Ontario’s Auditor General Sets Three Conditions on Launch of Private Gambling Market

Ontario has been enjoying robust results in its iGaming and interactive wagering sectors, as the Canadian province is still trying to figure out how to best welcome private operators. The initial date of early 2022 has been floated, with pressure rising as some of the most significant sports events draw near. 

However, the province’s auditor general, Bonnie Lysyk, has outlined some challenges associated with the expansion of the gambling market should certain steps not be taken. In a 15-page report published earlier this week, Lysyk outlines three proposals that should help the government and the operators of province gambling to create a framework that would allow them to coexist with any private operators that may be arriving next year. The report is directly addressed to the Ministry of the Attorney General.

Basically, Ontario currently runs its iGaming and interactive wagering through the Ontario Lottery and Gaming Corporation. The sportsbook, Proline+, is the only authorized sports gambling bookmaker in the province. 

Understandably, operators are keen to enter the province ahead of some of the biggest events in the world of sports, including the Super Bowl in the United States and the college basketball season, colloquially referred to as March Madness and played in Canada’s southern neighbor. 

However, jumping the gun and giving a free pass to most operators would not necessarily be good for the province if certain regulatory norms aren’t set beforehand, argues Lysyk in her report.

Avoiding Legal Challenges with Private Operators a Must 

To be able to break ground in Ontario, private operators would need to operate in a manner that is compliant with the country’s Criminal Code, argues Lysyk in her first proposal. The idea is to make sure that any future Internet gaming operations are aligned with state laws lest they cause confusion or impasses later on. 

Lysyk is adamant that Ontario should be able to create a framework and make it known to gambling operators that they would have to cover the prerequisites as set out by the Criminal Code. The report included both Lysyk’s recommendations as well as the government’s response.

In this case, the ministry has taken Lysyk’s recommendations in mind and said that it would conduct additional audits to ensure that potential legal risks resulting from the introduction of private operators are addressed in full. Lysyk’s office expects Ontario to conduct thorough background checks, such as whether a company had been the subject of litigation in Canada or Ontario in the past.

In a way, this first recommendation speaks about “bad actors,” or those companies that may have been involved with illegal gambling in Ontario in the past. The province does not explicitly take aim at companies that may have operated offshore before moving in the country depending on the available legislation, but Lysyk’s recommendation is a reminder about the necessity of thorough background checks. 

This is reflected in the recently released compliance guide by the Alcohol and Gaming Commission of Ontario or AGCO for short. 

Transfer of Regulatory Responsibility as per Lysyk’s 

AGCO is determined to create an open market that will partially depend on stakeholders maintaining the integrity and ensuring responsibility. However, this is something that Lysyk feels maybe a little much. Rather, she suggests that “key responsibilities to maintain integrity and fairness” should not be entrusted entirely to the private sector. She goes on to enumerate what aspects of the industry seem to be shifting away from government control in the hands of private companies to wit game design, gaming systems, payouts, calculating and displaying odds, and more. 

Lysyk’s report recommends that iGaming Ontario, a subsidiary of AGCO, undergoes an audit, and should it be found fit under criteria set out by the Criminal Code, it may be tasked with the governance and operating responsibilities that are now within the remit of the Alcohol and Gaming Commission. The ministry response states:

“The regulation establishing iGaming Ontario requires that the Board of Directors develop and maintain a conflict-of-interest policy for the directors, officers, and employees of iGaming Ontario. Similarly, the Alcohol and Gaming Commission of Ontario’s (AGCO’s) conflict of interest policy is being updated to account for its relationship with iGaming Ontario. These policies will deal with potential and actual conflicts that may arise between the regulatory interests of the AGCO and conduct and manage (operating mind and revenue generation) interests of iGaming Ontario.”

Auditor general report by Bonnie Lysyk

Ensuring Integrity and Combatting Offshore Gambling 

Lastly, Lysyk’s report questions how the province would conduct and manage the proposed gaming market “without directly verifying the fairness and integrity of games being offered by registered operators.” Lysyk insists that any such information is made publicly available to lawmakers before the Internet gaming market (involving private companies) is launched. 

The ministry is confident that such measures already exist, citing AGCO’s Registrar’s Standards for Internet Gaming, which is one of the measures that would serve to ensure the integrity of the futures market that will most likely include many established brands, including PointsBet, BetMGM, DraftKings and FanDuel, theScore, Caesars and others. 

Most of these companies have already sought to expand their operations in Canada and establish a strong presence in the country. The adoption of regulated sports gambling with the help of trusted names would serve as the basis of combatting offshore gambling, which currently accounts for CA$10 billion (around $7.80 billion) wagered offshore every year, as per figures released by the Canadian Gaming Association.