Good things come to those who wait, and those waiting for another regulated iGaming market to open in Canada are hearing they’ll ultimately get an operator-friendly model in Alberta.
Alberta will also outline its competitive market for online sports betting and internet casino gambling in “enabling” legislation it aims to pass next year, according to Service Alberta and Red Tape Reduction Minister Dale Nally.
Regulations to further define the iGaming market will follow, Nally said during an interview with Covers last week in Las Vegas.
And once those regulations are in place, the iGaming market can launch, the minister added.
New year, new market?
The comments from the politician overseeing Alberta’s iGaming overhaul further highlight how the timing expectations for the launch of a new market have been pushed back from late 2024 or early 2025 to now later in 2025.
A day before speaking to Covers, Nally had sounded hopeful during a panel at G2E that Alberta’s market could launch by the fall of 2025. However, during an interview at the Luxor, he made it clear there’s no firm date yet.
“Obviously, I’m being bullish,” Nally told Covers. “But at the end of the day, I don’t know the date. What I can commit to is we’re going to put the legislation in the spring. And once we do the spring legislation, then we’ll write the regulation. So anytime thereafter. In fairness, I can’t tell you it’s going to be August, September, October, November, but I’m pretty confident that we’re going to be able to say 2025 we’ll be able to offer a legal, regulated space for iGaming.”
Alberta will be the second Canadian province to launch a competitive iGaming market after Ontario did so in April 2022. Most other provincial governments have thus far allowed government-owned lottery and gaming corporations to have a legal monopoly over online gambling within their borders.
The government-owned Alberta Gaming, Liquor, and Cannabis Commission (AGLC) currently boasts the only “regulated” online gambling platform in the Western Canadian province, the agency’s Play Alberta brand.
However, when Alberta launches its new iGaming market, it will open the doors for private-sector operators to legally do business in a jurisdiction with a population similar to that of Kentucky and Oregon.
What those states lack that Alberta will have, though, is the capability for operators to offer online casino games to residents of the province, in addition to mobile sports betting.
One U.S. investment banking firm has already predicted Alberta could become the eighth-largest online gambling market in North America and generate more than US$700 million in annual revenue by its third year.
In other words, hopeful they'll launch that iGaming market in Alberta before next year's G2E.
— Geoff Zochodne (@GeoffZochodne) October 9, 2024
But first things first: Alberta’s iGaming market needs to launch. While there were hopes it would happen this year or early 2025, the timeline has been pushed back as Nally and others in the Alberta government still have to finalize the details.
The launch date, whatever it is, may not be tied to any major sporting event either, such as the Super Bowl or March Madness.
“We’ll make the right decision about how soon we can get something out,” Nally said. “We’re not going to postpone it just so that we can combine it with something else.”
Nevertheless, Alberta wants its iGaming market to be alluring enough for operators to join. That is key to ensuring unregulated entities currently doing business in the province come under local regulation.
“We’re going to make it as seamless as possible for them to enter the market,” Nally said. “We want to make it as attractive as possible."
Legislate, regulate, launch
Who exactly operators are dealing with is a question that must be answered. The Alberta government passed a bill earlier this year allowing the province itself to “conduct and manage” online gambling activities, not just the AGLC. That was seen as a possible prelude to the launch of a competitive iGaming market.
The provincial government now wants to enact additional legislation outlining the new system before contracts are executed with operators and they can launch.
Nally said the bill will contain “the broad strokes of what our iGaming market will look like and then we will further define it in regulation and then in policy.”
The minister added that Alberta still plans to have a structure “very similar” to that of Ontario.
In Ontario, the province constructed a new entity, iGaming Ontario (iGO), with which operators contract before they can do business. Before iGO was created, the Ontario government passed a budget bill with certain provisions that allowed for the agency to be set up.
Although Alberta considered drafting operator contracts that could detail its regulatory structure, the province now wants a law on the books before anything gets signed.
“In the end, we decided we wanted to have enabling legislation in place before we went forward with the contracts,” Nally said.
Where you go, iGO (maybe)
The Alberta government wants to avoid showing any favouritism toward the AGLC as well, which is why the agency is not going to be the regulator of the new iGaming market. The AGLC, like Ontario’s lottery and gaming corporation, is also trying to step up its game before new, regulated rivals arrive, such as by recently launching a mobile app.
“I anticipate [the AGLC] will continue to do well,” Nally said. “But I’m not surprised that they’re looking at the landscape and saying ‘Listen, we need to pull up our socks and get out an app.’ Because they need to be ready to compete with, essentially, the private sector. So I’m not surprised that they’re doing that and I’m pleased that they’re doing that. Ultimately, we want a free and open market, not a monopoly.”
Again, though, the Alberta government is still deciding on all the details of its iGaming market, including whether there will be an iGO-like entity involved.
