Response is Swift to Ontario Report Detailing Potential Lost Gambling Tax Revenue

Response is Swift to Ontario Report Detailing Potential Lost Gambling Tax Revenue
By Mark Keast

Industry-wide response to a report prepared by a consulting firm for Great Canadian Gaming, the company that owns the biggest share in Ontario’s casino market, has been widespread and swift.

The report says the Ontario government is potentially throwing away $2.8 billion in revenue over the next five years when it opens a regulated Ontario online casino network, according to CBC News, which obtained a copy of the report.

Ontario sports betting is also hoping to launch in the next few months.

Launch dates for Ontario sports betting apps and the online casino market are still unknown.

Tax Rate on Online Casinos Key

Yes, there will be new revenue when the online casino market opens. But the province is short-changing itself, since the report says less people will go into brick-and-mortar casinos. The tax rate the government is expected to levy on online gambling sites will be lower than land-based casinos.

Demands have been made. The Parleh Newsletter reported Great Canadian Gaming is seeking comparable tax rates for iGaming and retail operators, a limited number of online betting licenses, and two years of exclusivity over online betting and gaming for land-based operators.

Paul Burns, president and CEO of the Canadian Gaming Association, told OntarioBets.com a while back he had heard the tax rate split for the online operators would be 80-20 — 20 going to the government.

Will Casino Traffic Be Affected?

There’s been a lot of pushback from industry people against the report, several saying traffic into brick-and-mortar casinos won’t be affected. One source in the industry pointed out that no other casino operator has supported Great Canadian Gaming’s demands.

One of the challenges is Great Canadian Gaming was purchased by Apollo Global Management last year, and the source said the American outfit doesn’t fully understand the regulatory environment in Canada for iGaming.

“As the burgeoning U.S. sports betting industry has shown, a safe, legal, and openly competitive online and mobile sports betting infrastructure has proven to be complimentary, and frankly very beneficial, to pre-existing commercial gaming,” Scott Vanderwel, PointsBet Sportsbook Ontario CEO, told OntarioBets.com.

“Look no further than New Jersey, and more specifically Atlantic City, where the industry has made palpable strides thanks to a well-structured online gaming model. I believe that Ontario will benefit from the great leadership shown in bringing forward a well-constructed framework that has included ample opportunity for industry consultation.”

Licensing & Regulations Necessary

After all, the grey market operators in Ontario have brought no revenues to the province. Added Amanda Brewer, country manager (Canada) for Kindred Group: “The grey market has been flourishing in Ontario for more than a decade. The only way to properly enforce it is to license and regulate and bring as many operators into compliance as possible.

”We fully support the Government of Ontario’s strategy and public policy objectives to license and regulate the iGaming industry, and look forward to participating in the market when it launches.”

Whether the demands have had any traction with the government is unknown. One source told us the demands had not gotten very far.

Said a spokesperson from the Ministry of Finance: “Ontario remains committed to establishing a new online gaming market that will minimize the risks to consumers who play on online gaming websites. The government will continue to meet with the gaming industry, First Nations communities and organizations and social responsibility organizations to hear their views.”

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Contributors

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.