Exactly one year ago, the Ontario government made a bet: that it could create a safe and competitive market for online gambling in the province.
As the first Canadian jurisdiction to grant legal access to private iGaming operators—companies in internet sports betting, online casino, and poker—the odds were in the province’s favour. As one of North America’s largest markets by adult population, Ontario was initially pegged to generate approximately $570 million in iGaming revenue in 2022; the results were almost three times higher.
Today, competition in Ontario’s gambling market is red hot, with more than 40 active operators and just shy of 80 gambling sites currently active in the province. By way of comparison, New Jersey regulates 33 operators as of January 2023, and other states with legalized sportsbooks and online casino markets regulate even fewer. According to iGaming Ontario’s latest data, in the first year of iGaming legalization, Ontario’s industry generated $35.6 billion in total wagers and approximately $1.4 billion in total gaming revenue.
“I think it’s on pace to be the largest online gaming jurisdiction in North America,” said Benjie Levy, COO and president of Toronto-based theScore, which runs its own sportsbook in the province.
For companies that are active in this market, it has been a high-stakes game from the jump, and with year one now in the rearview, it’s still not obvious who the true winners are. As the iGaming market heads into its second year in the province, companies are doubling down on unique growth strategies to gain an edge.
In its first year, Ontario’s iGaming industry generated $35.6 billion in total wagers and $1.4 billion in total gaming revenue.
While the federal government amended the Criminal Code to legalize single-event sports betting in 2021, Ontario is the only Canadian jurisdiction that has opened its doors to private iGaming operators. In 2021, the province tasked the Alcohol and Gaming Commission of Ontario (ACGO) with setting rules for operators and established iGaming Ontario to conduct and manage private iGaming offerings as it geared up for regulation.
Ontario took a unique approach to creating this market by adopting an open license model with a low barrier to entry and no caps on the number of new entrants. Unlike most US states, the market was open to not just sportsbooks, but also online casinos (Ontario does require operators to be tied to a local casino in order to apply).
The province also allowed grey market operators in Ontario the opportunity to become regulated if they wound down their illicit operations by November 2022. Dave Briggs, managing editor of PlayCanada.com, has reported that some newcomers bemoaned this decision, arguing it gave companies like Bet365 an unfair headstart. Speaking with BetaKit, Briggs noted the decision also brought in a larger pool of operators, including those from Europe.
Paul Burns, president and CEO of the Canadian Gaming Association, which represents online gaming operators, told BetaKit he believes the province’s low-cost, wide-open approach has been a success so far.
“I think they did a very good job at creating a market that was attractive for companies to enter,” Burns said. “When you look at the number of companies, a lot of the early expectations were in the 20s, but we’re over [40] now. I think that’s a reflection of the choice to have an open license model.”
A mad dash for market share
Briggs, who has watched the market closely over the last year, said in those initial months, operators deployed significant funds in a bid for market dominance. “The biggest money is made right around the time they launch, and it’s all about customer acquisition,” Briggs told BetaKit. “They spent like crazy around that first month or two.”
Many sports betting companies have taken Big Tech’s approach of spending big and forgoing profitability in order to cultivate a massive audience. For the larger players, it’s been a race for who can outspend who, Briggs said, particularly when it comes to bonuses and credits for new users.
“The biggest money is made right around the time they launch, and it’s all about customer acquisition.”
Generous cash incentives have helped FanDuel and DraftKings win market share in the United States, and while they are legal in Ontario, AGCO’s guidance strictly prohibits operators from advertising them to the mass market.
Many newcomers to Ontario have also poured cash into high-profile partnerships with teams and broadcasters. FanDuel came out of the gate as the official sportsbook partner for TSN, and PointsBet Canada signed its own deal with Maple Leaf Sports & Entertainment, which owns the Toronto Maple Leafs, the Toronto Raptors, and the Toronto Argonauts.
theScore Bet announced a multi-year partnership with the Rogers-owned Toronto Blue Jays in April 2022, which Levy said has provided the company with “additional exposure and activation opportunities” with the team’s fanbase.
