Written By Marshall Eidinger, Elie Freedman and Suzanne Byrne
As of April 4, 2022, private gaming operators and suppliers that have successfully registered with the Alcohol and Gaming Commission of Ontario (AGCO) and entered into an operating agreement with iGaming Ontario will be able to offer internet gaming (iGaming) services in the province.
The Canadian government took steps to decriminalize single-event sports betting in June 2021, paving the way for provinces to allow and manage single-event sports betting within their jurisdictions. This change came into force on August 27, 2021, with an amendment to section 207(4)(b) of the Criminal Code (Canada) to remove the long-standing prohibition on betting on the outcome of any race or fight, or on a single sport event or athletic contest.
Ontario is the first province in Canada to set up its own internet gaming (iGaming) platform. Ontario's iGaming market is regulated by the AGCO. iGaming Ontario (an AGCO subsidiary) is responsible for conducting and managing the Ontario iGaming market provided through private operators.
Prospective iGaming operators and gaming-related suppliers are able to submit applications for registration with the AGCO through the regulator’s online service portal iAGCO. The AGCO has created an Internet Gaming Operator Application Guide and an Internet Gaming Supplier Application Guide to help prepare interested iGaming operators and suppliers for registration on iAGCO.
Applicants for the Internet Gaming Supplier and Internet Gaming Operator registrations (which are separate categories of iGaming licenses) are required to submit supporting documentation for each application including (among other things):
- constituting Document(s).
- schematic diagram showing the applicant corporation and all shareholders (including parent or holding corporations) owning 5 percent or more of any shares of the applicant corporation, and any affiliated or subsidiary corporations.
- entity level and personal (director / officer) disclosures.
- financial statements.
- tax returns and tax assessments.
- criminal background checks.
- gaming site diagram / wireframe.
- gap analysis for Registrar’s Standards for Internet Gaming (outlining how and when full compliance with the Registrar's Standards for Internet Gaming will be achieved).
Internet Gaming Operators are required to pay a regulatory fee of $100,000 annually per gaming site. Internet Gaming Suppliers are required to pay registration fees of $3,000 (for suppliers of gaming equipment/services) annually or $15,000 (for manufacturers of gaming equipment) annually. The respective registration fees for Internet Gaming Operators and Internet Gaming Suppliers are required to be paid when submitting an application with the AGCO.
Online application for registration by prospective operators and suppliers has been open since September 13, 2021. Bennett Jones looked at key considerations for prospective operators and suppliers in a previous insight, Ontario's iGaming Market Nears Launch: Update for Prospective Operators and Suppliers.
Do I Need To Register?
Internet Gaming Operators
Registration as an Internet Gaming Operator is required for entities that operate an internet gaming site within Ontario. In general, for iGaming, "operating a gaming site" means having an ongoing responsibility for a gaming site as a whole, including key decision-making activities, meeting compliance obligations for the gaming site and having authority to retain suppliers in relation to the gaming site (such as whether and what suppliers are used).
Internet Gaming-Related Suppliers
Registration as a Gaming-Related Supplier is required in Ontario for entities that manufacture, provide, install, test, maintain or repair gaming equipment or that provide consulting or similar services directly related to the playing of a lottery scheme or the operation of a gaming site. Some general examples of businesses or services that require registration are:
- platform providers.
- suppliers that manufacture, develop, provide and/or run games and game systems.
- customer electronic wallet providers.
- odds makers.
- sports integrity monitoring organizations.
- independent Test Labs.
No Registration Required for Non-Gaming Related Suppliers
No registration is required for businesses and service providers that fall into the existing category of "Non-Gaming Related Supplier" under the Ontario Regulation 78/12 of the Gaming Control Act, 1992. A "Non-Gaming Related Supplier" is defined in the Gaming Control Act as a person who provides goods or services that relate to the construction, furnishing, repair, maintenance or business of a gaming site or a related business but that, in the opinion of the Registrar (under the Alcohol and Gaming Commission of Ontario Act, 2019), are not directly related to the playing of a lottery scheme or the operation of a gaming site. The AGCO makes a case-by-case determination of whether any particular business or service qualifies as a Non-Gaming Related Supplier (so no definitive list is available) but the AGCO has provided the following examples of businesses or services that likely would not be required to register as an Internet Gaming Related Supplier:
- providers of technology components or services (e.g., ISPs, cloud server services, payment processing that does not include a customer wallet function, and geo-location providers);
- providers of business consulting or other services not directly related to the playing of a lottery schedule or the operation of a gaming site (e.g. financial advisory, organizational development, and customer service); and
- marketing affiliates.
Notes for Prospective Ontario iGaming Market Participants
The AGCO has provided the following guidance regarding transition requirements for iGaming market participants in an effort to facilitate a fair, business-like transition to its regulated iGaming platform.
The AGCO requires all iGaming operators and suppliers that apply for registration before April 4, 2022, to do the following upon being issued an AGCO registration:
- halt all unregulated market operations within Ontario; and
- end any association with companies that operate in the unregulated market in Ontario.
The AGCO has stated it will coordinate its issuance of registrations with the other necessary steps needed to onboard operators and suppliers with the aim of avoiding any "blackout" period.
The AGCO also warns that all iGaming operators and suppliers that have not applied for registration before April 4, 2022, risk not having their future registration applications approved if they continue to operate in Ontario's unregulated market and/or continue to have associations with organizations that continue to operate in Ontario's unregulated market.
Updated Guidance from the AGCO
On March 11, 2022, the AGCO updated its Internet Gaming Go-Live Compliance Guide, which applies to both prospective and registered iGaming operators and suppliers. The updates relate to three general areas: new guidance on advertising; the AGCO's approach and requirements for recertification of modified technology; and temporary approvals of compliance requirements for gaming-related suppliers in low-risk circumstances.
With regard to advertising, businesses, including iGaming operators, are not entitled to provide players with gaming hardware, such as kiosks and tablets, that gives a player access to an iGaming site while at a physical premise. The AGCO has also clarified what types of modifications to certified technology require recertification and the requisite timeframes for doing so, stating that minor bug fixes and cosmetic changes do not require recertification and that modifications made to fix a live issue that has a major impact to the Registrar's Standards for iGaming may be deployed immediately, but must be submitted for recertification within five business days of deployment. Finally, to facilitate operations at launch, the AGCO has created the opportunity for gaming-related suppliers, in certain low-risk circumstances and on a case-by-case basis, to obtain temporary approval for their critical gaming systems. Requests for such temporary approvals should be made to the Technology Regulation and iGaming Compliance Branch.
The above update provides a brief overview of the AGCO's framework for iGaming license applications and recent developments in the iGaming Market in Ontario. It is important to remember that Ontario's iGaming laws are complex and rapidly evolving. At Bennett Jones LLP, we have a team of industry-leading professional advisors that can provide legal and strategic guidance to all industry participants as Ontario's iGaming industry continues to advance.