Discontent Simmering Among Sportsbook Operators Due to Ontario's Regulatory Actions
The Alcohol and Gaming Commission of Ontario (AGCO) is reportedly set to prohibit licensed sports betting companies from engaging with unlicensed entities, with unlicensed operators being given a deadline to comply or cease operations in the province.
According to multiple sources, the AGCO has warned black-market operators not to continue their illegal activities in the province. This move represents the latest attempt by the AGCO to move former gray-market operators into legal territory while ensuring clear and consistent communication with all licensed operators.
Since April, when legal platforms were launched in Ontario, formerly gray-market operators who have secured licenses appear to be dominating the legal market. Meanwhile, other operators from the same sector continue to offer wagering illegally without facing any fines or penalties.
The AGCO has taken a hard stance on licensed operators found to have violated its promotional advertising rules, imposing fines on several platforms in recent months, including BetMGM, DraftKings, PointsBet, and Unibet, resulting in $226,000 (CAD) in penalties combined.
Despite providing what they claim to be clear restrictions on the advertising of inducements, bonuses, or credits, the AGCO appears to have faced challenges in communicating its expectations to new operators in the market. As a result, operators have repeatedly found themselves in violation of the advertising standards set by the AGCO.
In late August, the AGCO declined to answer questions from Sports Handle regarding the agency's advertising rules following concerns over a commercial partnership between its parent company and Boston Globe Media. This move came after the Better Collective-Boston Globe Media partnership was established on August 23.
The AGCO is reportedly taking issue with the contractual relationship between Boston Globe Media and three affiliates, Action Network, Sports Handle, and Vegas Insider. It contends that these relationships may be in violation of the agency's promotional advertising standards, although it has not suggested that Better Collective is non-compliant.
Meanwhile, the AGCO continues to face criticism for its approach to advertising enforcement, with some industry sources arguing that the agency should have provided clearer guidance on what constitutes an “inducement” to help avoid regulatory violations. According to these sources, the amount of operators being fined for advertising material containing inducements in the first six weeks of operation suggests that the AGCO should have provided specific words and phrases for operators to avoid, thereby increasing compliance in the market.
In an attempt to clarify its advertising standards, the AGCO conducted a 90-minute webinar prior to the launch of the new market, which many operators found to be informative. The AGCO, however, has expressed reluctance to act as an approval body for advertising restrictions, arguing that it is its role to communicate intent and objectives, rather than to find and close loopholes in the advertising rules.
In contrast to the Ontario market, U.S. states often require operators to submit ads for approval, with a designated timeframe within which operators must submit promotional ads, and some states requiring explicit approval for new and revamped ads and promotions.
The expected announcement from the AGCO is part of a broader effort to transition formerly gray-market operators into the legal market and to strengthen consumer protection measures in Ontario’s regulated iGaming market. The AGCO also recently proposed a new Standard that would require gray operators to fully transition into the regulated market by October 31, although it remains unclear whether there will be any penalties for operators that do not comply.
It is not yet known whether the enforcement of the ban on unlicensed operators will be effective in curbing illegal gambling activities in Ontario. The involvement of the Ontario Provincial Police's Investigation and Enforcement Bureau (IEB) in cases where illegal online gaming sites continue to operate after October 31 may help ensure compliance.
Meanwhile, the stricter advertising rules in Ontario have presented challenges for many operators, particularly those that are new to the market. These operators face a more difficult task in acquiring customers compared to existing operators with established Canadian user databases, such as bet365 and Pinnacle, which have become licensed in Ontario.
While the strict advertising restrictions have forced operators to shift their focus from promotions to brand awareness, the lack of penalties associated with the October 31 deadline for gray operators to comply may make the transition to the regulated market less urgent for some.
The strict advertising rules in Ontario may also be influenced by other countries' experiences with gambling advertising. Some European countries, such as Belgium, have adopted stricter advertising rules to protect consumers, while Spain has limited gambling advertising to the early morning hours on some media platforms. The United Kingdom is currently reviewing its 2005 Gambling Act, with advertising to be a key point of discussion.
In Canada, the Responsible Gambling Council based in Toronto has consulted with the AGCO on the development of the advertising standards. According to the Council, the AGCO conducted research and determined that the best way to prevent young people and vulnerable individuals from being exposed to promotional ads was by restricting their dissemination to consumers only upon signing up on the operators' sites.
There is concern among responsible gambling advocates, however, over the explosion of online gaming ads on various media platforms in the province since the April 4 launch. These ads, while brand-related rather than promotional, are still a hot topic in Canada, with the Responsible Gambling Council planning to conduct local research on the issue in conjunction with Flutter Entertainment, FanDuel’s parent company, although the results may not be published until 2024.
operators must abide by the AGCO's promotional advertising rules to avoid fines, as seen with fines imposed on BetMGM, DraftKings, PointsBet, and Unibet; the AGCO is still seeking to clarify its advertising standards to prevent regulatory violations; the AGCO's new rules also extend to its stance against operators engaging in sports betting with unlicensed entities, giving them a deadline to comply or cease operations in the province. Wagering on sports, whether licensed or not, poses a risk that the AGCO aims to mitigate by enforcing these rules. These wagers are often placed with a line or a stake, making it essential for all involved to understand and adhere to the rules to avoid the associated risks.
