Looking Back on the Progression of Canadian iGaming and Market Trends in Ontario
Early in Canadian history, gambling was prohibited under a decree from Britain’s King Richard III (1452~1485)—a ban that endured even after the nation’s confederation in 1867. The prohibition continued through the 1890s’ Klondike Gold Rush right up until 1969, when the Criminal Code was at long last amended to give provincial and territorial governments authority over gaming activities within their boundaries.
One after another, operators of legal gambling activities began to appear throughout the country, starting with lotteries, bingo halls and horseracing, and soon followed by the opening of full-fledged casinos. By the late 1980s, Canadians in Edmonton, Calgary and Winnipeg had become accustomed to playing slots, poker, roulette, blackjack, keno and other games of chance, with the exception of dice games, such as backgammon and craps, which remained illegal until 1999.
Electronic gaming made its appearance in Canada toward the end of the 20th century. It included not only Electronic Gaming Devices (EGDs) and Video Lottery Terminals (VLTs) installed in non-licensed establishments, such as bowling alleys and taxi stands, but also casino-type gambling via the Internet. In 1996, the Mohawk Territory of Kahnawake took a leadership role in regulating gaming websites, establishing the Kahnawake Gaming Commission to issue licenses to online casinos and poker rooms.
A Booming Industry
By 2001, Canada had 31,000 gambling machines (slot machines and VLTs), 59 permanent casinos, more than 32,000 lottery ticket retailers and some 1,880 licensed facilities for bingo, raffles, pull ticket sales and other gambling activities. Over the next ten years, those figures would increase to 87,000 gambling machines, 60 permanent casinos, 33,000 lottery ticket centers, and 25,000 licenses to run various temporary casinos, bingo halls and so on. Additionally, some 250 race tracks and teletheatres for live betting were also established.
According to statistics complied by the Canadian Gaming Association related to gross gaming win (wagering less prizes), the nation’s gaming industry almost tripled in size between 1995 and 2010, from $6.4 billion to about $15.1 billion. The composition shifted from a 50% reliance on lotteries to a more balanced dispersion, led by the expansion of casino facilities and the implementation of EGDs at facilities such as racetracks. Now casinos contribute about 37% of the win compared to 27% for lotteries, 29% for gambling machines and the remaining 7% or so divided almost equally between bingo and pari-mutuel betting. In the 7 years since 2010, those numbers haven’t shown any signs of slowing down, and this is an industry that always seems to be growing.
Meanwhile, Kahnawake continued to set the pace on the Internet, increasing the number of licensed online gaming operators based there from about 50 at the start of the new millennium to about 200 at most recent count. Of those, most support English and accept players living in Canada. There are also another 700 or so gambling web sites based outside Canada that are happy to welcome Canadian players.
Defying All Odds in the 21st Century
In a report prepared for the Canadian Gaming Association in 2011, HLT Advisory Inc. indicated that industry growth had slowed considerably since 2006. They attributed this deceleration to “a combination of industry maturity, the state of the economy, increased competition and the restructuring of a number of provincial gaming programs (e.g., certain provincial VLT programs).” They predicted that “slow growth will likely characterize the industry from a national perspective over the near term.”
Nevertheless, gambling has become firmly entrenched as one of the largest entertainment industries in Canada—“larger than television and movie rentals, and it is larger than the combined revenues generated by magazines and book sales, drinking places, spectator sports, movie theatres and performing arts.”
The Transition from Debauchery to Modish
Just after the turn of the century, researchers estimated each Canadian household was spending $460 annually on gambling. Another study has concluded that 82% of all Canadian households spend money on one or more legal gambling activities each year.
It became clear that gambling was no longer the “social vice” it was in the 1950s. It has since become an important thread in the fabric of Canadian society. A majority of Canadians approve of using funds generated from gambling sources for the greater good. Provinces utilie gambling revenue to support charities, health care and other similar organizations, including sports. This mindset eventually evolved into debates over the legalization of single-event sports betting.
Up until 2021, only “parlay” bets were on the table, combining three or more wagers. Today, punters can place as many, or as few, wagers as they like. And they can do it on everything from moneylines and spreads to totals, props, and more. It was the anticipation of that move that spurred Ontario’s push for an open iGaming market. That goal was finally realized in April 2022 when a bevy of private companies launched into a competitive market.
A Bigger Pie than Analysts Imagined
For years, industry experts touted big numbers proceeded by glittering dollar signs. Pierre Cadieux, President and Chief Executive Officer of the Atlantic Chamber of Commerce estimated that “nothing less than $14 billion dollars of Canadian offshore and illegal betting goes under taxation radar every year.” He called the regulation of iGaming – especially single-event sports betting – “a no-brainer” and a “win-win for the Canadian gaming industry, as well as for the Canadian taxpayer.”
As it turns out, Mr. Cadieux was beyond correct. He was actually underestimating the value of Canada’s online and mobile gambling community. In the first year of Ontario’s competitive market, the province’s collective punters wagered a total of – drum roll please – $14 billion through iGO-licensed websites. Cadieux’s number was hit, but just in Ontario alone, not the whole of Canada as predicted.
While other provincial governments continue to pull respectable revenue with government-run gambling portals, Ontario has proven time after time, quarter after financial quarter, that a competitive market benefits everyone involved. Competition breeds better choices among players. Regulation ensures safety while funneling revenue into responsible resources that benefit the community at large.
