Opinion: Times A-Changin’ In Ontario Sports Betting As Crackdown Nears

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Ontario sports betting

Roughly seven months after the grand commercial Ontario sports betting and gaming experiment began, it is time for former gray-market operators to get moving or get out.

The Alcohol and Gaming Commission of Ontario established October 31 as the date that those former gray-market operators must transition to the regulated market or face consequences from the province.

But, the end of olive-branch season is not the only change coming to the regulated ON sports betting (and online gaming market), potentially. In fact, a few days after reminding stakeholders that the conversion period was coming to an end, the province sought feedback from stakeholders on regulated promotional partnerships.

The end of times in Ontario sports betting market?

Ontario’s commercial sports betting market was built around a grand experiment. This experiment is less feasible in the United States because of the Wire Act and the Unlawful Internet Gambling Enforcement Act, as well as the general dysfunction of Congress.

But Ontario’s plan to bring gray-market operators over to the regulated market with few obstacles has seemed like an enviable one by many who view a primary purpose of the regulated market as cracking down on money going to unregulated markets and staying untaxed or undertaxed.

A big sacrifice?

The province has converted many of the unregulated operators that previously served Ontario and Canada, including bet365 and Pinnacle, with seemingly a few more still working their ways through the process. The crux of the updated Standards is that:

Operators and gaming-related suppliers must cease all unregulated activities if, to carry out those same activities in iGaming Ontario’s regulated online lottery scheme, it would require registration under the GCA.

Operators and gaming-related suppliers shall not enter into any agreements or arrangements with any unregistered person who is providing the operator or gaming-related supplier with any goods or services if, to provide those goods and services in iGaming Ontario’s regulated online lottery scheme, it would require registration under the GCA.

Those who do not get with the program, however, are going to be subject to sanctions from the AGCO.

What’s good for me, is good for me?

While it was inevitable that the conversion period would come to an end given that the low barriers to entry the market would attract a lot of entrants, the close of the period is indeed very Ontario-centric, highlighting one of the challenges with fragmented regulatory regimes.

Ontario’s rules govern Ontario, so the conversion period is ending for companies seeking to operate in Ontario. Those companies must be on their best behavior in Ontario and comply with Ontario’s Gaming Control Act, but Ontario’s authority only stretches so far.

Fed(s) up?

To date, the federal government has remained absent in the conversation regarding regulating the new gaming market.

While Canadians are likely to utter many of the similar groans Americans do at the thought of federal action, imposing some federal guardrails that the provinces must play between would not only strengthen the market by ensuring that market actors are playing on the same terms everywhere. But it would also be possible to add federal criminal protections against match-fixing, something sorely and still shockingly absent from the Criminal Code of Canada.

While theoretically possible that match-fixers could be prosecuted under existing laws in Canada, seemingly every opportunity to use existing laws to target match-fixers affecting Canadian sports has failed. The provincial government and regulators cannot act alone to make regulated sports betting safe and functional, and it is really on the federal government to take steps to protect not only the regulated market but also the underlying sporting events.

Going through even more changes?

Ontario’s end of the transition period for sports betting operators may not be the only change afoot in the province as on October 6, 2022, the province announced that it was seeking feedback from stakeholders on promotional partnerships.

While the Alcohol and Gaming Commission of Ontario did not provide significant detail on what they are thinking the engagement opportunity said the following:

Promotional partnerships are a form of advertising and marketing, and an expected component of regulated igaming in Ontario. However, such promotional activities remain an area of regulatory focus because of possible regulatory risks.

The AGCO is seeking stakeholder perspectives on the potential regulatory risks associated with promotional partnerships, and the possibility that the AGCO take regulatory action to address such risks.

While it is not clear, what if any action, Ontario regulators may have planned for promotional activities of sportsbooks (or igaming operators), given the enthusiasm to lock up partnerships and the increase in the value of advertising that has undoubtedly accompanied the rise of regulated commercial gambling in Ontario there will undoubtedly be some nervous marketers. Given that the regulated market remains so nascent it is likely difficult to draw significant conclusions about the consequences either positive or negative at this point, nonetheless, the Alcohol and Gaming Commission of Ontario appears to be committed to being active and seeking feedback from stakeholders.

What to make of this Ontario sports betting change?

Time will ultimately tell what the end of the transition period means. If enforcement of advertising restrictions is any indication, Ontario’s regulator will likely seek out and fine anyone violating standards after October 31.

We will see when the next set of numbers is released what effect the conversion has had, though we are still probably several cycles away from getting a clear picture of Ontario’s market size.

In regards to the promotional activity feedback, it appears that regulators remain concerned with the ubiquity of Ontario sports betting content and want to hear from those with an interest before deciding whether to issue new standards or stand pat.