In this roundtable, Mark Sperring, MuchBetter; Bob Akeret, FSB; Rory Kimber, 1X2 Network; Nick Nally, Continent 8 Technologies; Lahcene Merzoug, PressEnter Group; and Allan Petrilli, Intelitics explore the gaming possibilities in Canada as the country’s market slowly opens up.
The participants will examine the challenges that operators/platform providers and players are facing in the region, as well as analyze all the intricacies of being either a B2B or B2C provider.
SBC: What opportunities does the Canadian market present? Are they greater now that provinces such as Ontario are embracing regulation/licensing?
Rory Kimber, Account Management & Marketing Director at 1X2 Network: Canada is the gateway to North America and Ontario opening its doors to regulated online gaming for the first time is only just the beginning for what is undoubtedly a region with huge potential. Ontario alone is a significant market and its decision to license and regulate online gambling will pave the way for others to follow.
Regulating a market allows operators and suppliers to engage players in the right way and to ensure that the necessary protections are in place to mitigate the risk of problem gambling. It also leads to greater operator confidence, attracting the bigger players in the industry who bring with them sizable marketing budgets and unrivaled experience and know-how. This in turn drives awareness and helps to grow the market for all.
Nick Nally, Managing Director – Americas at Continent 8 Technologies: From Continent 8’s point of view, Canada forms an important part of our North American expansion plans where we are seeing significant growth across the market as states and regions regulate and open up. Operators are also seeing the huge potential, and upon the Ontario market’s launch, we saw big-name brands announce multi-year partnerships with broadcasters and sports teams, just as they have done in regulated US states.
As the infrastructure partner to the biggest names in iGaming, we have responded to this increased demand by launching our Public Cloud solution for Ontario iGaming, adding to our data center and cybersecurity solutions.
The opening up of Ontario’s regulated gambling market is a significant step. Its population is around 15 million people and the market is expected to generate around $800m in revenue this year alone (source: VIXIO GamblingCompliance). Those numbers place the province as one of the largest online gambling markets in North America. It’s an exciting time for all involved.
Bob Akeret, Vice President Operations, North America at FSB: Being a prosperous, digital-first country with a deep passion for sports opens up enormous opportunities for Canada. This is a population that lives and breathes sports and has a strong heritage in iGaming. Ontario regulating its provincial market in April was certainly hugely significant for FSB. We’ve always felt the opportunity in the province is significant and we were excited to receive our license at the end of March with a view to going live with multiple partners ahead of the upcoming NFL, NHL & NBA seasons.
We’re also excited about the second half of the year from a sports betting opportunity point of view as Canada will be present at the soccer World Cup in November in their first appearance since 1986. So yes, this is a market of significant short- and long-term opportunity with a population of 15 million and around 40% of the overall Canadian population. It was a market that FSB needed to be present in to help serve our strong North American ambitions.
Allan Petrilli, VP of Sales and Growth at Intelitics: For me, the biggest opportunities lie in the greater freedom brands and traffic sources will have in the marketing sphere now that the Ontario market has been regulated.
Regulation offers legitimacy, and this will give them access to buying space on major advertising platforms, like Facebook and Google, as well as allowing for deeper partnerships with local professional sports teams, talent, and so on.
For players, the regulation provides additional safety measures and safe gambling, as well as trust, which are all good things.
Mark Sperring, Head of Sales and Account Management at MuchBetter: Canada is a geographically and culturally diverse market, which gives MuchBetter an opportunity to appeal to a vast audience while also learning their behaviors and wants to help us develop and cater our offering to their needs.
With the market beginning to regulate province by province, there’s an opportunity to increase market reach while also protecting customers similar to what we’ve seen in European markets as they have regulated. Because of this, we are anticipating growth as other provinces follow Ontario.
Lahcene Merzoug, CEO at PressEnter Group: The Canadian market is currently valued at around CAD$5bn per year with the majority of this revenue coming from land-based and off-shore operators. As more provinces such as Ontario look to regulate online gambling, it will level the playing field for reputable, licensed operators to secure the permits they need to enter the market and take share away from unlicensed brands. This not only helps to protect players but ultimately helps the market to grow in a sustainable way. This is driven in part by allowing operators from other regions such as Europe to secure licenses and provide players with different experiences based on how they run online casino brands and sites compared to their North American and Canadian rivals.
SBC: Where there are opportunities there are also challenges – what unique/specific challenges will operators and suppliers targeting Canada face?
Kimber: It would be easy to assume that player behaviors and preferences are the same across North America, but that is not the case. Localization is just as important here as it is in other markets such as Europe, LatAm, and Africa. This is certainly true when it comes to content – just because an operator has a large portfolio of games that perform well in Europe does not guarantee success elsewhere. We learned that when we launched with Loto Quebec – there were certainly some surprises as to what did and did not resonate with players. From a regulatory perspective, Ontario is very similar to the requirements in place in the UK so we – and other operators and suppliers active in that market – are well-practiced but there is still a fair bit to manage from a technology perspective.
