Disclosure: Sports Handle is owned by Better Collective.
Multiple sources tell Sports Handle the Alcohol and Gaming Commission of Ontario is preparing to forbid licensed sports betting companies from doing business with unlicensed entities, and that black-market operators have been warned to get licensed or shutter.
The expected salvo would represent the latest in the AGCO’s struggle not only to move former gray-market wagering operators into legal territory, but also to clearly and consistently communicate with operators.
Since the AGCO and iGaming Ontario launched legal platforms in April, former gray-market operators that did get licensed appear to be dominating the legal market while others from that sector continue to offer wagering illegally — and without penalty at present. While black-market operators have been able to offer wagering with no fines or penalties since April, the AGCO has come down hard on licensed operators that have violated the agency’s stringent promotional advertising rules.
In fact, rather than warn operators or offer up examples in advance of what constitutes a violation, the AGCO has chosen instead to fine violators and, in at least one case, cut off a company it does not regulate for doing business with a company deemed in violation. The AGCO has fined at least four platforms, and it continues to grapple with how to interpret Ontario’s opaque advertising restrictions. Those who were fined could well be only the tip of the iceberg in terms of promotional advertising violations.
Last month, when Sports Handle sent the AGCO questions surrounding the advertising rules, the agency declined in an email response to answer them. The AGCO explained it would not respond to specific questions from Sports Handle for the foreseeable future, because of its parent company’s new commercial partnership with Boston Globe Media, which the AGCO contends is in violation of its promotional advertising standards.
The Better Collective-Boston Globe Media (BGM) deal was made on Aug. 23, and the email reply was received by Better Collective from the regulator on Aug. 30. The email points to Action Network, Sports Handle, and Vegas Insider, saying the three have a “contractual relationship” with Boston Globe Media, which in turn is working with “non-compliant” operators, though the email does not identify said operators or which BGM properties are in question. Better Collective properties were immediately cut off from editorial access to the AGCO, according to the email, without a warning or being given a grace period to rectify issues before being cut off. (Editor’s Note: the AGCO has not suggested that Better Collective is non-compliant, rather BGM, while Better Collective is operating in good standing.)
The email from the regulator to Sports Handle reads in part:
We have been advised by AGCO Gaming Compliance that the following BGM sites have instances of non-compliant advertising (standard 2.05) by AGCO registered operators which have an identified contractual relationship with the affiliate marketing site. Action Network, Vegas Insider, Sports Handle.
AGCO Gaming Compliance has reached out to AGCO registered operators, and we expect that appropriate changes will happen in a timely way.
In the meantime, while the AGCO does not regulate Better Collective/BGM, we cannot support it with editorial content while it carries non-compliant advertising and promotions. If it would be helpful, we can put your team in touch with an AGCO Gaming Compliance official to explain the examples of non-compliance.
Until then, while we’ll be pleased to point you to relevant information that is publicly available on our website, we’ll not be in a position to support your editorial content with additional information or perspectives.
Sports Handle had initially inquired why the AGCO implemented policies restricting advertising of bonuses and inducements. The regulator did offer a vague explanation in its reply.
“The Standards were put in place to protect Ontarians. They include clear restrictions on the advertising of inducements, bonuses or credits, except when they are on an operator’s site, or through direct advertising and marketing issued after receiving active player consent (Standard 2.05),” the Aug. 30 email stated.
Operators already fined by the AGCO
Although the regulator says it provided “clear restrictions on the advertising of inducements, bonuses, or credits,” those “clear restrictions” have clearly been misinterpreted by new operators in the market.
Since the April 4 launch of Ontario’s regulated iGaming market, four operators — BetMGM, DraftKings, PointsBet, and Unibet — have been fined a combined $226,000 (CAD) by the AGCO for various violations of its advertising Standards.
AGCO issues $100,000 in monetary penalties to Draft Kings Canada for alleged advertising and inducement infractions: https://t.co/opAh2bt09o
— AGCO (@Ont_AGCO) June 30, 2022
The Standards in question are 2.04 and 2.05 in the advertising guidelines:
Standard 2.04 requires that all operator marketing, advertising, and promotions must be truthful and not mislead players or misrepresent products, including any implication that chances of winning increase the more one spends.
Standard 2.05 states that advertising and marketing materials that communicate gambling inducements, bonuses, and credits are prohibited, except on an operator’s gaming site and through direct advertising and marketing after receiving active player consent.
Sports Handle interprets that to mean that an operator may advertise its promotional offers on its own website and via emails, social media, or other means sent directly to a customer who has given his/her permission for those ads to be sent, but not on billboards, social media, television, or other outlets. However, what constitutes advertising an inducement, bonus or credit does not appear to be well defined. Companies are permitted to advertise their services in general, but are not to include promotional offers, which seems to be where issues have cropped up.
