History of Complex Sports Betting in Canada and New Launch, Explained
The Canadian legal online sports betting market will launch on April 4 in Ontario, and there are a few regulatory features that set it apart from the gaming landscape in the United States.
Similar to the state-by-state approach in the United States, Canada legalizes sports betting one province at a time starting with Ontario, although unlike the states there is no cap on the number of operators per province. Regulators have already approved more than 25 sportsbooks to launch on Monday, with the potential for dozens more to come.
Some of the big players launching on Monday include:
The legal betting age in Ontario is 19.
The gray market
Sports betting has been legal in Canada since 1985, but a ban on single-match betting has restricted it to betting wagers via provincial lotteries.
Before Canada passed the Safe and Regulated Sports Gaming Act in June 2021, allowing provinces to regulate single-match online sports betting, online betting was not expressly illegal.
“Grey market operators” – meaning they are legal sportsbooks but have operated in a legal gray area in Canada for years – will be allowed to cross over and become regulated operators.
This gives books like Bet365 and Betway, with already established customer bases in Canada, a leg up on US books like DraftKings and FanDuel.
Offshore sportsbooks that operated in Canada before legalization will not be penalized or prevented from entering the legal market, as is the case in the United States.
Low barrier to entry for sports betting
The Safe and Regulated Sports Gaming Act also legalized iGaming. Most providers will also launch online casino apps on Monday, which Americans only have access to in Nevada, Delaware, New Jersey and Pennsylvania.
More than 12 million adults live in Ontario, generating C$1 billion in online gambling revenue, according to Vixio Regulatory Watch. That’s on par with major legal markets in the United States like New Jersey and Pennsylvania. With many more providers potentially on the way, that number could double in 5 years.
It should be easy for others to join, as unlike many US states, Ontario does not require providers to partner with land-based gaming entities to enter the online market. It costs operators only $100,000 to enter, with a tax rate of 20%. Free licensing is lower than most US states, while the 20% tax rate isn’t the lowest but is much better than New York’s 51%.
Alberta, which is expected to legalize online sports betting in the summer of 2022, has indicated it will also license multiple providers. Other provinces could simply expand their lotteries to broadcast a bookie online.
If more jurisdictions launch their lotteries and allow multiple commercial providers, we could have a scenario where the government competes directly with the private sector.
Limits on promotions and daily fantasy sports
Unlike the launch of a new US state, Canadian televisions will not be covered in free game offers and promotions.
Alcohol and Gaming Commission of Ontario regulations prohibit sportsbooks from marketing their incentives. Canadians should still have access to the same promotions as Americans, but only through the apps themselves.
These big brands will be at an even greater disadvantage, as the launch of Ontario’s online sports betting market spells the end of its day-to-day fantasy sports market.
DratKings and FanDuel, the only DFS operators in Ontario, have already announced their withdrawal, as new Canadian law considers DFS sports betting.
Since betting must be confined to each province, Canadian DFS players would not be able to compete with users from different provinces. Sportsbooks that operate DFS would also have to pay twice the $100,000 license fee and a 20% provincial revenue share.
By comparison, daily fantasy sports competitions are considered games of skill in most US states, which allowed operators to enter most markets even before they legalized sports betting.
The big operators have not yet announced that they will withdraw from the other provinces. They will likely continue to offer DFS contests there until those provinces regulate sports betting.
Regulation is managed by the Alcohol and Gaming Commission of Ontario, which reviews license applications and regulates the market. A subset of the agency, iGaming Ontario, will handle contracting and revenue disbursement across the province.
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