Nally: Every regulated market presents its own challenges, and Ontario’s iGaming regulations could be seen as complex and in-depth. But regulation is nothing new and we must embrace it and ensure that together we are offering compliant solutions to the market. Being flexible and adaptable is key to this.
Akeret: I think the AGCO and iGO deserve respect for creating a sober regulatory framework that puts consumer protection and the showcasing of responsible gambling at the forefront. We won’t see wall-to-wall free bet acquisition advertisements in the province and that of course poses challenges for operators. The art of brand building, unique messaging, content creation, and partnership management will prove vital areas in the quest for growth in the province. Being agile and smart in operations and budget will be crucial alongside having the right platform environment. This could be the difference between success and failure.
Petrilli: To put it bluntly, operators have had to change their entire strategy in Canada with Ontario regulating. This includes creating new Ontario-facing sites and getting more aggressive on bonusing. Additionally, with regulations prohibiting the public promotion of bonusing, they’ve had to get creative with their marketing, and ‘brand’ is going to play a big role in the market because of these restrictions.
Providers will also need to change the way they operate in Ontario versus the rest of Canada, and there is uncertainty about whether the regulators will crack down more heavily on any non-compliance. As with any new market, there is a learning period.
Sperring: The market size itself is a great opportunity for operators to get a fairly substantial market share in what is already a well-developed market, and each new market represents a slightly different type of customer. Both operators and suppliers need to be aware of variables and address them, for example offering local payment options such as Interac and providing support that covers the diverse customer base in Canada.
We also believe that the Canadian market is a great opportunity for existing regulated online operators from Europe and the US that understand a regulated approach, including the compliance and surveillance of identity verification, risk, and AML specific to the Canadian market, such as the different types of Canadian IDs and reporting requirements.
Merzoug: I think the biggest challenge is ensuring compliance with regulations that often change in the early days of the market opening up. This is because the regulator gets a clearer image of how their requirements work in the real world, and this often leads to tweaks and changes. Of course, operators that are familiar with working in regulated markets will be used to this and the unpredictability that comes with the territory of entering markets early on. Despite this, there are often curve balls that get thrown our way so it is important to have an incredible team in place at PressEnter Group and to use previous experiences in other markets to ensure we can overcome any unexpected challenges along the way.
SBC: How can these challenges be overcome? Can you provide some examples?
Kimber: The localization of content will ensure that operators can engage players and provide the experiences they are seeking. Because we are certified in a wide range of jurisdictions, we are well versed when it comes to localization and can help operators build portfolios that not only meet but exceed player expectations. Patience is key, however. We have a lot of new content set to launch that we know will do well in Canada but this content, including titles such as Wolf Strike and Eagle Strike, has been in development for many months now. Learning fast is important, too. Operators and suppliers need to quickly understand what is different or unique about a specific market and then factor this into their roadmaps moving forwards.
Nally: Operators need to work closely with the regulators every step of the way. Ultimately, they also need to form partnerships whether that be legal counsel, infrastructure, or media, who can support the launch and long-term success of the business as well as maneuvering through the complex regulatory space.
Akeret: For operators to thrive in the province they’ll need to put their brand front and center of their budget. It will be this approach that delivers growth under the current regulatory framework. Fitzdares are an operator we’ll be working with within Ontario (extending our already-strong four-year UK supplier-to-operator relationship with them) and they’ll be looking to replicate their UK strategy of cultivating a unique market presence through audience segmentation, brand building, tone of voice, and integrating with relevant media opportunities. This approach has seen them corner a certain section of the UK market and we’re confident this approach will translate well again in Ontario.
Petrilli: Luckily, regulation has been happening in Europe (Germany, Netherlands, UK, etc.) for years, and more recently in the US. So operators and platforms are used to maneuvering to meet regulatory changes. They have become adept at weathering those storms.
Sperring: Working with payment companies utilizing their insight into the local market would help any operator when it comes to making sure they offer the right payment solutions to their potential customer base, with the likes of Interac, cash collection, and a number of card options in use by Canadians.
Operators should also work with Fintrac-registered companies that comply with the local legislation and requirements as they will be a good source of support when going through the regulatory process, and already being compliant themselves will mean that suppliers and operators won’t have to justify working with a company that isn’t compliant.
Merzoug: Product architecture is crucial in a market such as Canada that is being regulated on a provincial/state level. For example, IP blocking is not 100% accurate so it is vital that KYC and the overall player onboarding process are accurate and secure so that players from outside of the province/state cannot gain access to the online casino.