“Given the AGCO’s refusal to provide specific guidance on what ‘inducements’ means, operators had no choice but to try to interpret to the best of their abilities,” one industry source told Sports Handle. “The amount of operators being fined for advertising material that contained inducements in the first six weeks after the market opened suggests the AGCO should have provided specific words and phrases for operators to avoid. Had they done so, compliance would have been higher and operators wouldn’t be trying to second-guess the standard through trial and error.”
The regulator did conduct a 90-minute webinar in March prior to launch in an attempt to clarify its advertising standards to prospective operators. Many operators have said the lines of communication were excellent with Ontario’s regulators leading up to the launch of the new market. The AGCO doesn’t want to take responsibility in advance, however, for deeming which promotional ads are acceptable and which are not.
“Our job isn’t to find loopholes and to close the loopholes — our job is to communicate intent and objectives and for the industry to act in a compliant way,” Jay Welbourn, senior manager, technology and compliance at the AGCO, said during the webinar. “It’s not our objective at all to become an approval body for all the advertisements.”
Of course, if the regulator is not the approval body for advertising restrictions, then who is? Confusion has filled the vacuum of uncertainty with individual operators interpreting and managing the Standards around launch time.
In U.S. states, regulators often require operators to submit ads — promotional and otherwise — for approval. Most states have a designated time frame in which the operator must submit promotional ads, and some, including Kansas and West Virginia, require explicit approval for new and revamped ads and promotions.
In Ontario, the AGCO has, in effect, declined to act as an approval body while at the same time has asserted its ability to issue violations.
Over the last few months, the AGCO has tasked suppliers with determining if the operators they are working with are in compliance, and then it has told those suppliers that they should suspend relationships with violators.
“The proposed Standard will create an obligation for operators and suppliers to cease any direct unregulated activities in Ontario, and to end any agreements or arrangements with third parties who are carrying out activities in the unregulated market,” an AGCO letter to licensees reads. “The implementation of this proposed Standard may require some applicants to shutter their gaming sites in Ontario until they have satisfied the requirements of both the AGCO and iGaming Ontario.”
Acquiring customers more difficult for some
The strict advertising restrictions have forced many operators to take a different marketing approach in Ontario when compared to many U.S. jurisdictions where the open advertising of lucrative sign-up and bonus offers is an effective and well-used customer acquisition tool.
When combined with the fact that formerly gray operators like bet365 and Pinnacle have been taking wagers from Ontarians for several decades already, some of the new entrants to the market believe they’re at a disadvantage over existing operators with established Canadian user databases. Both bet365 and Pinnacle have become licensed in Ontario.
A homegrown operator based in Toronto, theScore Bet, had a significant number of users in the province already using its popular sports news app, and many of those new users are transitioning to the sports betting application. All of the operators that had some sort of prior presence in Ontario, then, had a leg up on new entries because they had existing databases from which to draw.
This is also often the case in U.S. markets, particularly for companies like DraftKings and FanDuel, which can leverage existing daily fantasy sports databases in a new, legal sports betting market. But in no U.S. jurisdiction have black-market operators been encouraged to get licensed. Rather, in the U.S., the goal is to prevent such platforms from operating in legal gaming jurisdictions.
“Black-market operators … still live in Ontario, are not paying any tax OR being held under the regulatory rules. Advertising is very frustrating for operators playing by the rules,” one industry source previously told Sports Handle.
Many new operators to the Ontario market, such as BetMGM, PointsBet, Caesars, and Rush Street Interactive, are building their customer bases from scratch. And that effort has been made more challenging by the AGCO’s rules. In Canada, they have to shift their focus from promotions to brand awareness and find “elegant” ways to draw attention to their platforms.
Setting a new Standard
The Ontario regulator has also proposed a new Standard that would set an Oct. 31 deadline for gray operators to fully transition into the regulated market. However, there was no mention of a penalty for operators that may elect not to get licensed in either the proposed Standard or in letters that were sent out to suppliers and operators.
The proposed Standard reads:
Operators and gaming-related suppliers must cease all unregulated activities if, to carry out those same activities in iGaming Ontario’s regulated online lottery scheme, it would require registration under the GCA (Canadian Gaming Act). Operators and gaming-related suppliers shall not enter into any agreements or arrangements with any unregistered person who is providing the operator or gaming-related supplier with any goods or services if, to provide those goods and services in iGaming Ontario’s regulated online lottery scheme, it would require registration under the GCA.
According to a source, the AGCO must now open a stakeholder comment period as the next step in formalizing the amendment. The AGCO will review any comments received and will make any changes it deems necessary and release the final Standard. It will then be posted in the Ontario Gazette (the official publication of the government of Ontario), with an Oct. 31 effective date. After that, the AGCO would begin to publicly promote the effective date and what it will mean for operators that have not received AGCO registration by that date.
