With the political will to legalize single event sports betting in Canada gaining more traction, we asked Jason Logan, Senior Industry Analyst at Covers, to offer his view of how the market will take shape and how it will be received by the betting public.
How much of a game-changer would legalization be?
Single-game wagering allows Canadian regulated sports betting to compete with unlicensed books in terms of offerings. The current parlay-based betting done through the provincial lotteries is not an attractive product and continues to push new and existing sports bettors to these unlicensed operators and underground bookies, taking their tax dollars with them.
But getting single-game wagering approved is only half the battle. Two more decisions will shape just how big sports betting can be in Canada.
First to consider are the licensing and tax models for non-lottery operators, and if those costs will trickle down to the customer. If the tax on sports betting revenue is too high, operators will up their hold by offering unfair margins (-130 flat rate compared to standard -110) and that will still push a portion of existing and new bettors to unlicensed books.
Second is mobile wagering with the ability to fund, withdraw and bet from your phone. Mobile betting drives the sports betting markets and ease of entry into the platform is the largest speed bump in acquiring new players. Mobile betting also allows for in-game wagering, which is rapidly growing in North America.
Do we have any insight into current appetites for sports betting in Canada?
The appetite for sports betting is very strong in Canada, especially when you consider the estimated $15bn leaving the country to bet with unlicensed books. The rapid expansion of legal markets in the United States and the integration of sports betting into mainstream media coverage is also changing the conversation around sports gambling amongst Canadians.
How you feed that appetite differs depending on who you talk to. Lottery and casino-based sportsbooks would love to remain the sole regulated operators and will lean on the fact that 100% of their profits are returned to the provinces while independent operators could send just a fraction of that back in taxes – barring new taxation models.
Many Canadian gaming stakeholders would like to see the industry opened to independent operators, like in many US states, and offer licenses to those online operators currently accepting Canadian customers. This wouldn’t limit the provinces to only one channel and offer a variety of online and land-based options for sports bettors.
As for the Canadian sports bettor, the more options the merrier. A competitive regulated industry is great for the customer, not only in terms of choice but also in terms of offerings and bonuses as these operators battle for market share. We saw a similar situation when New Jersey sports betting launched, with many operators pushing advantageous promotions to bring in new bettors. It could be a buyer’s market for a number of Canadian bettors who have only had one regulated option for decades.
What would Covers’ predictions be in terms of how the market might take shape – what are the possible scenarios for the market structure?
Much like the state-by-state launches in the US, new-look sports betting will roll out province by province. So, sports betting in the Atlantic provinces could be set up different than it is in Quebec or Alberta. Of course, the golden goose in all of this is Ontario with its population of 14.3 million and multiple professional sports teams.
Ontario will likely set the table for the rest of the country, especially if things open up to independent operators. Many of those entities have business plans in place and their ducks in a row, ready to turn the key once regulations and licensing are in place. The scope of the licensing and more importantly the taxation models will define what the future of sports betting looks like.
We hope provinces aiming to expand their sports betting offerings look to examples like New Jersey and Colorado as models for successful consumer-first markets and avoid some of the short-sighted choices being made by other states. Provinces need to realize that sports betting at its core is a stable long-term revenue generator if done right – not a “get rich quick” scheme.