Ontario Sports Betting Regulators To End Gray-Market Grace Period

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Ontario sports betting

Halloween poses a scary Ontario sports betting date for remaining gray-market operators.

The Alcohol and Gaming Commission of Ontario announced Tuesday it updated the Registrar’s Standards for Internet Gaming to include Oct. 31 as the end date for its transition period for unregulated operators. The commercial online ON sports betting market opened April 4 and now has more than 20 sportsbooks.

“A key objective of the AGCO has been to move iGaming operators and gaming-related suppliers into Ontario’s regulated market as quickly and as seamlessly as possible,” the release said. “Since market launch on April 4, the AGCO has provided a reasonable amount of time for these operators and gaming-related suppliers to join the regulated market in a business-like and seamless fashion.”

Ontario means business?

With its goal to integrate previous gray-market operators, Ontario regulators wanted to provide little friction to help migrate existing customers. This was thought to help achieve one of the Canadian Parliament‘s major goals of reshoring millions of black- and gray-market bets.

The AGCO believes a sufficient number of gray-market companies have made the switch. Major sports betting operators like Bet365, Betway, Sports Interaction and Pinnacle have launched or are in the process of going live after servicing the unregulated market.

Sportsbooks still live in the unregulated Ontario market after Oct. 31 run the risk of jeopardizing their future chances of registration.

“As with any instance of non-compliance, the AGCO will take appropriate regulatory action against any registrant that does not meet this Standard (once it comes into force),” the AGCO statement reads. “For those registered operators that have yet to transition from the unregulated market to the regulated market once the Standard comes into force, the registrant will be required to end its unregulated operations within Ontario pending the registrant’s entry into the regulated market.”

The AGCO has not been shy with fines on operators violating advertising restrictions.

Ontario sports betting operators ready

New operators to the market, like US sports betting market leaders FanDuel and DraftKings, knew the province would be an uphill battle for market share against sportsbooks converting from the gray market. The transitioning operators could remain active while keeping existing customer databases.

“Gray market operators have been given over a year to submit applications for registration and transition into the Ontario regulated market, we feel the transition period has been very generous, but it is time for it to come to an end,” said Paul Burns, president and CEO of the Canadian Gaming Association

 “We know the AGCO and iGO continue to work to support many non-gray market operators working diligently to enter, as there are many more applicants wanting to join Ontario’s iGaming market, but it’s time to end the gray in Ontario.”

Did ON transition period help?

The CGA estimated Canada sports betting handle in 2020 was $15 billion; however, just an estimated 3% was through legal channels. Following months of waiting, iGaming Ontario released its first quarterly revenue report in August.

Online gaming operators took CAD $4.1 billion in bets during the second quarter of 2022. The handle, which includes iGaming and sports betting, generated CAD $162 million in revenue.

While the market is still developing, the numbers do not match up well with the market expectations. The numbers were, however, lacking some gray-market operators still in the process of transitioning, including Sports Interaction and Betway. Those operators will help bolster the next revenue report.