Zona de Azar Canada – Will More Sports Betting Sites Leave Ontario?
Canada.- March 21th 2023 www.zonadeazar.com Coolbet’s exit and the already-crowded iGaming market have kicked up speculation about a further shakeout in the province. There are arguments for and against such a shakeout, though.
The recently announced plan to exit Ontario by one operator of online sports betting sites has questions looming over the internet-gambling market in Canada’s most populous province. However, the biggest one is probably: who’s next?
Ontario sports betting was rattled last week by the news that Coolbet will shut down its website and mobile app in the province on April 3. Deposit options will be turned off on Tuesday, followed by the operator closing its online casino and sportsbook on Wednesday.
Asked by Covers why it is leaving Ontario, where Coolbet launched only last April in the first wave of private iGaming operators, the company pointed to the business conditions in the province.
“[Coolbet] is focused on maximizing profitability and investing capital and resources into only the highest return regions,” the company said in an email. “Unfortunately, given the competitive nature of the market and the heightened promotional environment we didn’t see a near-term path to profitability, so we are reallocating our resources elsewhere.”
Drawing a crowd
Ontario launched a competitive iGaming market last year that allows private-sector operators of online sportsbooks and casinos to legally take bets from residents. The market is the first of its kind in Canada, where most other provinces are content to let government-owned lottery and gaming corporations have a legal monopoly on internet-based gambling.
The experiment has drawn a crowd of operators. When Coolbet launched in Ontario’s regulated market last April, there were 17 mobile apps or websites available, in addition to Ontario Lottery and Gaming Corp.’s online casino and sportsbook. There are now more than 70 gaming sites, according to iGaming Ontario, the government agency with which operators must sign a commercial contract.
But Coolbet’s exit and the already-crowded iGaming market have kicked up speculation about a further shakeout in the province, where operators receive licenses with one or two-year terms. Coolbet was not even technically the first operator to enter and exit Ontario’s iGaming market either, as PressEnter shuttered its NitroCasino site in the province at the end of December.
So will any other operators follow suit and depart Ontario? Covers reached out to some that have their iGaming operator registrations set to expire this April to find out and heard (from those who responded at all) a lot of resolve from bookmakers to stick it out in the market. The responses Covers received were all along the lines of the operator planning to renew their registration and remain in Ontario’s iGaming market.
Covers received confirmation that, among others, bwin, NorthStar Bets, and Rivalry all plan to renew.
“We’re really happy with results to date and can’t wait to renew,” said William Woodhams, chief executive officer of Fitzdares, in an email. “I always said the market would settle and [it] sounds [like] brands are just too similar and can’t afford the fight.”
There are a few factors that may keep online-gaming companies in Ontario. It has, after all, not even been a year since the new iGaming market opened. Some operators have significant war chests left to spend and long-term partnerships in the province, such as FanDuel.
Ontario also differs from most other North American markets because it allows operators to offer both legal sports betting and online casino gambling, the latter of which typically has better profit margins. Therefore, it could be possible for operators to generate profits with a smaller share of the market.
Furthermore, while the Ontario government doesn’t advertise this, comments by operators suggest that they can deduct at least some of the value of free bets and other promotions they offer customers. This allows bookmakers relief from the 20% revenue share with the government.
No cause for celebration
Still, operators in Ontario’s iGaming market must fork over around a fifth of their revenue and pay a $100,000 annual regulatory fee for each site. Those and other costs can add up, especially for smaller operators.
Additionally, operators connected to publicly traded companies are under pressure to prove to investors they can be profitable. That increased focus on profitability comes as consumers are being squeezed by higher interest rates and prices, perhaps leaving them with lower gambling budgets.
Ontario also had a robust “grey market” for online gambling before the regulated market opened, meaning there are customers who have been playing with the same sites for years and may not be inclined to switch to newcomers.
So, while there are reasons that will keep iGaming companies in Ontario, there are reasons they could go as well. Whether more will exit is still to be determined.
Amanda Brewer, Canadian country manager for Unibet-owner Kindred Group, suggested during the latest Gaming News Canada Show episode that others could follow Coolbet out the door.
“I don’t think this is something necessarily to celebrate, but it is, unfortunately, just the reality of being in a highly competitive and also pretty expensive market right now in North America,” Brewer said.
Edited by: @MaiaDigital www.zonadeazar.com