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On April 4th, 2022, Ontario became the first province in Canada to fully legalise and regulate online gaming. Although Ontarians had been gambling online for many years already, the new rules were intended to bring online gambling and betting out of the ‘gray market’, while protecting gamers too.
This is a big deal. For the first time, gambling and sports betting firms can legitimately offer their entertainment services directly to Ontario’s almost 15-million people. Whether you run an online sportsbook, casino, poker site, want to expand your online gambling business in Canada, or are a brand-new start-up, this is a serious opportunity.
At Xace, we provide financial services to gaming companies. We’ve done the research into Ontario gaming licenses to give you a complete picture of the new regulations, license fees, tax, and the wider market.
What is the new Ontario gaming license?
As of April 4th, 2022, Ontario’s new online gambling license allows companies to offer games of chance and sports betting online within the province. The license is regulated by the Alcohol and Gaming Commission of Ontario (AGCO). The market itself will be managed by iGaming Ontario (iGO), who are a subsidiary of AGCO.
An important thing to note is that any operators must work through iGaming Ontario as a private contractor. This means gambling providers will be required to work very closely with the regulator.
A gaming website is defined by the 1992 Gaming Control Act as: “an electronic channel maintained for the purpose of playing or operating a lottery scheme.”
Background to Ontario’s gaming license
This is not the first time online gambling has been permitted in the province – Ontarians could already gamble online through the Ontario Lottery and Gaming Corporation (OLGC). This is a government agency which offers lottery tickets and a variety of online games. Until this year it had the monopoly. So, before the new rules were announced, any Ontarians who wanted to place wagers via other online gaming sites had to do so in a ‘gray market’, visiting websites abroad.
The purpose of Ontario’s gaming license was to increase competition, capture tax revenues from online gaming, tackle money laundering and organised crime, and protect consumers by ensuring games operators meet standards.
The process of opening up the market for online gaming in Ontario began in April 2019, when the province announced plans to end OLGC’s monopoly. The new legislation was approved in 2021 and then came into effect this year. Sports betting is also now permitted, but that only came into effect on August 27th 2022.
History of gambling in Ontario
Gambling has a very long history in Canada. For thousands of years, indigenous people have played a variety of gambling sports, such as Slahal. When Europeans began to arrive in the country, certain types of gambling (such as dice games) were illegal.
Then in 1985 the Canadian government allowed provinces to license gambling, which led to the emergence of numerous casinos. Ontario’s first casino opened in 1994.
Another big piece of legislation was Bill C-218. This permitted single event sports betting to be regulated by the provinces beginning in June 2021.
How to get an Ontario gaming license
If you would like to provide online games in Ontario, getting a license involves working with both iGO and the AGCO. The process is a little complex, and the exact steps involved will depend on your business – iGaming Ontario has more details.
But, to summarise the general steps:
- Register with iGO and AGCO via their websites
- Make sure your systems comply with data security rules
- CompleteiGO’s anti-money laundering and KYC process
- Attend AGCO training on the Internet Gaming Notification Matrix
- Submit financial documents, business details, and personal information of directors
- Set up an operating agreement with iGO
- Complete a technology compliance confirmation
- Open an Ontario License Bank Account
The length of time it takes to get the Ontario gaming license varies, but iGaming Ontario says operators should expect a minimum 90 day turnaround.
As part of the process, you will have to undergo AML, KYC and other compliance procedures,and demonstrate you can prevent underage access, have good information security standards in place, foster responsible gambling, and demonstrate game integrity.
Do you have to be physically established in Ontario?
No, your business does not need to be physically located in Ontario to receive a gaming license there.
What are the fees for applying for an Ontario gaming license
The fees for operating an online gaming website in Ontario are CAD $100,000 per year per website. You can apply for a one or two-year licence (in which case you would pay CAD $200,000 on application).
There maybe additional payments required during the application process, particularly if the regulator needs to conduct some kind of investigation into your business.
It’s not just operators who must pay the fee – gaming related suppliers also need to contribute as the following table shows
If approved, you can then launch your online casino, sportsbook or poker room
Besides paying these fees, there are other financial matters to be aware of:
- You will need a business bank account
- You may need a B2C license
- You’ll need a security deposit of CAD $5m or proof of your company’s GGR for the previous 12 months
Tax for running an iGaming site in Ontario
The tax for running Ontario iGaming websites is very competitive, at 20% of gross gaming revenue. This is significantly lower than the 55% that land-based casinos must pay.
