Paysafe VP Greg Kirstein: Consumers Benefitting from Regulated Ontario Sports Betting Market

Paysafe VP Greg Kirstein: Consumers Benefitting from Regulated Ontario Sports Betting Market
By Christopher Boan
Fact Checked by Michael Peters

It’s fair to say all eyes in Canada are fixed on the Ontario sports betting and iGaming rollout.

That’s especially true for the country’s main payments processors, such as Montreal-based Paysafe Group, which has deals with the Ontario Lottery and several other operators within the province.

The opening stretch for Ontario sports betting and iGaming represents a new era of Canadian gaming, shedding the country’s dependence on the grey market for one that’s safe and equitable for all residents.

OntarioBets.com chatted with Greg Kirstein, who serves as the vice president of business development at Paysafe Group, about the company’s plans in Ontario and beyond and about the future of sports betting and iGaming.

Below is a transcript of that conversation, edited for brevity and clarity.



 
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Ontario Could Match Biggest U.S. Markets

OntarioBets: There is a lot of talk the Ontario online casino and sports betting market could be as big as some of the biggest legal U.S. states. From what you’ve seen, is that a fair assessment?

Greg Kirstein: I think it's a bit too early to tell, just given the fact that we went live on a Sunday night, just in time for the March Madness finals. So, you haven't really got that entire slate of sports like we're used to, especially during the NFL season.

But Ontario represents almost half, if not over half of the population of the entire country of Canada, and it’s the most populous as it relates to sports teams. We have the [Toronto] Raptors, we have the Maple Leafs and the Blue Jays and an MLS team there as well.

So, it's definitely the hub for sports in Canada. But just looking at some of the early numbers and some of our customers in the amount of advertising that you're seeing through some of our local media channels, this market is unbelievably exciting. Just seeing the numbers from March Madness when this is the first day of online sports betting in the province was pretty remarkable.

I think they're saying that at maturity the Ontario market will be probably the fourth largest market in North America, just given its size and reach and the competitive nature of it. So listen, it's a little bit too early to tell from a processing perspective because we're so early into it. And operators really haven’t kicked into their advertising and marketing budgets, so they'll roll that out throughout the course of this year.

But I think when we get to the NFL season — once operators have had the chance to optimize their products, to make sure that it's kind of fit for purpose for a regulated audience and context — and then you get the ramp up in sports around September, I think you're going to see that potential is going to be clear as day. And also at the same time iGaming in Ontario hasn't publicly released any numbers around Week 1 and gross gaming revenue yet, so it’s hard to say after a week if it's going to be the same size as some of the larger markets in the U.S. But that's what all of us collectively fully expect it to be once it's at scale and we get into probably the fall of this year.

OntarioBets: What are the differences between U.S. and Canadian sports betting? Does it change anything for your company?

Kirstein: In terms of activity, I think it's pretty similar. In the U.S., there was probably more pent-up demand at the time just given the difficulty to find any form of legalized betting or just traditional betting products. For example, in Canada, with the exception of the Canadian lotteries, many grey market operators have been operating in Canada for a very long time and advertising through a lot of our sports and local sports media channels.

So, I think the attention to online gambling, I think has been there in Canada for quite some time. But when you look at Ontario and you look at how it's now being promoted as online gambling, you have payment methods and certain things that are more inherent in a regulated context that are working a lot better than they did in a grey market context. I think payments is the best example of that.

I think you're just going to see a further proliferation in safe, responsible online betting in the province of Ontario, but in terms of the U.S. I would say it's very similar.

I think the traditional Canadian sports bettor is probably different than your traditional U.S. sports bettor. I think you've seen a lot of companies in the space, whether it's TheScore or PointsBet, that are trying to build homegrown brands and are really trying to secure homegrown deals, like the one that PointsBet has been doing with Curling Canada.

They’ve got something you wouldn't see in the U.S., because the U.S. is really centered around the mainstream traditional sports. Canada at the same time, maybe the NFL is paramount. But they're really trying to target those types of consumers.

I think, in the past as a consumer, even though the products were still good, I think you felt the greyness — for lack of a better term — in engaging with some of the existing betting products in the market. And now under this regulated environment, when you're seeing it done in more of a controlled and regulated manner, and the fact that a lot of these new sports betting companies are partnering with the sports leagues, I think it legitimizes it a lot more, which is exactly what took place in the U.S.

But I think if you're a U.S. operator moving into Canada, and you think that your customers are the same, I think they will be surprised, because I think a Canadian sports betting consumer is definitely looking for some more localized products, maybe around hockey and maybe around curling, maybe around some other kind of sports that are more popular today for your traditional Canadian [sports bettor].

 
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Paysafe Has Roots in Canada

OntarioBets: Paysafe has roots in Montreal. How important is it for your company to be a strong presence in Canada?

Kirstein: It's unbelievably important. I mean, outside of the fact that Paysafe has its roots in Montreal, the company was founded by a group of entrepreneurs in Montreal, and Canada has always been near and dear to our hearts.

Paysafe has been around since the late 1990s as a company. Not only do we have roots locally in Montreal, but our DNA is online gaming.

