Ontario iGaming Could Cause Problems, Retail Gaming Commissioned Study Says

Online gambling in Ontario is set to expand, but Great Canadian Gaming projects the province and its municipalities may lose out on annual revenue, according to a report obtained by CBC News. The report was conducted for Great Canadian Gaming.

Report Argues In-Person Gambling Will Decline

Ontario will see a new source of revenue from taxing the online sportsbooks and online casinos set to launch, but the report predicts Ontario will lose out on revenue if its citizens decide to spend their money online instead of the land-based casinos.

Ontario is expected to impose a lower tax rate on online gambling sites than it does on land-based casinos. If this happens, the report states the province will lose out on $550 million in annual revenue and $2.8 billion over the following five years.

The report assumes that current casino goers will stop spending their money at land-based casinos and instead begin depositing solely at online casinos and internet sportsbooks. Jeffrey Haas, Senior Vice President at DraftKings, told CBC News he doesn’t expect the online additions to have that much of an impact on land-based casinos.

"When the regulated market opens in Ontario, nothing is going to change in respect to players' entertainment habits," Haas 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."

Online casinos may become an attractive option given the current pandemic. Those weary of the coronavirus can still play their favorite games from the comfort of their homes. Before the pandemic, annual provincial revenues from the lottery and gambling came to as much as $2.5 billion.

The CBC attempted to get an interview about the report’s findings, but officials from Great Canadian Gaming declined. But CEO Tony Rodio did give a statement.

"The report includes critical learnings from other jurisdictions that introduced iGaming and cannibalized land-based operators in the process," he said. "While we support iGaming in principle, the Ontario government needs to take the time to get this right."

The report goes on to mention the open licence model for gambling will result in online gaming sites tripling their share of Ontario’s overall gambling market, which is estimated at around $7 billion a year, according to CBC.

Retail casinos in Ontario are required to give over 55% of new gambling proceeds to the province. The Ford government still must announce what percentage it will take from the new regulated online gaming sites, but the report goes off the 20% tax rate gaming insiders believe is likely.

State of Ontario Gambling

Due to the Omicron variant, all casinos in Ontario have remained closed since the province’s latest restrictions were announced on Jan. 3.

The provincial government projects its residents spend nearly $1 billion a year on internet wagering. In July, the government announced the creation of iGaming Ontario, which is tasked with overseeing what operators can sign market access agreements to enter the province.

According to the report, the debut of expanded online gaming could cause Ontario’s casinos to lose out on $35 to $40 million in annual revenue. Still, Dave Ryan, the mayor of Picker, Ont., told CBC he is not overly worried about online gaming’s impact on land-based casinos. This past summer, his town opened a casino with 2,400 slot machines.

"There is cause for concern, but we're not overly concerned," Ryan said. "We believe that there is always going to be room for the bricks-and-mortar gaming. We're social animals. People like to get out, congregate and enjoy that experience. Plus, there's the entertainment factor that you don't have online."