More than a year after Ontario’s gaming industry was regulated, gambling businesses have each adapted to the market in their own way. So how can operators stand out from the crowd in North America’s most competitive market?
With every gold rush comes prospectors.
In the following 16 months Regulating the gaming industry in OntarioGaming operators of all shapes and sizes have rolled the dice for a share of North America’s largest and most dynamic market.
Those involved include former gray market players trying to make the regulated switch, major European operators, media brands developing a betting wing and land-based companies trying to get in on the action, and everything in between.
piece of land
Ontario has become an incredibly competitive market. iGaming Ontario has registered 46 companies operating 71 brands as of the first quarter of 2023.
But one thing to watch out for is the diversity of trends. This is particularly notable when compared to the US, which has seen ring-fenced jurisdictions backed by restrictive market access requirements often evolve into a FanDuel-DraftKings duopoly.
This is less the case in Ontario.
Bet365 is the market leader and is closely followed by Score Betting operator Penn and Flutter through its PokerStars and FanDuel brands. This is followed by a number of smaller operators, all of which have a healthy market share.
This province saw C$14.0 billion in online betting from 920,000 consumers in the first quarter, generating $545 million in gaming revenue, making the province North America’s largest single market by revenue.
Gray market transition
The Canadian online gambling market shares many themes with its U.S. cousins — but it’s distinct enough to mark it as a decidedly foreign country.
Unlike the United States, where the gray market problem was definitively resolved with the passage of the Unlawful Internet Gambling Enforcement Act (UIGEA) in 2006, Ontario had a thriving offshore segment before its launch on April 4, 2022.
After this date, most of these operators turned to the white market, which was, of course, the target of the regulation in the first place.
PointsBet Canada chief commercial officer Nic Sulsky says that in addition to these old-timers making the grey-white switch with key player data, “many other leading operators that are starting out are also coming to the table with user databases.”
Bet365 can probably thank its market leadership in Ontario for the brand awareness and player data it gained before the regulation.
Although the transition is not frictionless. Aleksandra Sygiel, chief revenue officer of former gray operator Pinnacle Sports, highlights the “schizophrenic” gray-to-white image often presented to users. In particular, the increased scrutiny of various regulatory procedures has stunned many.
“I have an account, why do I need to do it again?” He points out that increased KYC and AML obligations have had the effect of confusing customers.
“As both operators and regulators, we often forget about the customer. “It is a regulation-centric industry.”
But one element of continuity between the gray and white market is the popularity of the online casino.
igaming dominance in Ontario
$11.6 billion (83%) of Ontario’s total in the first quarter came from igaming bets. This can also be seen in terms of revenue, which amounted to $392 million (72%).
That’s why PointsBet has put significant effort into “improving” its casino product, says Sulsky. As a business with an existing sports fan base, attracting sports bettors to igaming offers is a significant challenge.
“We want to make sure we can offer Canadian sports fans the best regulated casino product possible,” he says.
An operator’s sports betting is important because it allows them to direct consumers to more profitable gaming offers.
To compete in this market, every operator has a theory of the situation and a strategy to succeed.
Will the product win in the end?
Many operators told iGB that relentless product focus is the key to standing out in the field.
It is also well known that both sports bettors and gaming enthusiasts like to use multiple platforms.
“You don’t place your first bet in your life on the Pinnacle,” Sygiel says. “You’d probably make a bet with someone else. “That’s okay with us.”
Pinnacle Sports likes to market itself to discerning sports bettors. The business aims to capitalize on consumers’ lack of loyalty by positioning itself as the site of choice for those who have been around a bit.
The company famously does not offer bonus bets. Instead, the business says it offers the best rates on the market.
Asit Ganguli, Canadian country manager for Neo.bet, says his company has adopted a similar strategy to Pinnacle, hoping that quality will win in the long run.
“We’ll probably be the second or third app someone downloads,” he says. “Our USP will probably be that we want customers to play longer.
Ganguli criticizes some operators for chasing consumers with constant messages and hard sales after placing bets.
“We want to take care of the customer,” he adds. “We want to build a long-term relationship.
“This is not an attitude I usually see in sportsbooks. Churn rate, almost everyone accepts this as part of the industry, but I’m not from this industry so I don’t understand why this is considered a pattern.
However, product is not the only tool available to operators who want to stand out. TheScore, a sports media site long before it was a sports betting or icasino platform, hopes to capitalize on its connection with sports fans.
“TheScore is a pretty big brand in Canada,” says Aubrey Levy, SVP of content and marketing. “So, within the media-focused gaming thesis, Penn thought, let’s launch TheScore in Ontario, leverage our media assets and hit the road.”
Levy sums up TheScore’s view: betting is just one component of the overall fan experience.
“And by now that you’re a fan, you’re consuming sports content, sports media and betting is really just an extension of that,” he says.
TheScore believes that being a media business provides the opportunity to offer betting as an extension of the type of sports content consumers enjoy. It argues that it does this in a way that no other operator can do through paid media and partnerships alone.
“That’s what got us into the game four or five years ago and we haven’t looked back,” Levy says.
Use sponsorship to win
But having a media brand isn’t the only way for a gambling business to connect with sports fans. Sponsorship is another tool.
“We have created a long-term strategy based on building brand affinity alongside some of the most trusted sports IP properties in the country,” says Sulsky.
“Our challenge to create a voice in this market was a difficult one, and what we decided to do was try to differentiate our brand by truly capitalizing on our boots on the ground.
“We wanted to launch our brand alongside some of the other trusted and loved iconic sports brands in the country,” he says.
This also involved some left-field thinking, such as curling, which some might consider a niche activity.
“Curling is not the biggest international sport right now, but curling is a sport watched by over 30% of Canadians,” he explains.
“So we knew there would be an opportunity to build a direct relationship with the 30% of Canadian sports fans who are interested in the sport of curling.”
While market exits are in full swing in the US, it is notable that the Ontario market shows little sign of similar consolidation.
Perhaps this is because the market is constantly evolving, with revenue reaching new heights every quarter. The $545 million reported in the first quarter was the fifth consecutive quarterly record.
This is a solid foundation for the size and competitiveness of the Ontario market.
Not every player will win, and in the long run it is likely that the market will not be able to sustain the current number of operators.
But for now, they seem content with trying their luck.