Report on Ontario's upcoming online gambling market shows land-based gaming impact

Online gambling in Ontario could lead to the loss of hundreds of millions of dollars annually for the province and its municipalities. This is the warning that comes in a report from a consulting firm for the gambling industry.

However, the source of the research has to be taken into account. Great Canadian Gaming requested the report. It holds the largest share in Ontario's land-based casino market.

The report says that even though Ontario will be able to tax the new online gaming sites, it will still lose revenue. It predicts a significant shift in spending away from land-based casinos and towards internet gaming.

The report states that Ontario's online gambling tax rate is lower than the government's percentage from gambling spending. This means that CAD$550 million ($439 million) of Ontario's annual revenue will be lost over the next five-years.

The annual revenue from gambling and lottery in the provinces was as high as $2.5 billion ($2.1 billion) before the pandemic.

Companies that are involved in online gaming claim the report's conclusions to be flawed. They question, in particular, the assumption that existing casino customers will suddenly spend less money at casinos and more on online gambling sites that are available to them. In other jurisdictions where iGaming has been added, cannibalism of land-based operations hasn't occurred.

"The new iGaming market is being developed to exist in parallel with land-based gaming activities in Ontario's regulated market, and not detract from [Ontario Lottery and Gaming's] revenue generation," says Finance Ministry spokesperson Scott Blodgett.

The government created iGaming Ontario in July. This agency will supervise online gambling offered to companies who sign agreements with the province. Ontario has not included online gaming revenue into its financial projections, but more details are likely in the next budget.

The report also asserts that local municipalities could lose as much as CAD$40 million ($37 million) in annual revenue. However, there is no legitimate basis for the projections. There is no precedent that supports the assumption.

At least one Ontario city isn't worried. Pickering Mayor Dave Ryan said in a recent interview, "There is cause for concern, but we're not overly concerned. We believe that there is always going to be room for the bricks-and-mortar gaming. We're social animals. People like to get out, congregate and enjoy that experience. Plus, there's the entertainment factor that you don't have online."

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