One of the questions of the April 4 launch of expanded legal sports betting in Ontario is what will happen to bettors who have been using the Ontario grey markets – unregulated books that have been operating for years prior to legalization.
Ontraio Grey Markets Never Really Enforced
Given Canadian criminal provisions were tailored specifically to ban single-game bets – with parlays still being sold at every corner store in the country – Canadians have always had access to a multitude of sportsbooks, especially the cadre of British books that are regulated in the United Kingdom.
For many, legalization hasn’t actually changed anything yet, with the previous criminal prohibition never being enforced, and even though it was on the books, many bettors weren’t actually in violation of the prohibition. Bets on Golf or UFC or any number of events was never illegal, and Canadians have therefore had a thriving betting scene, especially compared to the pre-legalization American landscape.
With the U.S. now legalizing, the grey market has been mostly swamped in the states that have legalized, but with much greater grey market penetration and longer ties to the betting landscape, what will happen to the Ontario grey markets and those bettors used to using them?
The short answer is probably not much, because the books most associated with access in Canada but not in pre-legal U.S. markets – namely but not exclusively William Hill and Bet365 – will presumably just seek to become regulated operators, especially given we know that there are up to 30 operators seeking formal status.
In many ways, unlike the experience in the U.S., where betting boons were seen after legalization, the Canadian experience is likely to be less revelatory, because for so many, this will only be the formalization of the grey market status quo, and the informal “don’t ask, don’t tell” policy that sports betting had been under until legalization.
More Ontario Sports Betting Competition
The advantage of legalization will be the increase in competition, and the bonuses on offer, but many operators may see less of a surge for their services, especially if those who have been using the grey market for years decide not to deposit large sums into new sites, content to use their usual services.
All of this should see an increase in pressure for those new operators seeking their entry into this market, because if they do not find something that actually differentiates them from the existing competitors which seem likely to be granted formal status with an established customer base from the grey market days, Ontario won’t be the panacea for American operators many are waiting for.
The answer will probably just be throwing money at the problem, for both bonuses to customers and in increasingly ludicrous TV ads with what qualifies as mid-tier Canadian celebrity, but the existence of the strong grey market changes the calculus for Ontario’s legalization in real ways.
At the end of the day, it’s in everyone’s interest for the current Ontario grey markets to be brought into the legal market – for operators who won’t want their legal ambiguity to cost them money that flocks into legal books, and for the province which doesn’t want to see tax revenue flood out the door because they can’t tax the profits of grey market operators.
That said, this is one of the more underdiscussed questions as legalization looms, and clarity will be necessary moving forward.