With the launch of Ontario’s open iGaming market imminent, a new report is predicting steep financial losses for the province and municipalities as a result of potentially opening up the market to private operators.
Sports Handle has obtained a 130-page report from HLT Advisory, a gambling industry firm, that predicts the Ontario government could sacrifice $550 million per annum for the next five years for a total of $2.8 billion by shifting to an open market model. The report was sponsored by Great Canadian Gaming, which owns many of the major casinos in Ontario, such as Casino Woodbine, Casino Ajax, and Pickering Casino Resort.
Brick-and-mortar casinos in Ontario must allocate 55% of net gambling proceeds to the province of Ontario. Prior to the pandemic, annual provincial revenue from lottery and gambling amounted to roughly $2.5 billion. However, rolling closures and capacity limits due to COVID-19 health and safety protocols in Ontario’s casinos have skewed those revenue numbers for the past two years.
The report suggests that adding online gaming will come at a cost to the province, because it will shift gamblers away from visiting casinos, and when they play at home the government’s share from the newly licensed operators will be less than the 55% now received from the casinos.
Responding to questions about the report from the CBC’s Mike Crawley, Great Canadian Gaming told him: “The report includes critical learnings from other jurisdictions that introduced iGaming and cannibalized land-based operators in the process. In the U.S., states that have rolled out a legalized iGaming framework have not yet seen casino revenues recover to pre-COVID levels. While we iGaming in principle, the Ontario government needs to take the time to get this right.”
I asked @GRTCanadian Gaming Corp. for an interview, but that was declined. This afternoon, the company's CEO Tony Rodio issued this statement, saying "While we iGaming in principle, the Ontario government needs to take the time to get this right." #onpoli pic.twitter.com/2faBmPbWnO
— Mike Crawley (@CBCQueensPark) January 17, 2022
It’s unclear what the government’s tax will be on private operators wanting to do business online in Ontario, where the Alcohol and Gaming Commission of Ontario and iGaming Ontario will regulate the private industry. Ontario’s open iGaming market has been expected to launch in the first quarter of 2022, with some industry sources suggesting a March launch is realistic.
Industry standpoint 5v3l21
The report doesn’t take into consideration other economic factors the government of Ontario will benefit from by moving to an open gaming model. Dozens of private operators have applied to be licensed in the province, presumably employing hundreds of tax-paying Fandom Sports are other operators looking to to launch online casino and eSports offerings.
Another factor not taken into consideration in the report is the amount of money already being wagered illegally offshore that isn’t being taxed by Canadian governments.
“iGaming needs to be regulated in Canada. A billion dollars leaves the country in revenues offshore,” Canadian Gaming Association President and CEO Paul Burns said. “None of the benefits will flow to Ontario until the market opens. Right now, the benefits are all outside of the province [in gray markets].”
“It’s an open market today, no tax is collected,” one industry source added while discussing the gray market implications in the country. “The report deals with the impacts of casino and doesn’t speak to the benefits of the other side.”
Sports betting 171w3i
Currently, sports bettors in Ontario can only legally wager through the Ontario Lottery and Gaming Corporation’s provincially run PROLINE + platform. The report estimates sports betting win will likely represent between 8% and 12% of the total market gaming win, and projects that the Ontario government’s profits will fall a total of $138 million from 2023 to 2027 if an open license model is adopted.
The report assumes a 20% tax will be imposed on private sports betting operators, and projects $212.9 million in government profit for 2023 if the market remains closed, and only $185.9 million for the same year if the market is opened up. The model assumes this gap of $27 million grows incrementally over the following four years up to the total of a $138 million government profit loss over five years. Sports betting is a “significant new growth development,” but it is not likely to for more than 12% of total industry win, according to the report, which cites the market potential of sports betting in Ontario will range from $50 to $75 win per adult.
Single-game sports betting handling more than $1 million (CAD) over the first five days of legal betting, with single-game wagers ing for roughly 74% of the bets. OLG has not yet released its fiscal report for 2021-2022, which will include single-game sports betting data.
