Ontario's online gaming market launches, but some insiders and experts have concerns

The government of Ontario has officially launched its new online gaming market, including online casinos and esports betting sites, as of Monday. 

iGaming Ontario (IGO), a subsidiary of the Alcohol and Gaming Commission of Ontario (AGCO), introduces new standards for gaming operators, according to a January news release.

The new market has some homegrown online gaming companies, like Toronto's Rivalry, celebrating what the future holds. 

"Until now, we've been unable to legally offer a product, or offer a product at all, in this market," said Steven Salz, Rivalry's co-founder and CEO. "It's a net-new market for us and we have a bit of a home-court advantage."

But while online companies celebrate, some advocates are worrying what it all might mean for the province's brick-and-mortar casinos. At the same time, gambling addiction experts have expressed some concern about increased access to gaming.

Online gambling as a concept isn't new in Ontario. Industry figures estimate that Ontarians spend about $500 million a year on internet gambling, almost entirely with companies that operate outside of the province.

Previously, those outside sites weren't subject to any regulations. But now, private operators will need to register and pay tax in exchange for legal access to the province.

In addition to providing Ontario with a new revenue stream, the market is meant to protect Ontarians by offering a legal alternative to the existing "grey market" of online gaming options, says the province.

The new measures "will enable more responsible gaming, prevent underage access, and ensure compliance with applicable laws including anti-money laundering rules and regulations," according to a statement provided by the office of the province's attorney general.

Ontario is the first province in Canada to implement such a system, and some industry insiders have concerns.

In January, CBC News reported the new market could create a loss of $550 million in annual revenue for the province, for a total of $2.8 billion over the next five years. 

That warning came in a report by a gambling industry consulting firm prepared for Great Canadian Gaming, the company with the largest share of Ontario's casino market.

Tax advantage for online operators

Tony Rodio, Great Canadian Gaming's CEO, told CBC News it's unfair that iGaming operators will only be taxed 20 per cent of their earnings, compared to the 55 per cent brick-and-mortar casinos are taxed.

"This is the only state or province in North America where the iGaming operators have a tax advantage," he said.

This will result in in-person casino visitors migrating to online platforms, Rodio said. 

On the other hand, Rivalry's Salz said he feels online gamblers are a distinct population from casino visitors. 

"People that were betting offshore historically were not going to be walking into a casino, whether this regulation came or not," he said. 

The lower tax rate for licenced online operators also allows for them to stay competitive with offshore operators, which pay nothing in taxes, he said. 

According to Rodio, however, regulation and a lower tax rate mean online operators can now spend millions on advertising and marketing to attract customers away from in-person casinos.

He also takes issue with iGaming being operated as an open market, where any company can now come in, even those that have been operating illegally prior to registering with the AGCO. 

The government should have taken more time to meet with in-person operators to make sure things were done right, Rodio said.

"We want to participate. We just want it to be a level playing field," he said. 

Experts raise concerns around problematic gambling

Some gambling addiction experts have also raised concerns about providing more access to online gambling. 

Chanel Larche, an associate researcher with the Centre of Excellence in Responsible Gaming at the University of Gibraltar, said any increase in accessibility to gambling should be accompanied by an increase in resources aimed at curbing the amount of time and money users spend online.

"There needs to be more of an active role in how [operators] choose to disclose or present those services and tools to the player," Larche said.

FanDuel, an online U.S. gaming site now expanding to Ontario, has been working with Canadian organizations like the Responsible Gambling Council to develop appropriate protocols.

"We'll be doing research and investing in partnerships to ensure that we have all the tools necessary to help anyone who needs it as they participate with us," Dale Hooper, FanDuel Canada's general manager, told CBC News.

Nigel Turner, a gambling addictions expert at The Centre for Addiction and Mental Health (CAMH), agreed that online gamers need to be provided with more information about problem gambling.

"Anytime you increase the availability of an addictive behaviour like gambling or alcohol or drugs, there's a potential for more people to develop problems associated with that addictive behaviour," he said.

Turner also warned that many people have a problem with gambling because they lack a proper understanding of how it works.

"People have a really bad understanding of random chance," he said. 

"Winning is possible. But in the long run, the chances of successfully coming out ahead … are really, really pathetic. And that means that it's not a good investment."