Ontario, Canada is working on its 2020 budget. Internet gambling could well be a part of it. Legislation is pending that would end the monopoly on legal online activity by the provincial lottery, the Ontario Lottery and Gaming Corporation (OLG).
In Canada, federal law leaves the matter of gambling to the individual provinces, apart from charitable gaming. Ontario boasts an online casino site and numerous land-based venues.
Budget legislation proposed
Premier Doug Ford has been considering online gambling since last year, but it may come to fruition now. The province is introducing legislation to give the Alcohol and Gaming Commission of Ontario (AGCO) authority to conduct and regulate i-Gaming.
If passed, a dedicated subsidiary would manage the relationship between the government and private i-Gaming operators.
Not surprising, COVID-19 is the focus of the 2020 budget. Online gambling is now being touted as the path to economic recovery. It falls under Modernizing Government, within a section titled Recover: Creating the Conditions for Growth.
Analyst, James Kilby believes legal online gambling would be about a $547 million market in Ontario even without single-game sports betting (or $1.47 billion with it).
Meanwhile, Danielle Bush, speaking for the Canadian Gaming Association said that the industry expects the government to agree on a tax rate of around 18% to 20%. Thus, legalization should produce more tax revenue, possibly in the low hundreds of millions.
Cash flow needed
The pandemic has devasted cash flow, except for OLG, a cash cow for the government. In 2019, it added some $2.3 billion to the coffers.
Canada has taken a more cautious approach than the U.S. to the reopening of casinos As a result, OLG’s revenue is projected at $200 million for the year, less than a tenth of the usual.
Ontario’s finance department estimates that residents spent $500 million gambling online in 2019. If global trends hold to Canada, it could be as much as twice that amount by the end of the year. Unfortunately, relatively few dollars go to OLG.
Most online gamblers in Canada do it with foreign operators of which most are not illegal. Licensed companies that operate elsewhere – PokerStars, Bet365 and 888 – accept business from Canada. Why not to begin issuing licenses to these companies and collecting taxes from them?
Of note, the Conservative provincial government is leading the charge. Yet it is a private sector versus public sector debate. Conservatives largely support involving private corporations. Liberals opt to retain the government monopoly.
Liberal resistance is evaporating, however, and a bill is on the agenda. Including legalizing sports betting.
Several important casinos fear their competitors in Detroit who have full-fledged sportsbooks. Member of Parliament, Brian Masse, for Windsor West, made sports betting an NDP issue and introduced one of the earlier versions of the bill.