Ontario Gray Market Sportsbooks’ Interest In Ontario Sports Betting Licensing 

Ontario gray market sportsbooks have attracted many Ontario sports bettors over the past few decades. But now that Ontario is legalizing private sportsbooks, Ontario bettors will have competitive legal options to use. Due to Ontario’s internet gaming standards and competition between companies, Ontario-based sports media company, theScore, is expecting improved sportsbooks for customers in the private market. 

“A lot of the issues with offshore books with how you’re getting money in, how you’re getting money out, customer service, a whole bunch of things that should hopefully get better with the regulated market,” Aubrey Levy, Senior Vice President of Marketing and Content for theScore said. “It certainly will with our offering.”   

In the gray market, sportsbook customers depend on their offshore book’s goodwill to resolve customer service issues. If there are issues with payouts, player accounts, or placing bets, there’s nothing Ontario or Canada can do to back bettors up. 

But with a licensing regime in place, Ontario sports bettors will be guaranteed sportsbooks that follow consistent rules about payouts, bet cancellations, and other sensitive customer service issues. 

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Ontario Gray Market Sportsbooks’ License Benefits

Historically, Canadian regulations didn’t explicitly outlaw offshore gambling. But the tolerance for Ontario gray market sportsbooks will end on April 4. 

“When April 4 comes around, Ontario will go from a gray market to a black market,” Amanda Brewer, Country Manager at Kindred Group said. “If you [sportsbook operators] do not have a license, you will be illegally operating.”   

So, offshore operators will carry the stigma of being illegal if they don’t have Ontario licenses — or even license applications. The damage won’t be limited to Ontario, either. Other regulators could frown upon an operator that spurns a major market’s licensing process. Brewer offers the example of the Netherlands, Norway, and other European markets that are cracking down on illegal sportsbook operators. 

“They’re kicking out operators who’ve been beaming in with licenses in other jurisdictions,” Brewer said. “So you can end up having your brand tarred and feathered publicly as well if a regulator decides to make a really big issue out of [licensing].”    

So an Ontario sports betting license can not only grant an offshore sportsbook access to Ontario’s private sports betting market. It can also protect an offshore book’s access to existing and future markets. 

Obstacles To Switching From Soon-To-Be Illegal Offshore Books

Switching from gray market sportsbooks to legal sportsbooks will be critical when Ontario’s private sports betting and igaming industry goes live on April 4. But gray market sportsbooks have two advantages going into Ontario’s new sports betting and igaming market. First, gray market sportsbooks already enjoy a hefty market share. 

“If you have been working in this industry long enough or if you go and buy some of the research reports on Ontario, bet365 by far and away has the largest market share,” Brewer said. 

However, a large market share means more than brand loyalty. It also means bet365 and other gray market sportsbooks hold large amounts of bettor money. 

“Whether [it’s] brand loyalty to [gray market sportsbooks] or just the sheer fact that people have balances on-site with them, that is a competitive hurdle to overcome without question,” Levy said.   

Ontario’s marketing restrictions will make consumer protection and “brand” critical to drawing gray market bettors to the new legal market. Ontario sportsbooks won’t be able to plaster billboards or Twitter feeds with large welcome bonuses. Instead, legal sportsbooks will have to rely on their products and brands for long-term heavy lifting. 

Bettors can still opt into promotional offers from major sportsbook brands. In the short term, books could use customer acquisition through bonusing to attract bettors actively seeking welcome bonuses.

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Looking Ahead In Ontario

Private sportsbook companies are already preparing to compete with gray market operators. That includes gray market operators who choose to get licensed in Ontario and those who don’t. Competing with gray market operators who become illegal will be straightforward. Drawing bettors away from existing offshore accounts with money in them may take time. But consumer protection and up-front branding will eventually draw Ontario bettors to legal books. 

Competing with gray market operators who secure licensing will be trickier. They’ll be entering the market with loyal customer bases. 888 Holdings recently announced its license approval by the Alcohol and Gaming Commission of Ontario. Brewer expects bet365 to apply for and receive a gaming license in Ontario, too.

Ontario’s sports betting and igaming industry will include former gray market operators, major legal sportsbook brands from the United States, Europe, and Australia, and the Ontario lottery-run book, PROLINE+. Despite the strengths that gray market operators that become legal bring to the market, private operators remain confident in their abilities to compete effectively.

“Our belief is that people don’t just bet as an isolated transaction,” Levy said. “They bet as a component of their overall fan experience. So when they’re used to sportsbooks that might be a little clunky, a little difficult to manage in the gray market, hopefully coming into an ecosystem like ours where we try to make their lives as simple and as easy as possible…it’s going to make their product lives a hell of a lot better and easier than it is currently.”   

About the Author

Christopher Gerlacher

Christopher Gerlacher is a senior author and contributor for many different sports betting websites, sharing his expertise on the subject for readers across the continent. He's a devout Broncos fan, for better or for worse, living in the foothills of Arvada, Colorado.
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