For individual players, winnings are not taxed, unless the player appears to treat gambling as a full-time occupation.
Non-compliance with AGCO
The AGCO has not yet published information about fines and penalties for gaming websites that fail to comply with the rules. This may be because they are trying to encourage existing ‘gray market’ operators to sign up with iGaming Ontario.
That said, AGCO has listed some possible responses to non-compliance, including:
- Education
- Warnings
- Financial penalties
- Suspensions
- Revocation of license
Advertising of online gaming sites in Ontario
Ontario has fairly strict rules about advertising for online gaming within the province. These rules include:
- You must not target ads at minors (younger than 19), gambling self excluders and high-risk players
- Your ads must include a ‘sensible gaming’ message
- You cannot advertise bonuses, and players will need to give approval before you send them information about future bonuses
- Promotions about bonus codes, sign up deposits and free spins can only be advertised directly on your website
Is it worth it? Market size for Ontario online gaming
If your business is considering entering the Ontario iGaming market, you’ll want to do your due diligence and decide if there’s enough demand there.
Ontario’s online gaming laws only came into effect in April 2022, so there isn't a huge amount of data available yet. But figures released for the first quarter are very encouraging:
- Ontarian online operators took CAD $4.1 billion in revenue
- Total gaming revenue was CAD $162m
- There were 492,000 active player accounts
- Average monthly spend per player account was CAD $113
This market is expected to keep growing, with various analysts predicting it could reach CAD $1 billion GGY in future.
Sportsbooks reported just 4% of this total revenue – but this is largely explained by the fact that online sports betting was only permitted from August 27th this year.
What’s the competition like?
There are currently 55 different gaming website URLs registered with iGaming Ontario run by 31 different companies. Many of the world’s biggest names in online gaming and sportsbooks are already present in Ontario, including Unibet, 888, Bet 365,LeoVegas, Betway, and many more.
What kind of gambling is popular in Ontario?
Gambling is very popular right across Canada, including in Ontario (which is also the country’s most populous province) - a huge 64% of Canadians aged 15 or above have gambled in the past year. Here’s everything you need to know about Ontarian gamblers:
What sports do Canadians bet on?
No surprises here. Ice hockey - Canada’s national sport - is by far the most popular sport to bet on in the country. That said, with the US so close, many Canadians are big fans of NFL, NBA and baseball leagues. They also enjoy betting on lacrosse, golf, boxing and horse racing. According to one survey, 35% of Candians bet on sport each week!
What online casino games do Ontarians like playing?
Canadians have been visiting land-based casinos for almost four decades, so many of Ontario’s iGaming websites offer similar types of games to their bricks-and-mortar counterparts. Blackjack, Roulette, and slot games are particularly popular, and poker is popular among younger gamers.
Other kinds of gambling in Ontario
Here are some of the other kinds of gambling that are popular in Ontario:
- The lottery is the most popular form of gambling nationwide, with 52% of Ontarians having played at least once in the last year
- 33% play online games
- 13% enjoy electronic gambling machines
- 4% play bingo
- 4% speculate on financial markets (particularly crypto)
Demographics of Canadian gamers
So, who gambles in Ontario? Below are some key statistics on Canadian gamblers:
- Men gamble more than women in Canada
- The age range that gambles most is the 45-64 group (72%), followed by 44% of 15-24-year-olds and 65% of 25-44-year-olds.
- 12% of men bet on sports, compared to 4% of women
- 10% of men will have played at casinos vs 5% of women
- 6% of women had played Bingo, compared to 2% of Canadian men
- 35% of women bought instant lottery tickets vs 31% of men
- Gambling is most popular in high-income households - 71% of wealthier Canadians have wagered
Canadians also like to ‘go big’ when gambling. They spend, on average, $825 per year with online casinos – almost four times as much as British online gamblers! Across, the nation, 14% of Canadian gamblers spend between CAD $20 and CAD $100 per month.
Ready to enter the Canadian iGaming market?
If you are thinking of launching your online sportsbook or gaming website in Canada and want to avail of the new Ontario gaming license, it’s essential to have a business account to receive CAD from your payment processors and pay suppliers within Canada or abroad with sufficient FX options.
Xace provides business accounts in CAD targeted specifically at the needs of gaming businesses in Canada and FX options in over 9 additional currencies including USD, GBP and EUR.
Open your account today, or learn more about Xace.
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