The Canadian gambling market is very well regulated and dominated by provincial authorities and offshore casinos. But the industry is enjoying steady and high revenues, which means there is still enough room for new iGaming operators.
The question is how can Canadian investors, entrepreneurs, affiliates and land casino owners start a business with online casinos and sports betting in 2023?
Gambling is one of the most popular forms of entertainment among Canadians. In the last 10 years, gambling legislation has become increasingly liberal, and provincial gambling authorities have opened websites to fully embrace the modern era. Although there are several authorized providers, provincial governments have established monopolies on the provision of gambling services to Canadian citizens.
Read on to learn more about the Canadian market and how Canadian companies can enter the international iGaming industry.
Overview of the gambling and betting market in Canada
Gambling has been extremely popular among Canadians for a very long time, and although the details vary from province to province, some form of gambling is available in each of them. Unlike other countries, gambling has broad cultural acceptance in Canada; on average, six out of ten Canadians participate in some form of gambling. With a population of over 37 million, of which approximately 27 million are over 18, it provides the gaming industry with a substantial audience.
Although most forms of gambling, except betting on horse racing, were banned, the authority to regulate gambling was transferred from the federal to the provincial governments in 1969.
The revenue that gambling can generate gives provincial governments a strong incentive to make various forms of gambling available to citizens. For example, the British Columbia Lottery Corporation has brought in $21 billion for the province since 1985, including $1.4 billion in the 2018-2019 fiscal year. Provincial governments use tax revenues from gambling to support cultural programs and other social initiatives.
Each province either has its own gambling regulator or cooperates with regulators in another province. Both online and land-based lotteries are available across the country, every province except Newfoundland has land-based casino games, and all provinces except Ontario and British Columbia allow video lottery terminals in bars and lounges.
In 2009 online gambling was legalized and the provincial authorities started to create online gambling sites. The first province was British Columbia through the British Columbia Lottery Corporation (BCLC), which opened PlayNow in 2010. The same year Loto-Québec followed which launched espacejeux.com, and Manitoba followed suit in 2013, trying to take advantage of the amount an estimated $37 million that citizens spent on offshore sites each year.
When it comes to sports betting and casino games, Canadian players have no shortage of options whether they are offered by provincial governments or offshore platforms. Also, casino games, lottery ticket sales, sports betting, bingo and poker are all widely available online.
Although Canadians have a passion for betting and Canada has a liberal legislation, this does not mean that the market is without barriers. Only provincial governments and licensed private organizations can legally conduct online gambling activities. Some provinces cooperate with private operators to provide online gambling services, and private operators can only offer online betting on horse racing if they are licensed by the Canadian Pari-Mutuel Agency (CPMA).
Although a lot of offshore operators entered the Canadian market before online gambling was legalized, authorities are wary of going after them because the legality surrounding gray market casinos is very unclear. In 2016, the Quebec government passed Bill 74, which required Internet service providers to block users who want to access offshore websites. However, the bill was challenged by the Canadian Wireless Telecommunications Association, and the Quebec Superior Court ruled the bill unconstitutional because it overstepped provincial authority in both criminal and telecommunications law.
Thus, breaking into the Canadian online gambling market is not necessarily feasible for Canadian-based companies, who between provincial monopolies and an oversaturation of offshore operators are somewhat locked out of their own local market. However, that doesn’t mean they don’t have options. Online gambling is a flexible, international business – in fact, the ability to deal with multiple markets in different regions of the globe may be one of its biggest draws. There are several ways Canadian companies can break into iGaming.
How can Canadian companies enter the online casino and sports betting industry?
Although 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 European market is well established and regulated, with an estimated value of €35 billion in 2022.
Gaming Business Opportunities for Canadians in 2023
The UK is the largest market in Europe and a 2019 study found that 47% of respondents had gambled in the past four weeks and 21% of respondents had gambled online in the same time period. Thus, the gross gaming yield (GGY) from online casino games reached over £3 billion between October 2018 and September 2019.
In Asia, many countries have an extreme passion for online gambling, and the market is estimated to be worth $72 billion in 2022. Thus, the gambling revenue of the Philippines, which has become famous for licensing operations offshore, they reached 1.5 billion euros in 2020. India has also become a followed 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 with revenues of €2 billion.
