On Monday, the Ontario government officially launched its new online gaming market, which includes online casinos and esports betting sites.

According to a January news release, iGaming Ontario (IGO), a subsidiary of the Alcohol and Gaming Commission of Ontario (AGCO), has introduced new standards for gaming operators.

Some homegrown online gaming companies, such as Toronto's Rivalry, are excited about what the future holds in this new market.


"Until now, we've been unable to legally offer a product, or offer a product at all, in this market," Rivalry co-founder and CEO Steven Salz said.

"It's a completely new market for us, and we have a slight home-court advantage."

While online casinos rejoice, some advocates are concerned about what this means for the province's brick-and-mortar casinos.

Simultaneously, gambling addiction specialists have expressed some concern about increased access to gaming.

Online gambling is not a new concept in Ontario.

According to industry estimates, Ontarians spend about $500 million per year on internet gambling, almost entirely with companies based outside of the province.

Previously, those out-of-the-way locations were not subject to any regulations.  However, private operators will now be required to register and pay taxes in order to gain legal access to the province.

Steven Salz, right, is the co-founder and CEO of Rivalry, a Toronto-based online gaming company.

According to the province, in addition to providing Ontario with a new revenue stream, the market is intended to protect Ontarians by providing a legal alternative to the existing "grey market" of online gaming options.

According to a statement provided by the province's attorney general's office, the new measures "will enable more responsible gaming, prevent underage access, and ensure compliance with applicable laws, including anti-money laundering rules and regulations."

The province of Ontario is the first in Canada to implement such a system, and some industry insiders are concerned.

According to CBC News, the new market could cost the province $550 million in annual revenue, for a total loss of $2.8 billion over the next five years.

This warning was contained in a report prepared for Great Canadian Gaming, the company with the largest share of Ontario's casino market, by a gambling industry consulting firm.

Tax breaks for online businesses

Great Canadian Gaming CEO Tony Rodio told CBC News that it is unfair that iGaming operators will only be taxed 20% of their earnings, compared to the 55% taxed by brick-and-mortar casinos.

"This is the only state or province in North America where iGaming operators benefit from a tax break," he explained.

According to Rodio, this will cause in-person casino visitors to migrate to online platforms.

Rivalry's Salz, on the other hand, believes that online gamblers are a distinct population from casino visitors.

"Whether this regulation came or not, people who were betting offshore in the past were not going to walk into a casino," he said.

According to him, the lower tax rate for licenced online operators allows them to compete with offshore operators who pay no taxes.

However, according to Rodio, regulation and a lower tax rate mean that online operators can now spend millions on advertising and marketing to lure customers away from in-person casinos.

He also objects to iGaming being treated as an open market, into which any company, including those that were operating illegally prior to registering with the AGCO, can now enter.

Rodio believes the government should have spent more time meeting with in-person operators to ensure things were done correctly.