What Illinois Can Learn From The Online Casino Market In Ontario

Many Illinois residents may find the wait for the legalization of the Illinois online casino market frustrating, but the extended delay could potentially be beneficial.

Senator Cristina Castro filed The Internet Gaming Act, SB1656, in the Illinois Senate on February 8. Concurrently, Representative Edgar Gonzalez Jr. filed a companion bill, HB2239, in the house.

As the bills progress through the Illinois General Assembly, state legislators can glean valuable insights from the states and jurisdictions in their vicinity that have already legalized iGaming.

Today, we’ll examine the online casino market in Ontario, Canada – a Great Lakes neighbor to Illinois – to see what lessons Illinois could potentially draw from it.

Ontario’s online betting market is massive

When we mention that Ontario boasts a vast online betting market, we’re not just alluding to the nearly 15 million residents in the province. We’re also highlighting the substantial number of online casino and sportsbook operators.

Ontario is home to 44 active online gaming operators who manage 68 separate sites, making it the jurisdiction with the highest number of online operators in North America. The online gambling market in Ontario was launched on April 4, 2022.

Only seven online sports betting operators exist in Illinois, all functioning as mobile sportsbooks since iGaming is not yet legal in the Prairie State.

Ontario also hosts a number of operators based in Europe offering action, such as bet365, Fitzdares, BetVictor, Pinnacle, Unibet, and others.

To fully realize the iGaming market’s potential in Illinois, the need for more operators is inevitable. Moreover, incorporating a few overseas operators could prove beneficial in providing bettors with a range of options.

Ontario gaming commission cracks down on advertisements

The Alcohol and Gaming Commission of Ontario (AGCO) holds the authority over regulating gaming operators. One area where the AGCO exercises stringent control is the province’s advertising laws, which are significantly more rigid than those in Illinois.

For instance, consider AGCO rule 2.05. This rule bans the communication of “gambling inducements, bonuses and credits” through advertising and marketing. The only situations where this rule does not apply are when incentives are offered on a licensed operator’s platform or sent directly to bettors who have given their consent.

Next, rule 2.04 stipulates that operators’ advertising and marketing must be honest and avoid misleading players or distorting the truth about products. Specifically, it is expressly forbidden to suggest that a higher bet increases the odds of winning.

It is improbable that the Illinois Gaming Board will ever establish exceptionally stringent regulations. However, devising stricter advertising laws for gaming operators would be a progressive move. It is vital to have a strategy to curb the rise in problem gambling once online casinos become legal, and reducing advertising could be an effective initial step.

Proposed fee for Illinois online casino license more reasonable

The difference in entry cost is a major reason why Ontario has significantly more gaming operators than Illinois.

At least 14 openings exist for new online sportsbooks to penetrate the Illinois market.

• Through a partnership with an active brick and mortar casino, six.
• Through a partnership with a retail casino applicant, five.
• Three licenses were issued through an online-only sportsbook.
• Potentially four or less associated with a professional sports venue.

An Illinois sportsbook license has a base price of $5 million. Joining the market via a retail casino partnership costs 5% of adjusted gross receipts. Running a sportsbook at a professional sports venue comes with a $10 million price tag. Acquiring an online-only license entails a $20 million fee.

Online gaming companies are required to pay a yearly regulatory fee of $100,000 for each gaming site in Ontario. Those supplying gaming services and equipment are charged an annual $3,000 registration fee, while gaming equipment manufacturers must pay $15,000 each year.

It is evident that Illinois lawmakers recognize the excessively high entry cost for its online sportsbooks. In response, they have proposed the Internet Gaming Act, suggesting that Illinois online casinos should pay a licensing fee of $250,000 and a renewal fee of $100,000. This measure alone could potentially boost the number of operators in the market. The example of Ontario demonstrates that operators from various jurisdictions globally consider an annual fee of $100,000 to be a reasonable price that encourages business.

The Ontario online market isn’t perfect

The AGCO failed in one particular area – transitioning grey market gaming operators into the legal market when Ontario declared incoming regulation. Grey market operators, which are technically illegal but not hindered by authorities from accepting bets from Canadians, are not legally recognized.

Ontario announced the impending gaming regulation in August 2021, yet grey market operators kept accepting bets without repercussions for over a year. The AGCO later declared on January 28, 2022, that the online market was set to launch on April 4.

However, operators in the grey market continued to accept bets until October 31. During this period, these “non-legal” operators made the transition to the regulated market.

Grey market sites gained an advantage as they did not have to abide by AGCO regulations. This allowed them to retain a loyal customer base even in the legal market. This situation was unfair to both the taxpayers of Ontario and to gaming operators who were conducting their businesses legally.

Although transitioning grey market operators into regulation was a wise move, the method employed by the AGCO was disheartening.