“We haven’t landed on that either,” Nally said. “These are live conversations where we’re saying ‘Look, how do we manage this? Do we need to go with an iGO-type organization or can we do it in-house?’ And the reality is we don’t know. We’re doing that work now to decide.”
Oversight of the market is a big decision for the Alberta government to make, but it’s not the only one. One important detail will be the percentage of their revenue that operators must pay the province.
In Ontario, online sports betting, casino gaming, and poker firms must turn over approximately 20% of their income. Nally suggested in the past that Alberta could go higher, but there is no final number yet.
“Ultimately, it’ll be a government decision, what our tax rate is,” Nally said. “And we haven’t landed anywhere.”
Cannibal corp. considerations
The minister noted there are Alberta-specific considerations to think about, such as its land-based casinos. Those casinos could open brick-and-mortar sportsbooks, but given the popularity of online wagering, the provincial government is looking at how the iGaming market will affect the bottom line.
“If there has been any cannibalization of land-based casinos in Ontario, that will be extrapolated in Alberta because we have significantly more land-based casinos per capita,” Nally told Covers. “So we’re very sensitive to that and we’re doing that analysis now. I can’t tell you where we’re going to land. It depends on that analysis and the government will make a decision that’s right for Albertans.”
Alberta also wants to ensure First Nations are “partners in prosperity,” including in the iGaming sector. What role they play, and perhaps what revenue they receive, from online gambling, is to be determined. Alberta’s brick-and-mortar gambling provides funding to charities as well, another consideration for the government.
“We have a unique charitable gaming model to Alberta, and that is one that is very generous,” Nally said. “One of the challenges we have in the iGaming space is the revenues are not as large in terms of the percentage the government gets. And so it does create challenges. That said, ultimately, it will be a government decision where we land.”
No 'grey' heyday
With the exception of Ontario, Alberta, like the rest of Canada, has a large "grey" market for online gambling, wherein operators that may be regulated abroad are accessible to local players. More than half of all iGaming revenue in Alberta (and likely even more than that) is earned by "grey" operators.
In Ontario, the province gave companies that wanted to join the regulated market more than six months to cease any unregulated operations. Alberta’s window for entry will be shorter.
“We’ve made the decision that we are not going to make it difficult for the operators in the grey space, since we don’t have anything to offer them,” Nally said. “And many of them are telling us they want to join our market once it’s regulated and legal. So we’re not going to make life difficult for them before that. However, once we go live we’re going to have a short runway for which they can join our market.”
Alberta's forthcoming iGaming market could eventually generate more than US$700M a year in revenue, according to Citizens JMP Securities analyst Jordan Bender.
— Geoff Zochodne (@GeoffZochodne) June 26, 2024
"If $700M of gaming revenue is met, it would represent the eighth-largest gaming market in North America." pic.twitter.com/E6IJX9DASe
Once the Alberta sports betting market goes live, any operator that isn’t regulated on day one but plans to join later will still have to follow the province’s advertising requirements. Nally said they want to avoid a “Wild West” situation where regulated operators are following the rules but others are advertising however they want before ultimately joining the market.
“We think people are going to know on day one whether they want to join our market or not,” the minister said. “And if they say to us, ‘We want to join your market but it won’t be for 60 days,’ we’re going to say ‘Fine, we’ll be ready for you in 60 days but we want you to start recognizing the advertising requirements now,’ so at least there’s a level playing field.”
The advertising rules are being finalized, such as what restrictions there may be on the use of athletes and celebrities and the touting of bonuses and other inducements. Allowing for both would no doubt prompt concerns among responsible gambling advocates, among others.
“But we’re also hearing that if we only allow the illicit market to advertise, because we can’t stop them, then we’re creating an environment where we’re doing all the right things over here but the good guys can’t compete with the illicit market,” Nally said. “And so that’s not the space that we want to be in. We want to have a fair and equitable market for the responsible operators to participate.”
Keeping it light
In general, Alberta is trying to place as few restrictions “as possible” on entering its market, according to Nally. That is to ensure plenty of participation by private-sector operators and the health of the new regulated market.
The minister has heard the rumblings from other provinces and provincial lottery corporations following the launch of a regulated market in Ontario, such as ads for operators only authorized to take bets in Ontario that are spilling over into other jurisdictions.
Nally said what he really hears is Crown corporations concerned about losing their monopoly; AGLC, he noted, has decided to “embrace” the coming competition.
So while Alberta is set to be the second province to launch a competitive iGaming market, it remains unclear who could be number three or four.
“The only jurisdiction that we’re really speaking to in Canada is Ontario,” Nally said. “We want to get this market up and running and make that the priority and then we’d love to partner with other jurisdictions and work with them as Ontario has worked with us. So if we can help promote this market, we’d love to do that, but right now we’re focusing all of our resources on getting this right.”
