Ontario’s market for online sports betting and gambling is once more a hot topic of discussion in the province. This time due to being mentioned in the Ontario Auditor General’s follow-up report, which said that the province little to almost no progress on the previous recommendations made by the Auditor General in 2021. It seems the province is still hesitant to follow the advice.
The previous report cautioned that there was a legal risk with the province’s iGaming plans. This was after court challenges in the past over provinces illegally delegating their role in gambling to private-sector companies. Currently, federal law states that the province can conduct and manage gaming, while in Ontario, the province launched a market for third-party operators.
Highlights from the Follow-Up Report
Acting Auditor General Nick Stavropoulos commented that after a review of publicly released data of the original AG report, the office noted that Ontario’s iGaming infrastructure awarded a substantial amount of business risk and strategic decision-making power to third-party operators. Back in 2021, the auditor advised the province to take appropriate steps so that the sector complies with federal law.
The new report claimed that the suggestion is no longer applicable as the Heartland Province started its market in April 2022. The province claimed that it carefully created the iGaming framework to abide by federal law. However, the legal risk may be connected to a lawsuit from the Mohawk Council of Kahnawà:ke in November 2022 that challenges the legality and constitutionality of the model.
However, the auditor general has also put warnings about legal risk in iGaming Ontario’s recent financial statements. That is not all as the AG also raised alarms about a potential existential threat to the competitive iGaming market in Ontario. Other provinces run gambling via state-run lotteries, meanwhile, Ontario has both and this model could still be problematic.
Other concerns extend beyond constitutional issues, addressing the structure of the iGaming market. In 2021, it was recommended to transfer iGaming oversight from AGCO to the Ministry of Finance, citing potential conflicts of interest and risks to AGCO’s regulatory independence due to iGaming’s subsidiary status within AGCO. The focus is on enhancing effectiveness and fairness in oversight rather than strictly legal considerations.
Furthermore, the report noted that the AG office maintains that as a regulator AGCO should not be involved in the management of iGaming in the province. It argues that a structurally independent government organization, not a subsidiary of AGCO, should manage the operational and revenue-generating responsibilities for internet gaming from private operators.
Fairness and Integrity Concerns
Last but not least, the auditor raised some concerns about the governance structure of iGaming Ontario and how the regulator will guarantee the integrity and fairness of games. To this, the province responded that AGCO has already developed standards for the iGaming market to ensure integrity. The province also reminded that an independent lab will be testing and certifying all online products.