Thirteen months on from the launch of its own regulated internet gambling site and the OLG (Ontario and Lottery and Gaming Corporation) is still playing catch up in the hyper competitive world of online gambling.
With Ontarians estimated to wager over $400M at offshore online gambling sites, the OLG’s launch of its own online casino site in January 2015 was seen as an attempt to try and get a piece of the action and claw back revenues lost to these international sites, most of which are based in the E.U. However, despite the OLG’s best efforts, industry commentators state that Playolg.ca has failed to make a dent into the offshore sites market share, with the vast majority of Ontarians still flocking to the offshore gambling domains.
Why does the OLG continue to play catch up and what options are open to it in the future?
In a sense, the roots of the current problems for the OLG (and for the other provincial gaming authorities) can be traced back to the legislative reforms of 1970 which legalized gambling but left the provision of licenses for casinos/gambling operations in the hands of the provincial authorities themselves.
This regulatory arrangement was fine in the 70’s to the mid 90’s when the only casinos were of a ‘bricks and mortar’ variety, but it couldn’t adequately deal with the online world where online casinos could be set up from overseas, thus not requiring a license (unlike a bricks and mortar casino) but yet could still effectively target Canadians.
It in this regulatory lacunae, otherwise known as a ‘grey market’ that the OLG has found itself; neither protectionist blocking the foreign run sites, or truly free market, with the OLG and other provincial regulatory authorities keeping their grip on licensing, failing to react to the nimbler online world.
European Model
If Canada and the OLG in particular are case studies in legislative inertia then the U.K is a case study in successful legislative action. They managed to create a comprehensive regulatory gambling regime which has benefited the country, the customer and the casinos themselves.
Unlike the tight grip of the OLG, the U.K gambling commission has granted licenses to hundreds of non-U.K domain sites (upon meeting the commission’s regulatory requirements) creating a healthy market benefiting both players, who get to choose and play at top quality sites, and the U.K government, which gains the tax revenues.
Better Product
It is this competition which explains why Canadians have continued to click to the offshore sites over the OLG’s own site. As Tom Wilson of the Canadian casino portal BestCasinosCanada.com explains: ‘The online casino market is one of the most competitive there is and this cut-throat competition drives these sites to ever higher standards. Their game selection, promotions and bonuses to even their customer support have all been honed and refined over the years, OLG’s new site just can’t compete’.
Even in getting players to the casino, the offshore sites have an advantage
‘The OLG may benefit from its monopolistic position in being able to advertise Playolg.ca, but the offshore sites are experts in using cutting edge online techniques such as SEO and affiliate marketing on the internet where the OLG doesn’t enjoy such privileges’.
Future Options
With Ontarians still flocking to the European based site and with OLG’s own site making marginal inroads into their market share, what options lay open to the OLG?
One option could be to introduce a fully-fledged ‘white market’ regime like the U.K or Italy. This would involve a comprehensive licensing and tax regime for the benefit of all three ‘licensing points’ i.e. player, casino and state. Such a ‘white market’ option would require serious legislative overhaul of the current regime, something which both the federal and provincial authorities don’t seem to have the appetite for.
Looking south to the US, a protectionist regime could be implemented, this may not improve the OLG’s own casino site but it could at least stem the revenue flow to the European online casino sites. Commentators similarly don’t believe this to be a viable option, with Canada not having the same judicial and economic clout to threaten the offshore sites as the U.S was able to with the passage of the UIGEA in 2006.
One option which isn’t easy to place on the regulatory spectrum of from ‘black to grey to white’ is to free the market within Canada itself. With the OLG able to grant casino licenses to Canadians, online gambling could be opened up to Ontarians themselves, allowing business people and entrepreneurs the ability to launch casino sites to rival the offshore domains.
One thing is for certain, like the internet, online gambling is here to stay, and until the OLG finds a way to create online casino sites that rival the offshore ones, Ontarians will continue to play at those sites which offer the best gaming experience regardless of whether they are based in Ontario or not.