Exclusive Interview: Ontario iGaming Fines No Cause for Alarm, Industry Experts Say

As operators navigate the month-old Ontario online poker, casino gaming, and sports betting market, some violations were expected to occur. But don’t look for regulators to change the rules anytime soon.
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By
May 10, 2022

This early precedent-setting for behavior by the AGCO is a positive sign and speaks to Ontario’s strong commitment to responsible gambling safeguards and consumer protections.Gaming industry experts in Ontario say the decision by provincial regulators to levy fines against two operators for violating rules governing advertising and inducements does not represent a bad omen for the month-old regulated market for online poker, casino gaming, and sports betting.

Rather, the experts tell Canada Gaming Review in an exclusive that such fines are commonplace in new markets and were expected as operators work to navigate the new rules. They also said they don’t believe the rules are too restrictive and cast doubt on them being changed anytime soon.

Last week, the Alcohol and Gaming Commission of Ontario (AGCO) alleged that Canadian subsidiaries of BetMGM and PointsBet had violated its Standards for Internet Gaming. All five of the violations cited involved advertising for bonuses or other inducements.

BetMGM Ontario was ultimately fined CAD $48,000 (about $37,450 USD) by the AGCO, while PointsBet Ontario was fined CAD $30,000 ($23,400 USD).

Early Violations a Common Occurrence

“This is somewhat common in both new and mature markets,” said Shelley White, CEO of the Responsible Gambling Council (RGC). “Operators come from different jurisdictions with different regulations and standards. As everyone navigates this new market, the boundaries are being established and learned. It will be crucial to continue monitoring the market as more operators enter and operating practices become formed.

“The recent penalties demonstrate that the regulator is closely monitoring and enforcing compliance with the standards, creating a level playing field for all operators. This early precedent-setting for behavior by the AGCO is a positive sign and speaks to Ontario’s strong commitment to responsible gambling safeguards and consumer protections.”

The AGCO wanted to send a signal that they’re watching the market and they’re going to be enforcing the rules. I think for both sides, this was a good learning experience.Peter Czegledy, a partner with the Toronto-based law firm Aird & Berlis LLP, added that “with such a large number of new entrants into the regulated Ontario market, many of whom may have made changes to their pre-existing operating model to meet its standards, it does not surprise me that a few issues would arise early on.

“Naturally, I would expect that to be less likely as time passes, as the parties become more familiar with each other, as well as with the market and the structure everyone operates under.”

Paul Burns, President & CEO of the Canadian Gaming Association (CGA), concurred. He characterized the market’s opening month as a “getting to know you” situation.

“The operators are trying to figure out what they can and can’t do at this point,” Burns said. “It’s just about getting comfortable with the language in terms of what’s acceptable and what isn’t. It’s not that they can’t offer both bonuses and inducements to players, it’s just that they can’t advertise them in mass media.

“The AGCO wanted to send a signal, too, that they’re watching the market and they’re going to be enforcing the rules. I think for both sides, this was a good learning experience.”

Neither the RGC nor the CGA believes the rules are overly restrictive.

“The standards are evidence-informed,” White said, adding that the RGC assisted the AGCO, the Ontario government, and iGaming Ontario (iGO) as regulators formulated the standards. “They are committed to responsible gaming and consumer protection.”

“The current standards in place for iGaming build upon the already robust standards for land-based [casinos] but updated to reflect the unique characteristics of iGaming. This process for the development of these standards is based upon evidence, industry best practices, and consultation with many industry stakeholders, including RGC. RGC works with many operators around the world, and across the board, there is strong support for adherence to these standards and upholding the commitment to consumer protections.”

Burns added that the AGCO wanted to achieve a balance with their rules. “Most operators think it’s a good balance, by and large,” he said. “Operators can still offer bonuses and inducements, they just can’t market them in mass media. They can offer them to players in their database and on their site.

“I think everybody appreciates the rules and that there is a balance. A lot of operators have said they’re happy to compete — but they’ll mainly be competing on product and service, versus the size of a bonus.”

System Working As Designed

A lot of operators have said they’re happy to compete — but they’ll mainly be competing on product and service, versus the size of a bonus.Czegledy disagreed with the characterization that the early fines were a “bad omen” of what was to come in the market. “I wouldn’t call it a bad omen for anyone — rather it’s simply the system working in the manner it was designed,” he said.

“The regulator published the standards in advance and has a duty to enforce them. The operators involved are very reputable, sophisticated, and experienced businesses. I would expect that they generally have carried on their businesses with distinction, or they would not have passed the very recently completed regulatory and due diligence reviews that were a condition of, respectively, their licensing registration and commercial agreement processes.”

The rules were also not created on the fly, Czegledy said.

“Broadly speaking, these kinds of rules are grounded in what the regulator perceives is necessary to properly protect the public. The regulator will have looked at the examples set by other jurisdictions in similar areas, as well as other sources — such as reviewing past history for related incidents and their outcomes, considering the practicality of imposing a particular rule from an operating perspective, etc. — before creating the rules.

“I can’t say what specific jurisdictions they looked at in this instance, but I also can’t imagine that any 'Tier 1’ regulated jurisdictions would have been ignored.”

Standards Not Likely to Change Anytime Soon

None of the experts believe the AGCO will lessen its standards anytime soon.

“We don’t expect or want Ontario to ease these rules,” White said. “The government and AGCO have a strong commitment to consumer protections. Each operator is required to go through RG Check accreditation within two years of receiving their licensing. The accreditation process combined with oversight by AGCO and iGO has created an effective evaluation framework.

We don’t expect or want Ontario to ease these rules. The government and AGCO have a strong commitment to consumer protections.“Through this robust framework, the dialogue between industry stakeholders and the government and AGCO needs to be continuous to assess the impact of the new market on Ontarians. This commitment also means a continuous improvement to the standards and modifications where required to maintain the highest level of consumer safeguards.”

Burns said the AGCO “wants to see how the market is going to behave. I don’t think they have an idea one way or the other [on changing the rules], to be honest. They just want to see how the market is going to unfold. They want to make sure the market is healthy, competitive, and sustainable.

“They’ll look at the standards as they go forward, but there’s no plan at this point to make any changes.”

Czegledy said he believes it is inevitable that the rules will be changed in some fashion over time. “Some of that certainly will be based on the lived experience of the participants as the new regulatory framework moves from being a concept to a practice,” he said. “Whether that means that some standards are removed, replaced, or altered to make them more restrictive or less restrictive remains to be seen.

“The framework has only been operating for a month. That’s a pretty short time period to base regulatory change on. In addition, I would be wary of making broad judgments — with respect to the framework, the AGCO, iGO, or operators — based on such minimal experience.”

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