Wednesday, May 25, 2022
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Ontario May Lose $2.8BN by Legalizing Online Gambling, Says Report

Ontario’s online gambling market holds significant potential. Opening the market would bring benefits for operators and consumers, but it will also fuel the province with fresh tax revenue. While all of this sounds good, a new report commissioned by the biggest casino operator in Ontario, Great Canadian Gaming, warns that the government may lose millions in revenue.

Report Claims That Opening Ontario’s Market May Result in Losses for the Province

Preparing for the launch of the online gambling market, Ontario created iGaming Ontario, a body that is expected to manage and conduct the internet gaming operations offered by licensed operators. Earlier this week, CBC released the details of a new report titled Ontario Gaming Market Assessment issued by HLT Advisory Inc. The whitepaper warns that the province may lose more than CA$2 billion in the next 5 years. Currently, Ontario’s land-based casino operations are taxed at 55% of net gaming revenues. On the other hand, the tax rate for online gambling activities is yet to be set.

However, the report estimates that if online gambling is taxed at 20%, this may ultimately lead to losses in billions of dollars for Premier Doug Ford’s government. If a 20% tax rate is implemented, the report estimates that the province may lose approximately CA$550 million ($474 million) annually. On a five-year scale, that represents losses of some CA$2.8 billion ($2.23 billion).

If an open-license e-gaming model is implemented in Ontario, e-casino would capture a significant share of the total casino market,

claims the report by HLT Advisory Inc.

The whitepaper suggests that the losses will be the result of customers switching from land-based casinos to online casinos. In other words, while the online gambling market will bring fresh revenue for Ontario, the report warns that if players switch from land-based venues to online operators, in the end, this will result in losses for the government, considering the lower tax rate.

Government officials are yet to comment on the suggestions made by the report. But considering that the report was commissioned by Great Canadian Gaming, iGaming operators have already questioned whether those suggestions are credible. According to Jeffrey Haas, the SVP of the leading US-based online sports betting operator DraftKings, once Ontario opens its regulated online market, not much is going to change regarding the gambling habits of the players.

He explained that consumers that prefer online sportsbooks, online poker or online casinos will continue to use them but will switch from “offshore to onshore.” Moreover, according to Haas, consumers who prefer brick-and-mortar casinos will continue to visit them and gamble.

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