But with no penalty attached, the deadline does not appear to have any teeth.
Once formalized, any illegal online gaming site operating after Oct. 31 would be breaking Canadian law and may be hearing from the the Investigation and Enforcement Bureau (IEB), which is composed of Ontario Provincial Police officers and is fully integrated as a bureau within the AGCO.
Advertising from a RG perspective
Many European countries have adopted strict advertising rules in an effort to protect consumers. The government in Belgium is proposing to further strengthen its rules with a ban on all forms of gambling advertising with the exception of the country’s lottery. Gambling advertising in Spain is limited to the early morning hours on TV and radio, and the country has also banned the advertising of bonuses and inducements.
In the United Kingdom, the government is prepping to review its 2005 Gambling Act, with advertising as a key point to be discussed. This month in Norway, meanwhile, the state-owned gaming monopoly pulled its television ads after a local broadcaster stopped running gambling advertisements from foreign companies.
Ontario’s regulators appear to have adopted some of these principles and guidelines from overseas, which are much different than the advertising rules in the United States.
“The AGCO conducted research, looked into this itself, and looked at what created the greatest risk for players,” Shelley White, CEO of the Responsible Gambling Council based in Toronto, told Sports Handle.
“And they determined that, based on the information that they acquired, that it was best if bonus promotions were delivered to consumers once they signed up on their sites. This was to protect and prevent young people and underage individuals and others who are vulnerable from being exposed to the various bonus and promotion ads that could actually be a trigger for an individual who is already high risk, or who’s vulnerable to developing a risk, of a moderate to severe gambling challenge.”
White said the RGC, and many other responsible gambling organizations, were consulted by the AGCO as it developed the advertising standards.
“The Canadian advertising culture is different, and they are much more sensitive [than the U.S.] to overblown advertising,” an industry source told Sports Handle. “They’ve had kind of second-hand experience from looking south of the border. They might be believing that some U.S. states are going to go down this road, but they thought they’d do that at the start and save themselves the problem.”
There are major concerns in Ontario from responsible gambling advocates over the explosion of online gaming ads on various media platforms in the province since the April 4 launch. These ads are brand-related, though, as the advertisements don’t include promotions or specials.
In fact, it’s such a hot topic in Canada right now that the RGC will be conducting local research on the issue in conjunction with Flutter Entertainment, FanDuel‘s parent company, but the results likely won’t be published until 2024.
Flutter provides support to Canada’s Responsible Gambling Council (RGC) in ‘first-of-its-kind’ baseline research into responsible marketing and advertisinghttps://t.co/mMZal1PNRK
— Alfonso Straffon 🇨🇷🇺🇸🇲🇽 (@astraffon) August 8, 2022
Different ad practices south of the border
The advertising rules in Ontario have been surprising for many U.S.-based operators that began taking bets from Canadians.
Some U.S. companies may have been “up in arms about that just because it’s different than in the U.S.,” Martin Lycka, Entain’s SVP for American Regulatory Affairs and Responsible Gambling, told Sports Handle. “The Canadian advertising culture is different and they are much more sensitive to overblown advertising.”
The stringent guidelines are a major departure from what is legal in terms of promotional advertising in U.S jurisdictions, where operators are allowed to advertise offers, bonuses, or promotions on social media, television, billboards, and on affiliate sites in addition to their own sites.
“My sense is that in Ontario when regulating, they were trying to keep that from happening,” Lycka said. “They’ve had kind of second-hand experience from looking south of the border. This is Ontario’s response to the latest U.S. advertising bonanza of offering crazy bonuses. … They were concerned they would be swamped the same way the U.S. was.”
Colorado Democrat who co-sponsored bill to legalize sports better in Colorado is now annoyed by the advertisements for…sports betting.#coleg #copolitics https://t.co/W0w1F90KPf
— Mr T 2 (@GovtsTheProblem) February 12, 2022
The amount of advertising has become a concern in some U.S. jurisdictions, among them Colorado, where Speaker of the House Alec Garnett this year suggested it might be time for the state to regulate wagering advertisements.
“You can limit how they talk to the people across the state both in online advertising, on billboards and on TV. You can try to limit who they are speaking to and what populations they’re trying to address,” Garnett told ABC News9. “I think the industry knows people are frustrated. The industry just hasn’t done anything about it. The industry is too slow.”
Colorado voters legalized sports betting via referendum in November 2019, and the regulator there launched digital platforms May 1, 2020, at the height of coronavirus shutdowns. Operators have been live and advertising for more than two years, and state lawmakers ultimately took no action this year to impose new restrictions.
–Jill R. Dorson contributed to this report
