Why Was Online Gambling Legalized in Ontario?

Why Was Online Gambling Legalized in Ontario?

We previously wrote about the legalization of online gambling in Ontario but let’s take a deeper dive into why and how this happened.

Gambling has been an integral part of Canadian culture for centuries. Natives used to gamble with sticks and dice long before Jacques Cartier discovered the country in the 1500s. When it comes to Ontario, the province has always been at the forefront with its innovative solutions — from allowing betting on horse races at the end of the 19th century and having a large number of legal land-based casinos to writing iGaming into law in 2022.

Previously, players could only turn to the Ontario Lottery and Gaming Corporation (OLG) if they wanted to play poker or indulge in other casino games and sports betting legally. However, as Ontario became the first Canadian province to regulate the online versions of these activities, OLG’s monopoly ended, bringing along a much greater gaming variety.

Players can now choose among a plethora of sites and platforms to find whatever suits their gambling styles and preferences, shifting their focus from the grey and unregulated industry toward the legal one.

Ontario’s Gambling History

Throughout the centuries, Ontario has always been a leader in gambling. It hosted a big horse race event in 1767, introducing betting on a grand scale. However, the Heartland Province’s legal gaming history officially began in 1892 with the passing of the Criminal Code that prohibited games on chance and lotteries.

Since wagering on horse racing was not considered gambling, it soon became commonplace. The government realized the economic potential of some betting games in 1900 and made a few amendments that allowed charity raffles and bingo. Almost three decades later, fairs and town exhibitions were permitted to host gambling events.

Other gambling forms remained illegal for quite some time until the lottery was legalized in 1974 after the creation of the Ontario Lottery Corporation (OLC). In 1985, the Canadian Parliament passed C-46, which made gambling legal and handed control over casino gambling, sports betting (except single-game wagering), and lottery draws to individual provinces.

In 1999, OLC was replaced by the Ontario Lottery and Gaming Corporation (OLG), which has been regulating the province’s casinos, lotteries, and slot machine venues at horse-racing tracks. OLG is independent of the provincial government and does not directly manage casinos — that is the responsibility of the Alcohol and Gaming Commission of Ontario (AGCO).

After Quebec, Ontario was the second province to open its first land-based casino in 1994 — Casino Windsor (later Caesars Windsor). Currently, there are 24 gambling venues in Ontario, all monitored by OLG, and three of them are tribal establishments.

Inception of Online Gambling in Ontario

Online gambling emerged in Canada in the mid-1990s, and one of the first gambling sites anywhere in the world, InterCasino, was launched around that time. Soon after, the industry exploded in popularity, and other operators, like Gaming Club Casino and Jackpot City Casino, followed suit. At that time, the Mohawk Territory Kahnawake Gaming Commission was established to oversee all classic casino game activities. Since it is still fully operational, this makes it the world’s oldest online casino authority.

Before the advent of the internet, Ontario and provincial law enforcement knew how to deal with illegal gambling. However, with the development of online gaming, the situation became far more vague, and they were unsure how to sanction companies operating from foreign jurisdictions and providing services to players physically located in Ontario. Since there were no laws prohibiting online gambling at that time, Ontarians had immediate access to such platforms and leveraged this golden opportunity.

The first state-owned online casino, PlayNow, was opened by the British Columbia Lottery Commission in 2004. The site was initially launched to enable users to purchase BCLC lottery products online, but it extended into an online casino in 2010.

As British Columbia had a head start in the online gambling world, industry experts expected it to legalize online gambling first. Instead, Ontario was the one to take the crown and lead the way for the rest of the provinces.

The local authorities decided to regulate this gambling vertical to bolster their budget and to get as many international operators as possible inside the tent. This way, the Ontario provincial government also intended to end the lottery’s online gambling monopoly.

