After months of waiting, online gambling and sports betting wonks finally have revenue data from the Ontario market that launched way back in April. Unfortunately, the data released by iGaming Ontario is very cursory. The iGO offered several topline numbers but didn’t even separate sports betting and online casino wagers and revenue.
Breaking Down The Ontario Online Gambling Numbers
At first glance, the revenue numbers look disappointing, with the province accruing $162 million over three months. Compare that to Michigan, and the difference is striking. According to data from the Michigan Gaming Control Board website, Michigan generated nearly three times as much revenue as Ontario in Q2 – $162 million to $465 million.
However, if we compare Ontario to the first three months in Michigan (January 2021-March 2021), the gap between the two shrinks considerably – $162 million to $246 million – with the caveat that Michigan launched on January 22. Adjusting for an abbreviated January, Michigan’s initial three-month tally is likely closer to $300 million.
So, what explains the remaining gap? It could be any combination of the following factors:
- The Ontario revenue numbers do not include the OLG’s online gambling site or its ProLine+ sports betting site.
- The “quarterly” report covers April 4-June 30 – 88 days compared to a typical Q2 of 91 days.
- Q2 is one of the slowest periods in the North American sports betting and online casino market.
- Just 17 of the current 31 sites were live on Day 1.
- There are still many gray and black-market operators in Ontario.
- Ontario has restrictive regulations on marketing, particularly around bonuses.
The first four points are what they are, and there is nothing anyone can do to change them. The final two points are a different matter.
Can Ontario Eliminate Black And Gray Market Operators?
Eliminating competition from the black and gray market seems like a no-brainer. The province could try to enforce applicable laws against illegal gambling, but this has been historically difficult, as offshore sites are often located in safe havens, placing them outside the reach of law enforcement.
Eliminating the gray market would be even more problematic. Gray market sites are licensed by First Nations like the Kahnawake, and any attempt to crack down on these operators pits the rights of Canada’s First Nations against provincial governments. That is something everyone would like to avoid.
Bottom line: There is little Ontario can do if its revenue numbers are held back by gray and black-market competitors.
Bonusing And Promotions
Bonuses and promotions accomplish two things, they increase market penetration and entice customers to register accounts.
Ontario’s restrictions, which only permit bonus offers on operator websites (bonus offers are prohibited on social media and through external marketing), could be seriously impacting the market, particularly if gray and black market operators have no obligation to follow the same rules.
While seen as a strong responsible gaming measure, this is a policy Ontario may need to revisit.