Ontario Sports Betting, iGaming Scheme to raise $75 million for province over three years: Audi


Ontario’s competitive online casino gaming and sports betting market is currently expected to generate approximately $75 million in revenue for the provincial government over the next three years, according to a legislative regulator.

Ontario Auditor General Bonnie Lysyk on Monday released her review of the provincial government’s pre-election multi-year financial plan included in last week’s budget.

Lysyk’s office is an independent arm of the provincial legislature that scrutinizes the government and its agencies. the tax audit by the auditor is required by law and hThe last report included a breakdown of the estimated net income of iGaming Ontariothe government agency legally responsible for the online sports betting and casino gambling market, which began on 4

Ontario’s new iGaming market allows private online sports betting operators to legally take bets in Canada’s most populous province for a percentage of bookmaker revenue. It is up to iGaming Ontario is to “implement and oversee the reconciliation of iGaming revenue on behalf of the province,” according to the agency’s website.

According to Lysyk’s report, the provincial government expects iGaming Ontario to post net income of $18 million (in Canadian dollars) for the 2022-23 fiscal year, which began April 1. This is followed by $26 million in net income for 2023-24 and $31 million for 2024-25, or a total of $75 million over three years.

“This is the end result forecast from iGaming’s Ontario operations as of this writing,” Lysyk said in an interview.

The auditor told Covers that the numbers in her review were based on information that iGaming Ontario (iGO) would have provided to the provincial government when preparing its budget. The iGaming funds are lumped in with the province’s “other” revenue in the financial forecast, which projects $179.8 billion in total revenue for the government this fiscal year.

“Indeed [iGaming-related] Income and expenses may vary,” the report said. “Given the lack of history in this area, it was not possible to assess the adequacy of the projections.”

Start time

Lysyc Additionally, a small portion of iGaming-related funds is also expected to come from sales tax, which would not be included in iGaming Ontario’s current $75 million forecast. The Alcohol and Gaming Commission of Ontario (AGCO) also requires iGaming site operators to pay a regulatory fee of $100,000 per year for each gaming site.

Still, the Auditor General’s numbers are the first predictions of what the province’s cutbacks from its new iGaming program might look like. The regulatory framework is the only one of its kind in Canada, where most provinces only allow state lottery and gaming companies to accept measures.

While the iGaming market has multiple goals such as: B. Increased protections for consumers, another goal is to move betting with offshore and out-of-province sites into channels that Ontario can monitor and tax, which would help fund state priorities. A provincial estimate said residents spend around $700 million a year on gray market locations.

The Auditor General’s report said nothing about how much revenue private iGaming operators are expected to generate in Ontario overall. Whatever that figure ends up being, the provincial reported tax rate for companies participating in the new iGaming market is 20% of their revenues.

In any case, the market is still maturing and some operators have yet to launch. As of Tuesday afternoon, 21 locations were active in the new market.

IGaming Ontario also says its approach to revenue reporting will be shared at a later date.

“iGO is encouraged by the number of operators that have joined the regulated market and the scale of iGaming activity to date,” agency Covers said in an email on Tuesday. “With the recent launch and anticipated growth as more operators go live, iGO is constantly reviewing and revising all pre-launch forecasts.”

The situation suggests that the projected iGaming revenue for the province could eventually be upgraded higher.

There are no other provinces in Canada with an iGaming market like Ontario, making direct comparison difficult. In the US, however, states of similar size from online sports betting receive much more tax revenue than iGaming Ontario expects next year, according to the Auditor General.

In Pennsylvania, Gaming Control Board figures show that from July 2021 to March 2022, state taxes due from online sports betting totaled approximately $65.6 million. The state tax rate on sports betting revenue is 34%.

Illinois, on the other hand, received $82.4 million in online sports betting taxes from February 2021 to February 2022. There, the tax on revenue from mobile sports betting is 15%.

New York only introduced legal online sports betting in January. Still, the 51% tax rate on mobile sports betting revenue translated into $163.6 million for the Empire State in the first three months of the promotion.

Legally speaking

As in those states, the launch of Ontario’s new iGaming market was quite the whirlwind as the province’s residents were subjected to a barrage of sports betting advertisements.

There is now a chance that the current government’s iGaming strategy could spark some debate during the election campaign with provincial elections scheduled for June 2nd. The province’s plan was also opposed by indigenous governments, organized workers and at least one major country. resident gambling operator.

Another concern about the iGaming model was highlighted the last time Lysyk delved into the details.

A section of the Auditor General’s 2021 annual report said the province’s approach could face legal risks, as a significant portion of the responsibility could lie with private operators and not enough with the province as required by the federal criminal code.

“Considerations as to whether a province illegally delegated the function of ‘governing and administering’ a gaming system to a private entity has been the subject of previous legal challenges in Canada,” the AG’s report said. “We conclude that iGaming Ontario’s business model may be subject to legal challenges.”

In response, the provincial government said it “carefully designed the online gambling model” to protect consumers and comply with the Criminal Code. The iGaming market then started in April.

Lysyk said on Monday that although the iGaming market is now live and private operators are taking bets on the province’s legal structure, her view has not changed.

“But we think it’s important to have information and understanding of all this so that all members of the legislature are on the same page regarding iGaming and how it works in Ontario,” she added.

Budgeting for bets

The budget, introduced but not passed by the progressive Conservative government in Queen’s Park last week, made no mention of iGaming Ontario. Bookmakers must first obtain an operator registration from AGCO and sign a deal with iGO before they can start on the regulated market.

However, the budget included forecasts for state-owned businesses, including the Ontario Lottery and Gaming Corp. (OLG), whose revenues are expected to increase from around $1.4 billion in 2021-22 to $2.3 billion in 2022-23.

Prior to the launch of the iGaming market on April 4th, OLG was the only legal online sports betting and internet gambling operator in the province, for example with its sports betting provider PROLINE+. Now the company is one of many fighting for the online gambling business in Ontario.

According to the budget, the net revenues of state-owned enterprises such as OLG are expected to grow at a compound annual rate of 10% from 2021-22 to 2024-25. Revenue from these companies should increase from about $5.6 billion to $7.5 billion over the same period.

“The strong growth primarily reflects the expected recovery in OLG’s net income, which was impacted by the public health casino closures in response to the COVID-19 pandemic and expected increases in OLG’s lottery and digital revenues.” it in the budget.

Lysyk’s report looked at net income estimates from state-owned businesses and compared them to historical trends to examine large changes from one year to the next. The WG also reviewed the business plans to ensure that the internal projections matched the projections in the multi-annual financial plan and found them to be consistent.

“In my opinion, the multi-year financial plan is a reasonable representation of Ontario’s finances for the years ended March 31, 2023, March 31, 2024 and March 31, 2025, with the exception of understated estimates of provincial corporate tax revenue in each of the three.” years,” Lysyk said in a formal general statement from the auditor. “Also, the contingency funds recorded in other program spending appear to be overly prudent.”


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