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Report claims regulated iGaming will cost Ontario billions

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A new confidential report shows Ontario will lose $550 million annually if they go ahead with regulated igaming.

The Canadian region of Ontario announced their remote gambling program in July 2021 and Premier Doug Ford’s government prepares to launch regulated online gambling. Following the news, casino giant, Great Canadian Gaming employed a consulting firm to investigate the impact of this change on Canadian online casinos.

As reported by CBC News, the report concludes that the move will leave the province and their coffers wanting. The gambling industry consulting firm concluded Ontario could lose billions in annual revenue over the next 5 years.

A great consumer migration expected

HLT Advisory Inc presented Great Canadian Gaming with the ‘Private & Confidential’ report. Bearing the title, ‘Ontario Gaming Market Assessment’, it predicts that once the region provides regulated iGaming, there will be a major shift in the consumer market.

Online gambling experts argue that the report’s premise is flawed. Ontarians currently gamble in offshore online casinos, as they do not prohibit the practice of online gambling in the area.

Industry veterans contend that consumers won’t change their behaviour once Ontario becomes a regulated market.

Jeffrey Haas, Senior VP of DraftKings Inc, said, “People who are playing in online casinos and online sportsbooks and online poker rooms will continue to do so, except they’re going to go from playing offshore to onshore, and anybody who continues to walk into real casinos in order to play games there will continue to do so.”

Statistics show Ontarians wager $500 million annually on online casino games, and currently, this all goes to online casinos outside the region’s borders. The government believes this figure is double and claims that $1 billion in gambling revenue flows out of the region’s pocket because of unregulated online gambling.

Learn more about Canadian regulations!

Tax unlikely to save the day

It’s expected that iGaming Ontario will demand lower tax rates from their regulated online gaming sites, and this is another reason the consultants believe the region will lose out. The report calculates losses at $550 million annually and $2.8 billion over the next five years.

Brick-and-mortar casinos in Ontario currently face a 55% tax on net gaming revenue and, although the government has not announced online gambling tax as yet, the report assumed a 20% rate for its findings. Industry sources agree that this could be the likely figure.

Great Canadian Gaming’s CEO, Tony Rodio, released a statement to CBC News where he explains, “The report includes critical learnings from other jurisdictions that introduced iGaming and cannibalised land-based operators in the process.”

According to Rodio, the company supports the iGaming principle but they urge the government to not rush into it and take the time to ‘get it right’.

In the wake of the Covid pandemic

The Covid-19 pandemic wreaked havoc for land-based casinos in Canada with all of Ontario’s facilities currently closed because of the Omicron variant. The past two years crippled casinos with shutdowns for months as well as capacity and travel limits that further restricted them once opened. Provincial annual revenues for lottery and gambling totalled as high as $2.5 billion, before the Covid crisis and closures.

According to the consultant’s report, Ontario’s government proposes an open licence model for remote gambling. The report indicates that this will increase online gambling providers’ market share threefold to an estimated $7 billion annually. The outcome of Britain’s launch of regulated online gambling sites in 2005 strongly influenced this conclusion.

Paul Burns, President of the Canadian Gaming Association, says that drawing comparisons between jurisdictions with different markets can create a warped image. The association represents land-based and online operators and Burns reckon Ontario’s outcome may vary from the UK’s and other regions.

Horses for courses

How the Ontarian market will react once they regulate iGaming is a hotly debated topic. Industry experts and the government believe different consumers prefer different experiences and brick-and-mortar casinos will always have their place.

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