With the implementation of new regulations for the igaming industry in several countries, Africa and Latin America are experiencing an iGaming boom. Thus, iGaming operators are making moves to enter these fast-growing emerging markets. The online gaming market in Africa was valued at nearly €1 billion in 2022, and this number is expected to double by 2024. In Latin America, home to such massive markets as Brazil, Colombia, Mexico and Argentina , online gaming revenues for 2022 were estimated at 2.5 billion euros.
In conclusion, Canadian entrepreneurs looking for opportunities abroad have no shortage of gambling markets. They have 2 options namely; investing in established gambling businesses and starting your own online gambling platform.
Of course, the fastest and easiest way to start is to invest in established businesses – or even in startups – that are based abroad. Many online gambling operations need liquid capital when they want to start or expand their operations and investing in an online casino or sportsbook can get your foot in the door of a dynamic industry full of opportunities.
Businessmen who want to be more active can open their own online gambling platform in a foreign jurisdiction. Thus, starting your own offshore gambling business involves analyzing potential target markets, registering an offshore company, obtaining a gambling license, building the casino platform and integrating game content and payment systems, as well as engaging in marketing and effective promotion.
There are a number of regulatory authorities in a number of different jurisdictions that issue gambling licenses, usually on the condition that the applicant establishes a company in the jurisdiction. These jurisdictions often have low or no gambling taxes and low corporate income taxes.
Why invest in online gambling?
The gambling industry is extremely flexible and is a very good option for investments. With estimated global revenues of over €117 billion, now is a better time than ever to get involved.
In addition to income, social factors must also be considered. People have moved their lives online, and entertainment is no exception.
Only online games were able to adapt in the covid pandemic. While casinos around the world have been closed and sporting events have been postponed or canceled, revenues from live casinos and virtual sports betting have 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 industry.
How can Canadian business start an online casino in an offshore jurisdiction?
For companies based in Canada, offshore jurisdictions are the best option. Whether you are a beginning casino operator, a land-based casino owner looking to expand into other markets, or an affiliate who is ready to start their own online casino or sportsbook, consider one of the offshore jurisdictions below.
Registering a company and obtaining a license
To start an online casino or sports betting, the first step is to establish a company and obtain a license. Curacao, Estonia, Isle of Man, Malta and the Mohawk Territory of Kahnawake are all popular options for operators. Curacao is an easy selection for first-time operators due to its relatively easy process and lower taxes and fees.
The Caribbean Island of Curacao has the longest history of any online gambling licensor. Operators apply for a sub-license from one of the four main license holders. Thus, a single sub-license allows them to organize any gambling activity, and the biggest advantage of obtaining the license in Curacao is the tax on net winnings of only 2% and the absence of a gambling tax. Low fees, the comparative ease of the licensing process and the single, universal 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 and is perhaps one of the most popular offshore licenses in Europe. Licenses from the Malta Gaming Authority (MGA) are accepted throughout the EU and they are ideal for operators looking to expand their igaming business in the EU market. Compared to Curacao, Malta has higher taxes as well as a mandatory compliance fee and several other requirements. In addition, separate licenses are required for each form of gambling that the operator intends to offer. Because the MGA license is more expensive than a Curacao one, operators often purchase a Curacao license first and then one from the MGA once they are ready to expand.
The Isle of Man, which is a British Crown Dependency, is another popular jurisdiction in granting gambling licenses for operators facing the European market. As with Malta, the 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 games as well as offer White Label solutions to other operators (who can apply for the Isle of Man sub-license). Although the Isle of Man does not have a blacklist of prohibited markets as other regulators do, they expect licensees not to enter markets where gambling is prohibited.
The Kahnawake Mohawk Territory is a First Nations reservation 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 relatively low license fees, 0% corporate tax rates and lack of any gaming tax.
These are just a few of the offshore jurisdictions that issue online gambling licenses. To learn more about the licensing process, get in touch with our experienced legal team.
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.
Gambling Consulting Expert offers consultancy services and complete package solutions for gambling license acquisition that include:
- Gambling jurisdiction and business advisory. 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.
- Gambling business corporate structure incorporation
- Opening bank accounts
- Gambling license application
- White Label or TurnKey Software Solution