July 26, 2024 4y6zu
Ontario's private market of iGaming operators just posted blowout year-over-year growth for its first quarter of the 2024/25 fiscal year. In these parts, we knew the biggest year-over-year growth in annual results would be apparent once essentially all important operators were being captured within the iGaming Ontario framework, having moved from the "grey market". As a reminder, the transition from being a "grey market" operator to a "legal" one that reported within iGO, took as long as seven months, or more than two quarters. In other words, for quite some time, we did not have a true picture of the inevitable annual market size, until many quarters had ed.
With this migration of operators now well and truly complete, with all major brands in the market for Q1 of 2023/24, which reported one year ago, it was arguable that Ontario could experience a true plateauing of results for Q1 of 2024/25. Although the growth was not as explosive as the annual comparative period described above, even with only four new operators, essentially every key metric experienced significant growth over the same quarter in 2023/24. (Due to seasonal differences, its more appropriate to compare respective quarters from different years, rather than consecutive quarters.)
• Overall gaming revenue up 34% to $726 million.
• Casino revenue up 35% to $529 million.
• Sports betting revenue up 31% to $181 million.
• Casino wagers up 34% to $15.5 billion.
• Sports betting handle or wagers up 25% to $2.5 billion.
• Active player s surged, up 107% to 1.9 million (*Not 1.9 million persons with s. An individual may have s at several operators.)
• Average revenue per active up 44% to $284.
With a slowing economy and only a slight tick upwards in the number of legal operators, the market growth reflected in these numbers suggests that the large amount of advertising that still prevails is the key driving factor. However, it is not only the frequently reviled sportsbook brand advertising as seen during sporting broadcasts that is juicing the results. Much has been made in the press about there being far too much sportsbook advertising, especially during NHL games.
The reality however, is that sports betting is more of a gateway to a potential cross-sell of the more lucrative casino vertical, and then, only for some sports bettors. While the large sportsbook brands certainly enjoy their fair share of casino revenues, many people are solely interested in online casino games, with no interest in sports. This is reflected in the fact that over 40 of the 100 or so websites in Ontario are casino-only, with no other gaming verticals offered.
Very few of these casino-only brands during high profile sporting events. Many casino-only brands however, continue to engage in radio, TV and social media campaigns, which are relatively inexpensive and fly under the radar from a media criticism perspective. For example, public broadcast channels CBC and CBC News Network have commercial breaks that are well-populated with Ontario's casino-only brands.
Compared to the issue of ads aired during professional sports broadcasts, we rarely hear complaints about this. However, it's clear that these frequent but lower-profile casino-only ads are creating brand awareness for many of the "smaller" operators and helping to boost what is by far the most lucrative igaming vertical in the province, which ed for nearly 73% of revenue in the quarter.
If we're right about increased and sustained gambling advertising being the driving force behind the significant, continued growth in Ontario online gaming revenues, since the vast majority of the TV ads in question are seen nationally, there is likely a similar amount of online gambling growth across Canada, outside the Ontario market. The majority of legal Ontario online casinos and sportsbook brands also serve the "rest of Canada" from the so-called "grey market". Thus, by promoting their legal iGaming Ontario brands (even with an "Ontario-only" disclaimer), several operators are getting significantly more bang for their marketing buck, as compared to Ontario-only brands, such as FanDuel, DraftKings or BetMGM.
Beyond the like-for-like brand exposure, the mere existence of increased gambling ads across Canada can spur people into looking for online gambling options more often. Given the regulations in Ontario, many formerly "grey market" brands that once served it, have now closed their sites to Ontario, respecting the market rules. However, this behaviour in large part has not spread to cover other Canadian provinces.
In other words, compared to Ontario, there are now far more online gambling destinations that serve other Canadian provinces, while there are more online gambling ads visible than ever before. Despite having no reliable ex-Ontario revenue numbers, we can be sure there has been a large jump in online gambling across the country, with no additional consumer protections in place.
Compare this to Ontario, which is on its way toward developing a unified self-exclusion platform, so that with a single click on any one site, Ontarians may self-exclude across all 100+ gambling sites, to help minimize harms in a quick, efficient manner. Players in Canada's "grey market" will have no such benefit, while they absorb all the very same ads.
While Alberta is moving toward replicating iGaming Ontario in some manner for its populace, nearly all other jurisdictions seemingly remain steadfast in their stubbornness to maintain their pseudo igaming monopolies, refusing to be pragmatic about the "grey market" of online gambling. This leaves their citizens at greater risk of bad dealings and the vulnerable at greater risk of harm.
Despite the clear path to regulation blazed in Ontario, provinces like British Columbia refuse to move to collect what is essentially the lowest of low-hanging fruit in of new potential revenues. A replicated "iGaming BC" could be tapped to increase overall contributions to BC First Nations as part of pre-existing gaming revenue share agreements. It took about 15 years of lobbying by BC First Nations before the BC Government submitted to such sharing.
If BC First Nations want to increase their gaming revenues, they will certainly need to be on the front-foot again, to lobby the Province, this time for a BC version of iGaming Ontario. Despite all rational common sense, the Province won't proceed of their own accord. It seems as ever, it will take First Nations to convince the powers-that-be, to do the right thing for them, and BC-at-large. Will it take another 15 years of lobbying to get a result?
Just how much money is BC missing out on by not replicating iGaming Ontario">We made some very conservative estimates for the loss of public revenues across the country. Given the growth we've seen in the Ontario market since this piece was written, the figures are probably now 20% to 30% higher, but it still gives readers an idea about the money that is being lost on an annual basis from lack of igaming regulation.
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