Gambling business opportunities for Canadians in 2021

The gambling industry in Canada enjoys consistently high revenues. However, the market is dominated by provincial authorities and offshore casinos, with very little — if any — room for new iGaming operators. How can Canadian investors, entrepreneurs, affiliates, and land-based casino owners get started in the online casino and sports betting business in 2020? Keep reading to find out what options Canadian businesses have for breaking into the world of iGaming. 

Gambling is a widely accepted form of entertainment among Canadians, unlike in other countries with cultural taboos against gaming. Since the middle of the twentieth century, gambling legislation has gotten progressively more liberal, and in the past decade provincial gaming authorities have been opening websites in order to fully embrace the modern age. Except for certain authorized providers, provincial governments have monopolies on offering gambling services to Canadian citizens, so Canada-based entrepreneurs with visions of iGaming success can find themselves shut out of the industry. However, there are plenty of opportunities abroad. Keep reading to learn more about the Canadian market and how Canada-based businesses can jump into the international iGaming industry.

Overview of the gambling and betting market in Canada

Gambling has been very popular among Canadians for a very long time, and while the details vary from province to province, some form of gambling is available in each of them. Unlike in some other countries, gambling has a wide cultural acceptance in Canada; on average, six in ten Canadians participate in some form of gambling. That gives the industry a substantial audience — the country has a population of over 37 million, with around 27 million over the age of 18.

While for most of the twentieth century all forms of gambling except for horserace betting were banned, the authority to regulate gambling was transferred from the federal to the provincial governments in 1969, and regulations have grown even more accommodating over time; the country’s parliament is currently debating a law that would strike down the longtime ban on single-event sports betting, one of the few remaining restrictions.

The revenues gambling can generate give provincial governments a powerful motivation to make various forms of gambling readily available to their citizens. For example, the British Columbia Lottery Corporation has brought in C$21 billion for the province since 1985, including C$1.4 billion in the 2018-2019 fiscal year. Tax revenues from gambling are used by provincial governments to support cultural programs and other social initiatives. 

Each province either has their own gambling regulatory body or cooperates with regulators in another province. Both online and land-based lotteries are available across the country, every province except for Newfoundland has land-based casino gaming, and all provinces except for Ontario and British Columbia allow Video Lottery Terminals in bars and lounges. 

Online gambling was legalized in 2009, at which time provincial authorities began to establish online gaming sites. The first was the British Columbia Lottery Corporation, which opened PlayNow in 2010. Loto-Québec launched espacejeux.com the same year, and Manitoba followed suit in 2013, trying to tap into the estimated $37 million citizens were spending on offshore sites every year.

Casino games, lottery ticket sales, sports wagering, bingo, and poker are all widely available online. In short, between the various provincial governments and the offshore platforms that face the country, Canadian players have no shortage of options when it comes to sports betting and casino gaming. 

However, the cultural passion for betting and liberal legislation don’t mean the market isn’t without its barriers. Only provincial governments and authorized private organizations may legally organize online gambling activities. Some provinces cooperate with private operators to offer online gambling services in arrangements such as revenue-sharing schemes, and private operators can only offer online wagering on horseracing if they are authorized by the Canadian Pari-Mutuel Agency (CPMA). 

A number of offshore operators face the market, many of which broke in before online gambling was legalized, but authorities are wary of pursuing them as the legality surrounding gray-market casinos is very unclear. For example, in 2016, the government of Quebec passed Bill 74, which would require internet service providers to block users from accessing offshore sites. However, the bill was challenged by the Canadian Wireless Telecommunication Association, and the Superior Court of Quebec ruled the bill unconstitutional, as it overstepped provincial authority regarding both criminal and telecommunications law. 

In short, breaking into the Canadian online gambling market isn’t necessarily feasible for businesses based in Canada, who between provincial monopolies and an oversaturation of offshore operators are in a way locked out of their own local market. However, that doesn’t mean they don’t have options. By its very nature, online gambling is a flexible, international business — in fact, the ability to face multiple markets in various regions of the globe could be one of its biggest draws. There are several ways for Canada-based businesses to break into iGaming.

How can entrepreneurs based in Canada get into the online casino and sports betting industry?

While the Canadian online gambling market is dominated by provincial and offshore operators, there are plenty of other markets around the world that offer just as much potential. The well-established and well-regulated European market, home to several licensing authorities, is predicted to be worth $35 billion by 2022. 

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In the UK, the largest single-country market in Europe, a December 2019 study revealed that 47% of respondents had gambled in the past four weeks, and 21% of respondents had gambled online in the same time period. In a time period stretching from October 2018 to September 2019, Gross Gambling Yield (GGY) from online casino gaming reached over £3 billion. 

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In Asia, where many cultures have a passion for betting, online gambling was worth an estimated $72 billion in 2019. Gaming revenues in the Philippines, which has become famous for licensing offshore operations, reached $1.5 billion in 2019. India has also become a closely watched emerging market. The combined turnover of regulated and black market betting in the country is estimated at $60 billion, with black-market operators accounting for $40 billion of the total and walking away with $2 billion in revenues. 

