The Bets Are In: Ontario’s iGaming Marketplace to Launch April 4, 2022Wednesday, March 16, 2022
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On April 4, 2022, any internet gaming (“iGaming”) operators or gaming-related suppliers who have registered with the Alcohol and Gaming Commission of Ontario (“AGCO”) and, in the case of iGaming operators, entered into an operating agreement with iGaming Ontario (each, an “Operating Agreement”), can begin offering their products and services to Ontarians in the regulated iGaming market. Ontario is ready to become the first province in Canada to run a private marketplace for iGaming and has the potential to become one of the largest iGaming markets in North America.
Our previous updates, Raising the Stakes: Proposed Changes to Canada’s Gambling Industry, Canada Doubles Down on Single-Event Sports Betting, and On the Road to Single-Event Sports Betting and a Regulated iGaming Market in Ontario, tracked the development of the private iGaming marketplace in Canada and Ontario.
How to Participate in Ontario’s iGaming Market
Interested parties may participate in Ontario’s iGaming market as either an iGaming operator or a gaming-related supplier. iGaming operators are classified as entities that “operate a gaming site” while gaming-related suppliers are goods and services suppliers that do not have any measure of control or role in operating an iGaming site.
To operate an online betting site or become a gaming-related supplier in Ontario, interested parties must first register under the Gaming Control Act, 1992 (the “GCA”) by filing an application with the AGCO through the iAGCO online portal. Once registered under the GCA, prospective iGaming operators must then enter into an Operating Agreement with iGaming Ontario. Prospective iGaming suppliers, on the other hand, only need to apply with the AGCO and do not need to enter into an Operating Agreement.
Importantly, iGaming operators may undertake the same activities as a supplier, but a supplier may never operate an iGaming site. This means that once an iGaming operator’s application is accepted and the operator has entered into an Operating Agreement, it can participate in Ontario’s iGaming market as both an operator and a supplier. In other words, iGaming operators will only need to apply to the AGCO once, as an operator, to conduct the activities of both an operator and a supplier. However, iGaming operators that intend to operate more than one distinct iGaming site will have to submit separate applications for each site.
The application fee for operating a commercial gaming site is $100,000 per site and the application fee for suppliers is either $3,000 for suppliers of equipment and services, or $15,000 for manufacturers of gaming equipment. A full breakdown of the AGCO’s gaming related fees can be found on its website.
Understanding the iGaming Regulatory Ecosystem
Once an iGaming operator or supplier has registered with the AGCO and, in the case of an operator, entered into an Operating Agreement, the applicant becomes a part of the regulatory ecosystem governing the operation of the private iGaming marketplace in Ontario. To understand their ongoing obligations, participants should familiarize themselves with the differences between the AGCO and iGaming Ontario. In short, the AGCO is the provincial regulatory body responsible for establishing and upholding the standards and requirements applicable to the OLG, iGaming Ontario and iGaming operators and suppliers in Ontario. iGaming Ontario, on the other hand, is a subsidiary of the AGCO and is responsible for managing the iGaming offerings provided to Ontario through private iGaming operators. The non-exhaustive chart below sets out some key activities of the AGCO and iGaming Ontario. For a full list of differences, see the AGCO’s chart Roles of the AGCO and iGaming Ontario.
|Develops regulatory standards via the Registrar’s Standards for Internet Gaming (the “Registrar’s Standards”)||Enters into Operating Agreements|
|Determines the eligibility of and registers potential iGaming operators and suppliers||Develops policies implementing responsible gambling requirements for iGaming operators|
|Delivers sanctions, warnings, suspensions, licence revocations and monetary penalties where compliance with the Registrar’s Standards is breached||Oversees compliance with the contractual provisions of the Operating Agreements|
|Addresses regulatory complaints and inquiries relating to game integrity and fairness, misuse of private information, responsible gaming violations and money laundering||Establishes a dispute resolution process to respond to customer concerns|
iGaming operators and suppliers in Ontario must follow the rules and regulations set by the AGCO and, if applicable, abide by their contractual obligations as set out in their Operating Agreement, which may include a requirement to follow certain current and future policies put in place by iGaming Ontario in addition to the Registrar’s Standards.
Additionally, iGaming Operators and suppliers that supply “critical gaming systems”1 must have, prior to the launch of Ontario’s iGaming market:
- provided the AGCO with confirmation that their technology is compliant with applicable AGCO standards;
- in the case of operators, designed and implemented certain control activities to comply with the Registrar’s Standards and, in the case of suppliers, confirmed to the AGCO that they have a control activity matrix in place to comply with the Registrar’s Standards; and
- had their critical gaming systems certified against Registrar’s Standards by an independent testing laboratory.
It is important to note that once prospective iGaming operators and suppliers are registered with the AGCO, they will be expected to stop all unregulated online gaming activity and any associations they may have with another company that operates in the unregulated market. Prospective iGaming operators and suppliers who have not applied for registration with the AGCO and continue to operate in the unregulated market or have associations with other entities that operate in such a market may not have their applications for registration approved in the future.
For more information on go-live compliance, the AGCO has published an “Internet Gaming Go-Live Compliance Guide” which sets out certain compliance requirements for iGaming operators and suppliers upon the launch of Ontario’s iGaming marketplace.
Going All In – The Building Interest in the iGaming Market
The road to a privatized iGaming market has featured significant market activity. On September 22, 2021, Apollo Global Management, Inc. announced that it had acquired Great Canadian Gaming Corporation, one of Canada’s leading casino operators, for approximately C$3.3 billion. On October 19, 2021, Penn National Gaming, Inc. (“Penn National”) announced that it had completed its acquisition of Toronto-based Score Media and Gaming Inc. for approximately US$2 billion. Penn National’s announcement specifically highlighted that the combined entities would be well positioned to participate in Ontario’s soon to be opened iGaming marketplace.
Since the launch of the iAGCO portal in September 2021, several major sportsbooks, including PointsBet, theScore and Rivalry Corp., have announced their registration as iGaming operators. FansUnite, a Canadian-based iGaming company with operations in the United Kingdom and Malta, recently announced that it had received a Gaming-Related Supplier – Manufacturer license from the AGCO. In a previous statement, FansUnite praised the legalization of the iGaming market in Ontario as “a major milestone for the entire Canadian gaming industry.”
The anticipated launch of Ontario’s iGaming market has continued to draw the attention of international iGaming giants. At a recent iGaming conference at Western University, FanDuel announced its intention to shed its moniker as a “U.S. Sportsbook” to focus on delivering offerings tailored to Canada. Other major players, such as PointsBet and BetMGM, have also begun positioning themselves to enter the Ontario market by associating themselves with iconic pieces of Canadiana. For example, on January 14, 2022, PointsBet announced that it had concluded an exclusive partnership with the Trailer Park Boys to “build a sportsbook as authentically Canadian as poutine.” For its part, BetMGM announced the signing of The Great One, Wayne Gretzky, as its brand ambassador to support its expansion into Canada.
If you have any questions with respect to the matters discussed above, please contact Michael Rennie at email@example.com, Jeff Bookman at firstname.lastname@example.org, Brendan Wu at email@example.com or any other member of our Entertainment, Media, (e)Sports and Gaming practice group.
This update is intended as a summary only and should not be regarded or relied upon as advice to any specific client or regarding any specific situation.
If you would like further information regarding the issues discussed in this update or if you wish to discuss any aspect of this commentary, please feel free to contact us.
1 “Critical gaming systems” are a sub-set of gaming equipment that include certified games, random number generators and components of iGaming systems that accept, process, determine the outcome of, display and log details about player bets and wagers.