report from February provides an economic analysis of the impact of single-game betting across Canada.

Setting the guideposts

The Report commences by detailing that it was commissioned by the Compass Rose Group, an Ottawa-based group of “Public Affairs Counsellors.”

The Report’s economic analysis was targeted to hit on four key points:

  • Current scope of the regulated and unregulated sports betting market in Canada
  • Summary of how international markets have liberalized gambling laws and imposed regulatory changes
  • Different scenarios to determine the potential size of a legal market in Canada based on international experiences
  • Overview the economic and fiscal impacts of legalization of single-game wagering

What does sports betting in Canada look like?

The first substantive section of the Report notes that the Canadian market is currently bifurcated, split both by brick and mortar and online, and regulated online and unregulated online marketplaces.

Current estimates

The report estimates that currently, 39% of sports betting takes place via land-based retailers, whereas only about 3% of sports betting is done via regulated online vendors (not all provinces currently allow online sports betting products). This is contrasted with 57% of sports wagering taking place online via unregulated operators.

If accurate, these numbers would indicate even with limited regulated options, Canada appears to retain much more money already in the regulated market than estimates from the United States, which had historically projected only 1% of sports betting takes place in regulated markets.

Canadian regulated sports betting Gross Gaming Revenue (GGR) in 2019 was estimated to $242 million. However, sports betting makes up only an estimated 1% of the Canadian gambling market according to the Report.

The report detailed that Ontario accounted for more than half of all land-based sports betting GGR in 2019.

How big could the future be for Canada sports betting?

The PwC analysis used a number of different criteria in order to estimate the size of a future Canadian market, Interestingly, one solution generally considered less feasible in the United States due to constitutional issues is the proposed blocking of access to unregulated sites directly, as opposed to merely blocking payments via banking legislation (in the US, this is where UIGEA comes in).

The Report looked at both models for legalization in the U.S. as well as in Europe.

The results from pre-legislative analysis predicted that Canada’s legalization path most closely follows Denmark, but PwC shortlisted Sweden, and Delaware (who prior to the fall of PASPA also offered a similar parlay product to that currently available across Canada), as well for comparison.

A number of caveats

The market analysis includes a number of caveats that could derail the projections, but on the basis of the selected comparison jurisdictions, the projected numbers would be significant.

Notably, the PwC report projects up to 10 times the current market size within the first two years of legalized single-game betting, estimating a range of between $1.5 billion to $2.4 billion CAD.

The biggest driver would be the expansion of online sports betting, which given the absence of regulated online sports betting in Ontario, is unsurprising.

One of the factors driving the assumptions in the models is that regulated products will cannibalize the unregulated market. This is notoriously difficult to measure. While it is likely true to some degree that the regulated market will convert (and keep) some bettors, in the U.S. it is unclear how successful this endeavor has been.

So how much is this going to pay?

Across direct, indirect, and induced measures, the Report projects adding upwards of $425 million to the GDP and creating a little more than 2,500 jobs across the country.

The PwC applied two models to measure impact with both assuming a 50% tax on GGR of land-based revenue and 20% tax for online regulated GGR in the low-growth model and 18% tax in the high-growth model.

What’s the takeaway?

In terms of sports betting reports, this one appears to contain an air of reality, which is not always the case.

While Canada appears poised in the coming weeks or months to repeal the barricade stopping single-game sports wagering, there is a great deal about just what Canada sports betting will look like when it arrives in the various provinces.

How the rollout occurs will have a great deal of impact on how much money it generates for the provinces.

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John Holden

John Holden J.D. / Ph.D. is an academic. His research focuses on policy issues surrounding sports corruption.

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