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The continents of Africa and Latin America are both seeing iGaming booms, as a number of different countries are rolling out new regulations for the iGaming industry, particularly when it comes to sports betting. With more and more governments liberalizing their legislation, iGaming operators are making moves to get in on the ground floor of these rapidly growing emerging markets. The online gaming market in Africa was valued at almost $1 billion in 2019, and that number is expected to double by 2024. In Latin America, home to such massive markets as Brazil, Columbia, Mexico, and Argentina, online gaming revenue for 2019 was estimated at $2.5 billion. 

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To sum up, there’s no shortage of markets for entrepreneurs based in Canada who are looking for opportunities abroad. Two options that leap out are investment in established gambling enterprises and starting your own online gambling platform.

The quickest and easiest way to get involved is probably to invest in established businesses — or even startups — that are based overseas. Many online gambling operations need liquid capital when they’re looking to get started or to expand their operations, and investing in an online casino or sportsbook can get your foot in the door of a dynamic industry that’s filled with opportunities.

Entrepreneurs looking to take a more active role can start their own online gambling platform facing a foreign market. Starting your own offshore gambling business will involve analyzing prospective target markets, registering a foreign company, applying for a license, building the casino platform and integrating game content and payment systems, and engaging in effective marketing and promotion. 

Regulators in a number of different jurisdictions issue licenses, usually provided that the applicant establishes a company in the jurisdiction. These jurisdictions often have low or nonexistent gaming taxes and low corporate income taxes. 

Why invest in online gambling?

Industries with inflexible demand are always good options for investment, and games of chance have always had their devotees. And now’s a better time than any to get involved; global iGaming revenues are predicted to rise above $117 billion within the next five years, up from $58 billion in 2018. 

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Aside from exploding revenues, there are social factors to consider. People are living more and more of their lives online, and entertainment is no exception, with every reason to believe the trend should continue in the future. Additionally, the online gaming industry was one of those best able to adapt to the tumultuous events of 2020. While land-based casinos around the world were shuttered and sporting events were postponed or cancelled, live casino and virtual sports betting revenues exploded. Live dealer games connect players to a real dealer via streaming technology to play games like blackjack or baccarat, and virtual sports are computer-generated simulations of sporting events — and both are examples of the level of innovation you can expect from the industry. 

Essentially, as online gambling takes advantage of all the latest technological developments already, the industry is agile and flexible enough to handle even the most unforeseeable disruptions to daily operations. 

How can Canadian entrepreneurs start an online casino in an offshore jurisdiction?

For first-time online casino operators, land-based casino owners looking to expand into other markets, and affiliates who are ready to start their own online casino or sportsbook, offshore jurisdictions present the best (or perhaps only) option for businesses based in Canada.

Registering a company and acquiring a license

The first step towards getting an online casino or sportsbook up and running is establishing a company and acquiring a license. Curacao, Malta, and the Mohawk Territory of Kahnawake are all popular options for operators, with Curacao a very common choice for first-time operators due to its comparatively easier process and lower taxes and fees. 

The Caribbean island of Curacao has the longest-running history of any online gambling licensor. Operators apply for a sub-license from one of the four master license holders, and a single sub-license allows them to organize any and all gambling activities — one of the biggest advantages of getting licensed in Curacao, along with the net gains tax of only 2% and the lack of a gaming tax. The low taxes, comparative ease of the licensing process, and single, all-purpose license make Curacao a very common choice among first-time operators.

The Mediterranean island of Malta has become an international hub for the online gambling industry. Licenses from the Malta Gaming Authority (MGA) are widely accepted throughout the EU, making them ideal for operators looking to expand their operations into the European market. Compared to Curacao, Malta has higher taxes, as well as a mandatory compliance contribution and several other requirements. Additionally, separate licenses are required for each form of gambling the operator intends to offer. As the MGA license is more expensive than one from Curacao, operators often first acquire a Curacao license and then one from MGA once they’re ready to expand.

The Isle of Man, a British crown dependency located between the UK and Ireland, is another popular licensing jurisdiction for operators facing the European market. License categories are based on the type of business, with separate licenses for B2C and B2B companies. A Full License allows the holder to offer all types of gaming, as well as offering White Label solutions to other operators (who can apply for the Isle of Man’s Sub-License). While the Isle of Man does not have a black list of forbidden markets, as some regulators do, they expect licensees not to enter markets where gambling is prohibited. 

The Mohawk Territory of Kahnawake is a first nations reserve located near Quebec. The Kahnawake Gaming Commission (KGC) has been issuing licenses for both land-based and online casinos since 1999. Kahnawake is a popular choice due to its comparatively low licensing fees, 0% corporate tax rates, and lack of any gaming tax. 

These are just a few of the jurisdictions that issue licenses to conduct online gambling activities. To find out more about the licensing process, get in touch with our experienced legal team. 