Ontario’s New Era of Online Gambling

The Ontario government announced its intention to create a competitive and consumer-protective iGaming market in its 2019 budget. As part of the 2020 budget, the province promised to amend the law to allow AGCO to conduct and manage the iGaming sector as the primary regulator. The authority was requested to establish a subsidiary that would be the mediator between the government and the private iGaming operators, so it created its regulatory arm in the province — iGaming Ontario (iGO).

Once the Canadian federal government enacted Bill C-218 (the Safe and Regulated Sports Betting Act), which granted permission to each province to create a regulated online gaming, sports betting, and horse racing betting market, AGCO started consultations with the iGaming industry, including international operators.

The province showed the highest degree of dedication to fulfilling this mission. It released a set of principles and standards for the industry in June 2021 and continued to amend them until the end of the year. At that time, AGCO also started accepting licence applications from potential operators, independent testing labs, and suppliers.

Finally, on April 4, 2022, Ontario became the first Canadian jurisdiction to legalize online gambling. To this day, none of the other Canadian provinces or territories have given any indication that they would follow suit.

Ontario’s iGaming Requirements For Operators

As of 2023, over 60 online casinos and betting platforms operate legally in Ontario. Passing the law has allowed some of the biggest industry powerhouses, such as BetMGM, DraftKings, bet365, and Rivers, to penetrate the market. Major international game developers, like Play’n GO, High 5 Games, and Inspired Entertainment, have also been approved to collaborate with licensed operators.

However, AGCO doesn’t only expect the companies to meet the standards and requirements to be allowed to go live. Instead, every commercial operator that commences online gaming activities in Ontario must obtain the AGCO permit and pass the rigorous testing by iGO. Furthermore, iGO’s responsibility is to ensure that operators are implementing security measures to protect players, provide fair games, and foster responsible gambling.

Some of the criteria refer to the users’ age. They must be at least 18 years old to play the lottery and bingo but at least 19 to place sports bets and online casino wagers. To access the regulated sites, players must prove they are physically located in Ontario by turning on the location on their devices.

Additionally, gambling platforms are prohibited from advertising incentives, bonuses, and credits. This doesn’t mean that they don’t offer them, but they are not allowed to entice people to join such sites by promoting such deals. Even affiliate sites are not allowed to drive traffic toward platforms legally operating in Ontario by using bonuses.

iGO has also implemented sophisticated rules to prevent fraud, money laundering, and terrorist organization funding. Under this new legal framework, operators must verify players’ identities when they sign up for an account. Each player’s information is kept on file, and a reminder is sent annually to ensure that it is up-to-date.

Future of Online Gaming in Ontario

Considering that the new legislation has given Ontarians the much-needed freedom to gamble legally online, we can safely conclude that the industry has a bright future in this Canadian province. Only one year after being written into law, Ontario’s legal gambling market cemented itself as one of the top five largest iGaming jurisdictions in North America.

The fledgling industry has managed to deliver approximately $1.4 billion in total gaming revenue and about $35.6 billion in total wagers in its first year of operation. Since the day it went live, more than 1.6 million people have registered on websites run by operators that have signed agreements with iGaming Ontario.

This responsible and strong gaming model turned out to be quite competitive in relation to the unregulated market. It is estimated that over 70% of people who gamble used to do it on international online platforms. However, AGCO has released a survey stating that more than 85% of players have joined legal sites since April 2022, and each spent roughly $70 per month.

AGCO and iGaming Ontario have granted licenses to over 60 operators and approved over 5,000 games in the province so far. According to statistics, 48% of all online casino wagers were attributed to slots, 32% to live dealer table games, and 19% to RNG table games. When it comes to sports betting, most bets were placed on basketball, followed by soccer and football.

iGaming Ontario officials claim that the province opening its doors to regulated online gambling has seen a significant increase in job creation, investments, and revenue. Their goal is to become the world’s premier gaming jurisdiction. Currently, Ontario benefits immensely as more players choose to play locally instead of on the grey market.