Troy Ross discusses what lessons Ontario can teach gaming

Troy Ross discusses what lessons Ontario can teach gaming

Troy Ross draws on 30 years of experience at the intersection of politics, gaming, and regulation in Canada. He has been at the forefront of the iGaming lobby in Canada and played a pioneering role in the achievement of successive iGaming milestones, beginning in 2006 with the defeat of legislation aimed at prohibiting iGaming advertising in Ontario through to the establishment of the Ontario regulated market in 2022. He has advised gaming industry stakeholders since 1996; first, as a legislative and policy advisor to the Ontario cabinet minister responsible for casinos development, then as a policy director at the AGCO, and for the past 20 years as a lobbyist and regulatory advisor to gaming companies.

Ross will be on hand at next month’s Canadian Gaming Summit, speaking on the panel entitled Alberta’s iGaming Evolution.

SBC: Ontario recently celebrated the two-year anniversary of its regulated market for online gaming. Are you surprised by how far the market has come in that time?

TR: Frankly, I am not surprised at all by the success of the model. The Ontario government took a practical approach to regulation by introducing sensible standards, a reasonable tax rate and not limiting the number of registrants that could enter the market. This approach led to a regime that was both commercially attractive and has sound consumer protection, responsible gaming, and anti-money laundering features.

I was pleasantly surprised, however, at just how fast Ontario became one of the biggest and most successful iGaming regimes in North America. The sheer number of operators who have entered the market and become regulated exceeded my expectations.

SBC: Beyond size, what are the other metrics that have denoted success for you?

TR: The degree of channelization, first and foremost. It’s truly impressive how quickly the iGaming Ontario regime channeled 86% of online gaming play through legal and licensed sites. That is competitive with other leading global gambling jurisdictions who have been regulating the online market for over a decade.

Also, as an Ontarian, I’m pleased by how much money the province has garnered in tax revenue as a result of this initiative. Based on a 20% GGR tax, the government will be earning just shy of half a billion dollars in only its second year of operation. These are both amazing achievements.

SBC: Does the Ontario data finally put to bed the oft-raised concerns about cannibalization?

TR: It should, but there remain a variety of stakeholders who still may not be aware of the data coming out of Ontario. The stark reality is the province has not experienced any cannibalization. At the same time that the Ontario government created its regulatory regime, Ontario Lottery and Gaming Corporation (OLG) online gaming revenues increased by 31%, and their average monthly player count improved by 22%. David Pridmore, OLG’s Chief Gaming Officer, said that they were extremely happy with their results — not only in online, but across all lines of businesses. I think that speaks for itself.

SBC: What do you see as the next phase for regulated online gaming in Canada?

TR: A number of other provincial governments across the country have begun seriously looking at the Ontario model as a case study. I can assure you that there are multiple groups of senior officials scrutinizing the numbers and policy options very closely. I hope we will see at least one or two of these provinces adopt similar regimes in the near future. The success of the model, and the significant tax revenues it delivers to provincial treasuries, will be very difficult for Ministers of Finance across the country to ignore, particularly during difficult economic times.

SBC: What frustrates you most about the arguments from some provinces who prefer to maintain the status quo and rejected regulation for iGaming?

TR: Some provincial agencies have framed the debate about regulated iGaming on inaccurate data about channelization rates and false assumptions on the impact to provincial treasuries. That’s a shame. The truth is that lottery corporation websites often have a limited appeal to iGaming consumers, many of whom are sophisticated and experienced players. As a result, those monopoly lottery sites have captured a relatively tiny portion of market share, meaning they have very low channelization rates.

A recent H2 Gambling Capital analysis found that provincial lottery sites capture only 11% of the sports betting markets. Other technology experts estimate provincial lottery iGaming market share at around 14%. Based on iGaming Ontario’s own quarterly reports, and the established GGR in Ontario, it’s possible to comparatively estimate the size of the iGaming markets in other provinces. When you do that comparison, the lottery corporation websites tend to capture no more than 20% market share.

That’s why the Ipsos polling data from Ontario is so significant. It showed that the regulatory regime in the most populous province has captured 86% of iGaming play, among the highest channelization rates in the world. I don’t understand how other provincial governments can discount that. A high channelization rate is critical because it means that your citizens and consumers enjoy the benefits of a well-regulated market, with world class responsible gaming standards, and consumer protection measures. At the same time, you are maximizing revenue contributions to your treasury, and likely even expanding your own lottery corp’s share. It’s a no brainer.

SBC: Quebec has been the most vocal in its opposition to adopting an Ontario style regime for online gambling. Why do you think that is the case and has the province always taken this position?

TR: It is curious and disappointing that the Quebec government has chosen to ignore their own 2014 seminal report by Dr. Louise Nadeau, published after three years of detailed study. Quebec’s Nadeau Report remains the most comprehensive analysis of the regulatory and socioeconomic context of iGaming ever undertaken in Canada.
The conclusion they reached was that to control the online gambling market, protect consumers, and generate revenues for government, the very best solution is to establish clear rules and open up the market to private operators. In effect, to create a tax and licensing system. Yet after investing years spent researching the issue and listening to sound policy recommendations from their experts, the government of the day immediately shelved the report.
It was unexpected and discouraging, but I guess you could say it wasn’t a complete waste. The Ontario government clearly read it, implemented it, and is now reaping considerable benefits right next door!

SBC: Anything else you’d like to add?

TR: There is a good deal of conflicting rhetoric about the legitimacy of regulated iGaming regimes and their benefits – some of which is deliberately misleading — coming from certain sectors and agencies in other Canadian provinces. Some of that is to be expected, given that there are always going to be entrenched interests who will naturally oppose change if they don’t see it as being in their personal interest. But that rhetoric is toxic when decision makers are trying to have productive conversations about the creation of good public policy.

This extends also to the characterization of all online operators in provinces outside of Ontario as “illegal.” Let’s be clear. Leaving aside the legal monopolies of the provincial lottery corporations, Ontario has the only legal regulatory regime in the country. Therefore, by definition, there are currently many unregulated operators in the broader Canadian marketplace — some of whom are very large incumbents who have been taking bets for 20 years. Suggesting that all unregulated operators are “illegal” is wildly inaccurate. Many of these operators are licensed, taxed and regulated in the province of Ontario, throughout most of Europe, and in a growing number of U.S. states. Certainly, there are illegal websites that are not licensed or regulated by any jurisdiction and that should be weeded out in a properly run regulatory regime. Those provinces and their proxies seeking to portray all presently unregulated operators as illegal doesn’t allow for any meaningful adult discussion of the important public policy considerations involving regulation, player protection, and taxation. It’s unhelpful at best. At worst, it’s completely disingenuous.

Source: Canadian Gaming Business

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