We offer consultancy services and complete package solutions for gambling license acquisition that include:

  • Gambling jurisdiction and business advisory
  • Gambling business corporate structure incorporation
  • Opening bank accounts
  • Gambling license application
 

Target market analysis

Regulations should be the first thing you consider when choosing a target market. Fully regulated markets are the safest options, as authorities will provide clear rules and requirements to follow, so you always know where you stand in relation to the law. Markets that are unregulated or countries where gambling legislation varies from region to region can seem inviting at first, as operators may be able to avoid paying taxes, but setting up shop in these regions has some risks attached. Governments that tolerate offshore operators for now could one day have a change of heart and enact legislation that targets their businesses by blocking their sites, prosecuting players, or other methods. 

You should also look at the size of the potential market’s population, as well as its overall economy,and how much disposable income your players will have. Of course, whether or not the country has a cultural acceptance or even passion for betting will also factor into your decision — countries where betting is banned for religious reasons won’t offer the same prospects for your sportsbook as those with a national love of football.

Once you’ve chosen a target market, you’ll need to research your audience to find out how best to meet their needs. Demographic research will include things like age and gender, but digging a little deeper will yield information that’ll help you tailor your platform’s offering to your audience. An overall analysis of the country’s economy will give you an idea of what kinds of disposable income players will have. 

A careful study of your competitor’s platforms will help you gauge many aspects of your target market. Competitor analysis will give you an idea of appropriate minimum and maximum bet limits, as well as game preferences. Do the players enjoy slots? Baccarat? Poker? Bingo? For sportsbooks, do punters like to bet on football, horseracing, or something else? It’s also a great way to see what payment methods are most commonly used, as well as effective marketing and promotional strategies. With a detailed look at your competitors, you can see what they offer the target audience — and, perhaps more importantly, what they don’t. 

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Casino Software

To give your players the experience they want, you’ll need high-quality casino platform software, games from industry-leading developers, and payment systems from certified providers. New operators should choose a powerful and flexible platform capable of future adaptations such as the addition of different modular solutions. Platforms with a customizable frontend will enable you to choose a design for your website that mirrors your players’ tastes — which can vary from region to region, so casino software that can offer separate pages for each target market is seriously worth considering if you’re planning on facing multiple markets.

Marketing

Player acquisition and retention are essential for an online gambling business model, so operators should outline strategies for attracting players’ attention (often with the help of affiliate sites) and ways to reward players, such as loyalty and VIP programs. Marketing and advertising strategies will also depend on the market’s laws; some markets limit gambling advertisements to certain times of day, prohibit certain forms of advertising, or ban gambling advertising altogether. If that’s the case, you’ll need to rely on search engine optimization and affiliate networks to bring in a steady stream of new players — and again, competitor analysis can help you puzzle out which affiliates are worthwhile and which aren’t. 

For more details on how to start your own online casino business, read our in-depth article on the topic

How can Slotegrator help?

Starting an online casino business on your own will take a lot of time, money, and hassle. Most new operators decide to cooperate with an aggregator in order to stream and accelerate their launch process — and that’s where Slotegrator comes in. We offer a range of different services to help you maximize your return on investment at every step of your journey in the iGaming industry. 

Licensing and jurisdictional services 

Our experienced legal team can guide you through the complex licensing process in a number of different jurisdictions. Instead of wasting your time stumbling through a bureaucratic labyrinth and risking rejection, leave the paperwork to us while you focus on business development.

Platform software

Your iGaming business will be dead in the water without a high-quality platform, but building one from scratch can turn into a frustrating waste of time and money. Instead of working from the ground up, get readymade software for your platform’s front- and backend. Our Turnkey and Casino Kit solutions come with a customizable design and powerful management tools. Established and experienced operators looking to expand their operations have the option of our White Label solution, letting them operate under our license.

We also offer sports betting software for those interested in starting a sports betting business. Our Sportegrator solution is a complete bundle for an online sports betting business with customizable software and a wide range of sports betting feeds.

Game integration

Online gaming projects need a bottomless selection of gaming content. Game developers are constantly releasing new titles, and integrating new content is the best way to keep your platform fresh and appealing. Our APIgrator solution can integrate over 5000 games from a wide variety of industry-leading developers in a single, cost-efficient integration session. 

Payment system integration

Fast, smooth, and secure processing of deposits and withdrawals is an absolute must. It’s also critical to support transactions in a number of different currencies. Our Moneygrator offers over 140 payment methods from over 20 industry-leading certified payment service providers, letting your players use debit and credit cards, bank transfers, e-wallets, vouches, and cryptocurrencies.

The online casino and sportsbook industry is one of the world’s most exciting — and fastest growing. If you’re an entrepreneur based in Canada (or anywhere else) and you’re interested in breaking into the iGaming business, contact us for a free consultation — we can explore your options and find the one that’s right for you.

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Сomments

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Nice Article. It is very explanatory and informative post, which tracks back every event related to the history of gambling business in Canada. Details related to basic licensing requirements, regulation rules, gambling taxes as well as the state profits from gambling are very enlightening. overall a very factual post. Bingo Nice

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