Despite the uncertain times we’re operating in, one thing we know for sure is that iGaming is still a massive growth area for the industry. Newly regulated jurisdictions are still emerging all over the world, providing fertile ground for revenue growth.
The latest of these regions is Ontario, Canada. With a population larger than all but 4 American states, the potential for this market is undeniable and something to be excited about. In part 1 of our Ontario focused double-header John Levy, CEO of theScore shares this sentiment and gave us some well-needed insight into the future of this promising region.
The regulatory events in Ontario are a fantastic step forward for the Canadian iGaming industry. How far did the impact of the Covid-19 pandemic influence this decision to move forward?
It’s been an exciting few weeks for theScore, with renewed momentum at both the federal and provincial level in Canada around creating a modernized, competitive, and regulated market for sports betting and iGaming here. While we’re already the second most popular sports app in North America and have a growing US sportsbook business, Canada is our home turf.
Here, we are the dominant mobile sports media brand by some distance. Ontario alone is a huge market with a population larger than all but four U.S. states and, with our existing audience, trusted brand, and unique approach in how we’re combining media with gaming, no-one is better placed to capitalize on Canada’s eventual ‘PASPA moment.’
In terms of regulatory movement being influenced by COVID, it did have an impact, as it did in the United States. But there was a lot of momentum in Canada, even before COVID hit. This isn’t something that just showed up on the radar screen one day. It’s a combination of a whole bunch of things that were happening.
First of all, in Canada, the grey market was flourishing, and we know people have been betting on sports for time and eternity. Ontario has been very open about wanting to introduce bills to create a regulated and competitive market for sports betting and iGaming, and this month the province moved a step closer to that as they unveiled deeper plans as part of their budget announcement.
At the federal level, there remains this pesky little provision in the criminal code against single-event wagering. There’s been discussion for a long time now about legalizing this at the federal level. And, again, the momentum is very positive, with this set to be debated again in the House of Commons early in the new year.
I think COVID, probably like it has all over the world, has forced governments to evaluate where they’re going to get their money from, to replenish the coffers. They’ve been spending like crazy trying to keep people working, trying to keep businesses alive, trying to put food on people’s tables.
Governments are saying all over “How do I get money back? How do we replenish?” It’s either taxation or tapping into these enormous revenue streams that already exist. They’re probably thinking, “Why didn’t we do this years ago?”. And that’s the same question I’ve been asking.
Do you expect the nearby regions to Ontario to follow suit?
I think it’s going to follow the same sort of pattern that it did in the US, but however it rolls out, theScore will be ready.
In the US, the PASPA moment happened, then they turned it over to the individual states to decide when they were going to go forward. Within the next two to three years, we expect there’s going to be 30 to 40 States, even more than that, that are open to sports betting. I think the same thing will happen in Canada.
Ontario is the most aggressive, but it’s also likely to happen out in the Western provinces and the Eastern provinces and each will likely regulate on their own, the same way it happened in the US.
From our perspective, we’re a mobile-first company with four to five million average users in North America on our sports app. 60-65% sit in the US and 20-25% sit in Canada. Even though there’s more of them in the US, there’s a higher percentage of users versus the total population of in Canada. This puts us in a great position with our existing brand, audience, and expertise in mobile gaming.
And, of course, many of our users already love to bet on sports. You just have to look at how people consume sports and how people are doing things and how can you maximize the revenue that’s going to be generated.
In certain states in the US, there’s tethering, where you have to get licenses from bricks and mortar organisations, or even from casinos or racetracks. And in some states in the US, it’s direct licensing.
In Canada, we’re not sure what’s going to happen, and we’ll have to wait and see what the regulator says. Obviously, we’re in favour of direct licensing, but we can live and compete successfully in any environment with the regulations that are eventually put in place.
Editor’s Note: After hearing John’s perspective on future Canadian regulation, it’s hard not to get excited about this market. It seems the wheels were already in motion for iGaming expansion in Canada, more specifically Ontario and the experience of Covid – 19 just helped to speed things up.
Importantly, it’s believed that just like it’s US counterpart, one state regulating may be the catalyst of a trend spreading to other states. With the added benefit of being able to learn from those jurisdictions that have gone before them, creating a protective, competitive market will be an easier task. In part 2 of our John Levey doubleheader, we’ll discuss the potential regulation in more detail and what that means for operators like The Score hoping to achieve sportsbook success in Canada.