AGCO CEO: There’s a Flexibility Period for Grey Market Operators, But Hammer Coming Soon

AGCO CEO: There’s a Flexibility Period for Grey Market Operators, But Hammer Coming Soon
By Mark Keast

The status and pace of applications for licensing is becoming more of an issue for Ontario sports betting, especially among iGaming operators who are licensed.

It’s certainly being discussed on the convention floor at the Canadian Gaming Summit and SiGMA Americas Summit, both going on in Toronto this week. And it’s especially relevant since the government can draw tax revenue only from those who have legally entered the market (20% of revenues). 

So what’s next in terms of trying to combat the illegal market? The Alcohol and Gaming Commission of Ontario has given grey market operators in Ontario a grace period of three to six months to get registered. The market went live on April 4.

“You can’t take too long,” said AGCO CEO Tom Mungham, taking part in this morning’s keynote address at the Canadian Gaming Summit, along with iGaming Ontario executive director Martha Otton and iGaming Ontario chair Dave Forestell (who moderated).

“We signalled long ago that we will be at some point declare this market regulated and unregulated,” Mungham said. “For those operators in the queue, we’re like, let’s go, let’s get your paperwork in, let’s hustle. We talked about a three-to-six-month businesslike transition.

“We are now at two months. So we are internally reviewing the tools we can use, whether they are legislative, that allows us to draw a line in the sand, to make the market regulated and unregulated, legal and illegal.”

Mungham said they were talking with an applicant over a week ago, where they asked about their operator readiness, and the operator said it would be ready Jan. 23. 

“We said not good enough,” he added. “And they came back and asked if November was any better. Still not good enough. We talked about three to six months, and they will be ready to go in September. So difficult conversations like that are being held."

 
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Some Operators Might Have to ‘Go Dark’

Mungham said if those who are in the queue, or are thinking about coming into the market for Ontario sports betting apps, and won’t be ready by that time, then they may face a period where they will have to “go dark,” and customers would conceivably go elsewhere.

On the enforcement side, Mungham says the AGCO has met with the Ontario attorney general and his office, with the solicitor general, ministry of finance, as well as Ontario Association of Chiefs of Police, the OPP, and all the municipal police services, so everything is lined up there.

There are 40-plus operators in the queue, so this summer will be spent in part finding out where those operators are.

“I think it’s a very strong message from (Mungham),” Otton said. “It aligns with our philosophy, that we are calling operators who indicated an interest in the market but who are perhaps not proceeding as fast as we anticipated they would.

“We thought we would have a larger number (operating) in June, and that hasn’t turned out to be the case, so we are following up with those operators, doing everything possible that we can do to ensure we are not the obstacle in operators going live.”

 
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Most Open, Most Competitive Market

Mungham added that Ontario has been identified as the most open, most competitive iGaming market in North America. 

“The majority of the operators and the suppliers registered to date came to us with a relatively low-risk profile,” he said. “They had good licensing and compliance backgrounds in jurisdictions that were well respected and did an excellent job in their gap analysis to meet the registrar’s standards, no major issues came up during the due diligence process, and this aided in their acceleration into market for go-live date.”

The AGCO has also been busy engaging with suppliers who have maintained associations with those operators that are not registered, or in the process of getting registered. In one example, one of those suppliers had a relationship with 50 sites. They are in the process of removing those associations and the AGCO is working with them to register.    

The Canadian Gaming Summit, at the Metro Toronto Convention Centre, is Canada’s annual conference for gaming professionals and runs through Thursday.

 
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Mark Keast

Mark Keast has recently covered the sports betting industry in Canada for The Parleh, and is a long-time sportswriter and editor, most notably with the Toronto Sun.