So, our company was founded by trying to find solutions for early online gaming companies in the early 2000s. And our business grew significantly over time until 2006, when online gaming was banned in the U.S. and we pulled out of the U.S. market as a whole and started to diversify our business in a multitude of different ways and continued to operate with online gaming companies outside of North America.

But when you look at Paysafe’s North American gaming story — in the way that we've grown over the course of the past 10-plus years — our reentry into North America really started in 2010 when we won the RFP to be the exclusive payments provider for Lotto Quebec. That was our beginning of reentering North America, which extended itself into all of the other provinces as well, where Paysafe is the exclusive payments provider for most of the provincial lotteries.

And just given the story and what we've been building in Canada…, all that infrastructure, all that work, the fact that we call Montreal home, in terms of where the company was founded, making sure we have a strong presence and we're supporting the growth of regulated gaming inside of Canada was incredibly important to us.

So, there's a lot of different ways to kind of express it but, simply put, this is unbelievably exciting for us. And, even for me personally, being based in Montreal, running our U.S. gaming vertical and running business development for our U.S. gaming business. All the work and effort in the network that was built over the last 10 years to see gaming open here in Canada is an incredibly exciting milestone for our company.

OntarioBets: You’ve worked with Ontario Lottery & Gaming Corp. since 2015. How will that experience help your company in the legal, regulated Ontario iGaming market?

Kirstein: Significantly, and I think that Ontario is obviously one but just our experience in Canada in general. There's multiple ways in which players can fund their online wagering accounts. If you look at the work that we've done with the rest of our lottery customers, their cashiers look vastly different than the traditional grey.

And what I mean by that is that we've really focused and have educated the issuers or their banks across Canada to be able to delineate between good clean regulated gaming traffic through the provincial lotteries, compared to what some of the other operators that they've been competing with have done.

So, we really helped drive conversion significantly for our Canadian gaming customers and made sure that the issuers in Canada were approving their credit and debit card transactions because this was clean government-run provincial lotteries.

… Look at Ontario today, customers that are making a deposit at a regulated licensed website in Ontario, their transactions, mostly all of them are working. If they go try to make that same deposit six months ago, on an unregulated site, that action was likely going to be declined.

So, all of those learnings along the way, and operating with local payment products in a local environment, which is regulated and legal, like the provincial lotteries has kind of laid the groundwork for what Ontario is going to look like payments wise. And it's really, again, the people who benefit most.

 
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Future is Bright for Sports Betting

OntarioBets: How has the start of the year been for PaySafe overall?

Kirstein: I think the proof’s in the pudding, you look at our Q1 earnings call it was positive. There's a lot of exciting things happening across the business, in online gaming and in very specific specialized niche verticals that Paysafe has built a business. So, overall, there's a lot of momentum.

Our new CEO of our North American gaming business — Zac Cutler — he's a former operator. So, the way we see the future is making sure that we're developing products from the outside in to bring in more talent from the outside, who sat at the operator level, who have made decisions around payments, who understand all the issues and the nuances an online gaming operator goes through on a day-in, day-out basis to bring that expertise in house to help drive our strategy and our products.

So, there's a lot of momentum around that as the team's getting bigger and some exciting stuff that we've announced around our gaming business.

OntarioBets: Where do you see North American gaming in general and PaySafe in specific headed over the next 12 months or so?

Kirstein: I think it's going to continue to expand in Canada. I think all the provinces hate the fact that they're losing all this tax revenue to gray markets. It's no secret. Ontario was the first province that went out and actually legislated online gaming and provided a safe and regulated structure.

I think the rest of the provinces are keeping a very close eye to see how things unfold in the province. And I think, over time, you're going to see more and more provinces in Canada introducing the same type of framework that Ontario has today.

I can't predict the future. I don't know the order in which it's going to happen. But you already saw some comments around potentially opening up Alberta, with a couple of operators.

So, I think the industry in Canada is going to head towards a regulated direction. I think all the provinces for the most part will regulate at some point.

And the U.S., you just see the momentum, every year, with more and more states coming online. You see the amount of tax revenue that's been generated in the states where they were losing all that revenue to grey markets in the past.

You see the momentum in New York, which is the largest state to date to regulate online gambling in the U.S. and just the sheer data and numbers that are coming out there. Its first two months or three months of operation, they've just been out of control.

So, just to think about what the potential can look like in other popular states in the U.S. that haven't regulated online gambling yet, like a Texas, a Florida — who tried but it's a bit complicated but it will retry again in the future. And then in California. It's an exciting time to be a consumer. It's an exciting time for the states in general to provide that safe activity and keep that revenue in house.

And we're investing in that same future building out our gaming business, operating it as a separate business and business unit within our company. It's not just an extension of what we do. It's a core part of what we do. The future is exciting for the industry.

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Contributors

Christopher Boan

Christopher Boan is a writer at OntarioBets.com. He's covered sports and sports betting in Arizona for more than seven years, including stops at ArizonaSports.com, the Tucson Weekly and the Green Valley News.