• Joanna Hojjati, Author |
4 min read

Canada is on track to open its lucrative iGaming market to private sector operators. Going first is Ontario, where the regulators at the Alcohol and Gaming Commission of Ontario (AGCO) will soon validate the country's first slate of entrants.

Expanding the iGaming market is a big bet for both the federal and provincial governments. It's also one that promises big returns for private sector players who abide by their jurisdiction's rules. In Ontario, that means navigating a stringent application process and readying the operational processes, controls, and partnerships that will stand up to regulator scrutiny.

Have a realistic game plan
Becoming a private sector iGaming operator means being prepared to back your play. After conducting an initial compliance gap analysis, private sector applicants in Ontario will need to show the AGCO they have addressed (or plan to address) their control gaps in a meaningful and sustainable way. One's ability to demonstrate this in their application may be a key factor in the regulator's eligibility review.

It also pays to be realistic. Regulators will want to see that any gaps addressed in that crucial upfront analysis are being backed by realistic and achievable measures. That means committing to control design strategies that are doable and will stay in place well after plans are operationalized.

Everyone benefits when internal controls—or what the AGCO calls "control activity matrices"—are built to purpose and are audit friendly. To that end, there is an advantage to involving one's internal auditors or third-party auditing advisors from the start of the application process. That way, when it comes time for them to report on your controls, expectations will be aligned.

But key to thinking long-term about this opportunity is recognizing the benefits of designing controls and processes in a flexible and holistic way. Entities that are planning to operate in Ontario will most likely want to do the same in other jurisdictions when they open up, so designing with flexibility in mind now will save rework down the road and make the organization more agile in future application processes.

It also never hurts to look for outside inspiration. Canada's iGaming operators can take cues from more mature markets (e.g., the UK) and glean insights from subject matter experts and consultants who are familiar with private sector initiatives such as this.

Your partners will be a factor
The new Ontario standards require private sector iGaming operators to sever their ties with organizations that continue to operate in the unregulated market. This can be complex, especially in an interconnected and borderless realm such as online gambling. For example, there may be scenarios where applicants are working with suppliers who have tangential business ties with unregulated organizations. It's also possible that Ontario applicants may continue to work with a backend service provider that is also providing services for out-of-province operators. This scenario may fall outside the AGCO's jurisdiction but may still be an important consideration. As such, it's in every applicant's best interest to ensure their service providers and suppliers can provide upfront and ongoing assurances that they're cutting ties on their end. Again, the key is to show due diligence when regulators raise questions.

Certainly, now is the time to choose your allies wisely. For Ontario's applicants, partnering with an AGCO-registered and gaming-dedicated supplier comes with the knowledge that the supplier has, or will be, well vetted. Applicants with suppliers who are not recognized by the AGCO, however, will do well to conduct further due diligence to ensure they're comfortable with their supplier's control environment, processes, and market reputation. Keep in mind that the consequence of any undo actions on behalf of service providers and suppliers will land on the primary operator. So, if it takes more time and effort to verify your third-party networks, consider those resources well spent.

It's a learning process for everyone
There is no universal playbook for Canada's iGaming transformation. Even still, similar developments in single-event sports betting (see my colleague Steve Hills' post "In the game: Chasing a license for single-sports betting") and the AGCO's application process in Ontario will offer future market entrants a good view of what to expect.

Even still, the coming year will be a learning period for all stakeholders. That includes the operators hoping to make a claim on Canada's iGaming market and the regulators who will be intent on maintaining that market's integrity. The application process will be rigorous, but having a practical, flexible, and auditable game plan will go a long way toward ensuring the country's iGaming transformation pays out for everyone.

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