Canada’s Complex Sports Betting History & New Launch, Explained

Canada’s Complex Sports Betting History & New Launch, Explained article feature image

Carlos Osorio/Toronto Star via Getty Images. Pictured: The Canadian flag before a Toronto Blue Jays game.

Canada's legal online sports betting market launches April 4 in Ontario and there are a few regulatory features that make it different from the United States's gaming landscape.

Like the U.S.'s state-by-state approach, Canada is legalizing sports betting one province at a time starting with Ontario, though unlike the states there's no cap on the number of operators per province. Regulators have approved over 25 sportsbooks already to launch Monday, with the potential for dozens more to come.

Some of the big players launching on Monday include:

The legal age to bet in Ontario is 19.

The Grey Market

Sports betting's been legal in Canada since 1985 but a ban on single-game wagers had limited it to parlay betting through provincial lotteries.

Before Canada passed the Safe and Regulated Sports Gaming Act in June 2021, allowing provinces to regulate single-game online sports betting, online betting wasn't expressly illegal.

"Grey market operators" — meaning they're legal sportsbooks but have been operating in a legal grey area in Canada for years — will be allowed to cross over and become regulated operators.

This gives books such as Bet365 and Betway, with already established customer bases in Canada, a leg up U.S. books like DraftKings and FanDuel.

Offshore sportsbooks that operated in Canada prior to legalization won't be penalized or barred from entering the legal market, like there are in the U.S.

Low Barrier to Entry for Sportsbooks

The Safe and Regulated Sports Gaming Act also legalized iGaming. Most providers will also launch online casino apps Monday, which Americans only have access to in Nevada, Delaware, New Jersey and Pennsylvania.

Over 12 million adults live in Ontario, putting it on pace to generate CAD$1 billion in online gambling revenue, according to Vixio Regulatory Intelligence. That's on par with top legal markets in the U.S like New Jersey and Pennsylvania . With many more providers potentially on the way that number could double in 5 years.

It should be easy for more to join, as unlike many U.S. states, Ontario does not require providers to partner with land-based gaming entities to enter the online market. It costs just $100,000 for operators to enter, with a 20% tax rate. The licensing free is on the lower side compared to most U.S. states, while the 20% tax rate isn't the lowest but is much better than New York's 51%.

Alberta, which is expected to legalize online sports betting sometime in Summer 2022, has indicated it will also allow multiple providers. Other provinces could simply just expand their lotteries to run online an sportsbook.

If more jurisdictions launch through their lotteries and allow multiple commercial providers we could have a scenario where the government is directly competing with the private sector.

Limits on Promos and Daily Fantasy Sports

Unlike when a new U.S. state launches, Canadians televisions won't be plastered with gambling offers and free to play promos.

Regulations from the Alcohol and Gaming Commission of Ontario prohibit sportsbooks from marketing their incentives. Canadians should still have access to the same promotions Americans do, but only through the apps themselves.

Those big brands will be at further disadvantage as the launch of Ontario's online sports betting market means the end of its daily fantasy sports market.

DratKings and FanDuel, the only Ontario DFS opperators, have already announced they're pulling out, as Canada's new law considers DFS sports betting.

Because betting is to be confined each province, Canadian DFS players would be unable to compete against users from different provinces. Sportsbooks that run DFS would also have to pay he $100,000 licensing fee and 20% provincial revenue share twice.

By comparison, daily fantasy sports contests are considered games of skill in most U.S. states, which has allowed operators to enter most markets even before they've legalized sports betting.

The big name operators haven't announced they're pulling out from any other provinces yet. They'll likely continue to offer DFS contests there until those provinces regulate sports betting.

Regulation is handled by the Alcohol and Gaming Commission of Ontario, which reviews license applications and governs the market. A subset of the agency, iGaming Ontario, will handle contracting and disbursing revenue throughout the province.

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