Despite tighter marketing rules, sports betting campaigns and broadcasting partnerships have begun to grate on consumers in the last year. According to a January Ipsos poll, nearly half of Canadian respondents agreed that the volume of sports-betting advertisements is “excessive.” Ontarians have also taken to Twitter in recent months to lament the barrage of sports betting ads on public transit, primetime TV, and elsewhere.
Betting on user experience
Companies like theScore have claimed their first year in Ontario’s iGaming market as a successful one, but in the race for customers, not all operators have fared well. Last month, Estonia-based CoolBet closed its gaming operations in Ontario, six months after its parent company’s CEO acknowledged an “intensely competitive environment” in the province.
Cutthroat competition and tighter rules on advertising promotions are forcing operators to compete on other features in Ontario, according to Burns. “Product has been where competition has come from,” he said.
theScore is one of the companies leaning into a product-led strategy. The company, founded as a sports TV channel in 1994, now believes that its integrated betting and media experience will fuel the company’s growth in its home province.
“Our success has been and I think will continue to be in the future product,” Levy said. “If you’re trying to win on promotions, those are all short-term tactics that can ultimately impact your results over that period of time, but those aren’t the sustainable metrics that we look at.”
Months after its acquisition of theScore in 2021, Penn Entertainment withdrew theScore’s sportsbook from the US market and has since designated the Barstool Sportsbook as its US-branded platform. theScore Bet is now only available in Ontario, though theScore’s media app remains popular south of the border.
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In the last year, Levy said theScore has made approximately 400 hires, the majority of whom work on product development and engineering. Those teams have been focused on rolling out new betting features, like the ability for customers to make same-game parlays, as well as bringing theScore’s risk and trading platform, player account management system, and promotions engine all in-house.
“We have to give our customers a reason actively to choose us every day,” Levy said. “They are one tap away from a dozen competitors, and so we need to continue to invest in our product, to innovate, to surprise and delight. I think we’ve done a great job at that, we have a fantastic team that underpins our ability to do that.”
Penn Entertainment is also looking to migrate its US-branded Barstool Sportsbook and Casino platform from third-party providers to the in-house technology built by theScore. It’s “a massive undertaking,” according to Levy, which the company expects to complete this summer.
Briggs said operating on a vertically integrated technology stack gives theScore an opportunity to control its own destiny when it comes to user experience. “Many of these companies, especially on the sports side, but even on the casino side, are using the same suppliers to create their gambling offerings,” Briggs said, adding that by building its own tech stack, theScore has a chance to “offer something truly unique” to Ontario users.
Levy said TheScore is also looking to leverage its “tremendously engaged” media app audience to bolster its betting product. While competitors like FanDuel are also building their own media experiences, Levy believes theScore’s success lies in integrating the betting activity into consumers’ existing media consumption habits, rather than the other way around.
Stakes to stay high in year two
theScore is just one player in a crowded market, and the distribution of market share is difficult to surmise. iGaming Ontario tracks local market performance figures like revenue and wagers, but does not release performance figures on individual operators. theScore also declined to disclose its revenue or number of users in Ontario to BetaKit, though Levy said Ontario is now Penn Entertainment’s top market in North America for both sports betting and iCasino.
“We wanted to show very well here, we were confident we would show very well,” Levy said. “But listen, until you play the game, you don’t know what the result is going to be. But here we sit a year later, very happy with how we’re doing, more than holding our own against the biggest sports betting brands.”
As the dust settles on one year of legal iGaming in Ontario, operators are likely poised for a similarly competitive year two. There are more gambling operators queuing up to enter the province, according to Briggs, and for the time being, regulated players will also have to contend with what remains of Ontario’s grey market. While many once-illicit operators have become licensed, some continue to operate without a license in Ontario and the rest of Canada.
As more Canadian jurisdictions look to bring their grey market operators out of the shadows, Burns said many are keeping a keen eye on Ontario, and how its bet from April 2022 ultimately pans out.
“A lot of them are actively watching and asking and learning from Ontario, which is great because it does provide a real-time classroom.”