SBC: Can lessons learned from other North American markets be applied to Canada? If so, what lessons?
Kimber: Yes, they can, but it is important not to use lessons learned as a set of instructions for Ontario and other Canadian markets. Generally, across all North American markets, there is a preference among players for themes, mechanics, and bonuses found in land-based slot machines. But that is taking a very top-level view and, in reality, operators and suppliers must get to know player preferences in each province/state. We don’t treat Europe as a single market, even though there are themes that are generally popular across the region as preferences around mechanics, volatility, bonuses, etc differ significantly from country to country. It is also worth noting that Canadian players are a little more advanced than those in other North American jurisdictions due to the “grey” nature of the market prior to provinces such as Ontario embracing regulation.
Nally: At Continent 8, our key learning from the rapidly growing US market is that the first-mover advantage is incredibly important. That’s why, as the trusted infrastructure partner to the industry, we must be – and are – one step ahead.
We have worked tirelessly to deploy our solutions via a first-to-market approach right across North America, allowing our customers to leverage the first-mover advantage. We achieve this through being adaptable and flexible, having strong relationships with regulators and policymakers, and through our highly skilled technical team.
Akeret: The importance of product and localization should again play a key role in the battles within the Ontario market. Creating optimal seamless experiences for players across various channels and verticals will be vital for operators to thrive in the province. Localized content will also be crucial. This isn’t just another US state, operators and suppliers need to deliver an authentically Canadian product. At FSB, we’ve worked hard on fine-tuning our Canadian-facing product and worked with appropriate local data feed suppliers like the well-respected SportsIQ to make sure that popular local sports, markets, and casino content feature within our offering.
Petrilli: I’d like to hope so. We are seeing the downward pressure on US operators to start spending more responsibly on user acquisition, so I hope that Ontario operators are more careful with bonusing, as well as marketing dollars versus ROI.
Ontario is both casino and sports betting, and that lends itself to higher player values, comparing more directly with NJ. So smart brands will likely become profitable more quickly than those in single-vertical states.
We can’t forget that the “grey” market has been huge in Ontario to date, and many customers are already loyal to existing brands that are now regulating.
Sperring: When it comes to both North American and European markets, the key lesson is to work with the regulator and make sure they understand your approach and challenges. Building that relationship with regulators not only helps them understand your work, but you also get to understand their regulations and can contribute to a dialogue to improve regulation, and the overall process.
We’ve seen over the past few years that the US has been regulating state by state, which seems to be the way that Canada is going when it comes to online gambling, with all provinces likely working toward one overarching regulation.
Merzoug: I would say the biggest lesson that can be learned from other North American markets and in particular the US is the power of great marketing. Operators have pulled out all of the stops and spared no expense when it comes to driving awareness of their brands among players. You just have to look at some of the ambassadors signed by sportsbooks and casinos to promote their brands to see just how fierce the marketing war has become. This includes the likes of Jamie Foxx, Aaron Paul, and some of the biggest sports stars in the business.
Of course, it takes more than just a glitzy marketing campaign to launch a successful sportsbook or online casino brand, but Hollywood budgets and Hollywood stars can get you a long way.
That being said, at Press Enter Group we take a different strategy in the markets where we are active and focus more on the product and experience that we provide to our players. This is something that I believe some US operators and brands have overlooked among the excitement of their million-dollar marketing campaigns. Advertising is great but if you do not deliver the experience the player is seeking then they will simply go elsewhere.
That is why we focus so much on all aspects of the user experience, from the games offered to the payment methods available through to VIP rewards and loyalty and, of course, customer support.
SBC: Do you encourage greater regulatory harmony between provinces? How can this be achieved?
Kimber: Yes, of course. I think all operators and suppliers would like to see at least some elements of regulations align across all provinces and states. In reality, that is not always the case due to a range of factors from political pressures to infrastructure and systems, so we have to be flexible and adaptable in order to ensure compliance in each market. I do hope that provinces learn from those already up and running such as Quebec and Ontario and use this to guide their frameworks and ensure consistency where possible.
Nally: In an ideal world, there would be more consistency and harmony between provinces or states in North America but we do not live in an ideal world. What we can see in Ontario is that they are taking consumer protection incredibly seriously and that’s good news for everyone involved in the market.
Will other provinces follow the exact same framework? I think realistically we can expect to see nuances across provinces. However, it’s about building honest and open relationships with the regulators and supporting them where we can, to shape those regulations.
We have been working in the iGaming industry and regulated markets for more than 20 years and have built long-lasting partnerships with regulators across the world. We are fully committed to providing compliant solutions as markets in North America and further afield regulate.
Akeret: The initial numbers from Ontario look incredibly positive and we feel the success of the province will act as a beacon to the rest of the Canadian market. We’ve invested in Ontario and believe in their regulatory framework so naturally support any cross-province harmonization.
Petrilli: That would be ideal. But, as a Canadian living in Quebec, I find this dream unattainable, at least in the short term. Having said that, I think provinces are keeping a close eye on Ontario. They’re eager to see how much tax revenue comes in, versus the losses from the state-run lottery, before they take their next steps.
Sperring: All provinces will benefit from one overarching regulation, as the overhead and admin will be lower and offer a clear direction for operators to follow. If we look at Spain, each region had the power to regulate gambling, with some initially trying to apply state-only regulation but this started to get complicated. They soon realized that the only sensible way to address online gambling was on a country level, so an agreement was made between the federal government and the provinces so while regulated on a country basis, the states still get their tax revenue. Having a federal body or a body with representatives from all provinces would likely help streamline the process. Bringing it back to Canada, it took Ontario almost three years of work to launch the market in April but think how it could go if the provinces and government all aligned and took Ontario’s learnings and framework as a foundation.
Merzoug: Regulation is absolutely a good thing for the industry so long as frameworks and requirements provide viable and sustainable markets for operators and suppliers to enter. Protecting players is also crucial, but sometimes the ultimate reason for regulations being brought into force centers around generating tax revenues or other motives. When this happens, it is often only black market operators that benefit and that is why it is so important to have an open dialogue between all stakeholders when it comes to enacting regulation in any given market.
SBC: How can operators/suppliers determine whether Canada is a viable market for them? What are you doing to help facilitate their launch/activity in the market?
Kimber: A lot of operators will already have Canadian players in their databases and will be fully aware of what value they provide. Of course, regulation will change the market to some extent but ultimately if operators wish to be able to engage players in Ontario – and the other provinces that will undoubtedly follow – then this is something they are going to have to work with. For 1X2 Network, we believe Canada will be one of the most significant online gambling markets in the world and that is why we are seeking certifications in as many provinces as possible so that operators wishing to enter regulated markets can access our proven content and powerful player engagement tools.
Nally: It’s still early days for Ontario’s regulated market. But market data and forecasts predict the market to be a significant one for North America, and ultimately could shift the dynamic of the region if other provinces look to follow suit.
We have data center solutions in Toronto and have recently augmented our offering with the launch of our Public Cloud, in response to customer demand for cutting-edge cloud solutions.
When it comes to Public Cloud, a significant benefit is that it eliminates the need for ongoing hardware investment which in turn provides the flexibility for customers to pay for resources as required. In addition, we fully manage the cloud environment, removing the need for customers to maintain and support infrastructure and instead focus on their business.
Akeret: As a supplier already licensed in Ontario and ready to go live with multiple partners over the coming weeks we’re very much committed to the province. With a corporate commitment to regulated markets, we would support further Canadian regulation to encourage additional channelization away from gray markets.
Petrilli: Customer lifetime value (LTV) in Canada is strong and for the last three to five years has been a focus area for a large part of the industry. The numbers are there, but it comes down to whether you have the money and resources to compete with the large operators entering the province. And if not, is it worth focusing on the rest of Canada and ignoring the roughly 50% revenue that Ontario represents?
For now, taking the wait-and-see approach isn’t a bad strategy for operators doing due diligence on Ontario and the wider Canadian market.
Sperring: Investing in good research on Canada is key for any operators and suppliers considering entering the market to fully understand not only the regulations but also the customer base. If after this the market still appeals to them, they’ll know what they can offer, and what they need to adapt. Know your market, know the regulation, know your customers, and continually monitor to optimize how you operate in this landscape.
We can help those looking at launching in the Canadian market through our insights in Canada and our expertise from other regulated markets, having worked with regulators in other territories. We ourselves have learned best practices from our experiences, listening to what regulators say and working with them to get it right.
Merzoug: It really boils down to the longevity of your business plan and whether you are happy to commit to the market in the long term. If you are wanting to take a smash-and-grab approach, Canada is not the market for you.
Operators will be competing with the biggest and the best from North America, Europe, and beyond. Many will also have deep pockets and will be looking to spend big as they wage an advertising and marketing war with their rivals. Not only that, but these operators will have superior products that have been honed over many years to deliver the best possible player experience. That is why those looking to succeed in Canada must be willing to play the long game.
SBC: Anything to add?
Kimber: I think that when we look at the market in a year’s time and see the progress that has been made a lot of my answers to the above questions will be different. But that is what makes the early days of any market so exciting. Ultimately, the regulations put in place in each Canadian province – and US state- will determine the viability of that market and we hope that Ontario proves to be a great example of a jurisdiction getting it right.