Letter from the Chair

On April 4, Ontario successfully opened the regulated igaming market. iGaming Ontario (iGO) was founded just nine months prior with a clear mandate. In that time, we built an organization from the ground up. Everything from small tasks like creating a website, to critical decisions like hiring the right staff and creating a seamless onboarding process for operators. Each decision was made with one goal in mind: to be the world’s best gaming market.

In building iGO from the ground up, we had an opportunity to redefine how a government agency works. What should an agency prioritize knowing that every process, employee, and decision is being made for the first time? In other words, how should we run the company? To be the world’s best gaming market, we needed to not just work with operators, but to understand their businesses and their issues while keeping our expenses low and our team lean.

We created a world-class onboarding process that operators have told us is the gold standard globally. This is an example of an ethos that runs throughout every decision iGO makes: make it easy to do business with us. iGO works with operators to provide world-class igaming options, meaning more choice, competition, and greater benefits for players and the province.

Looking forward, the future is bright. As iGO continues to onboard operators, protect Ontarians, and ensure proper market operation, we are already delivering real results for taxpayers. We anticipate more operators joining the market in 2023, growing the economic benefit and revenue stream for Ontarians. We will also ensure that the investments made by legal operators are protected and valued by taking further efforts to crack down on the illegal market. Illegal operators do not share revenue with the province and are not governed by our strict rules around responsible gambling, anti-money laundering, or player protection. For our thriving legal market to succeed, we must crack down on the illegal market. Combatting the illegal market will be a significant focus for iGO.

Lastly, we anticipate that the igaming market will become more dynamic, innovative, and competitive as the market grows. The private sector operators will merge, consolidate, expand, and change. New products and new demands from players will arise, as they should. By prioritizing innovation and flexibility, iGO can continue to help the private sector grow, provide choice to players, and maximize returns to the province.

It has been a very successful launch, with hundreds of thousands of Ontarians participating in our highly competitive market. The Board, the executive team, every staff member at iGO, and partners in government and at the regulator deserve credit. However, the work does not stop here, the future is bright for Ontario and by listening to operators and players we will learn, grow, and do our best to serve the interests of Ontarians.

Dave Forestell
Board Chair, iGaming Ontario

 

 

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Letter from the Executive Director

Starting up a new organization during the pandemic had its challenges. With the creation of iGO on July 6, 2021, our mandate was clear: conduct and manage the province’s online lottery schemes in a way that promotes responsible gaming and consumer choice. Achieving that vision, in nine short months, took great effort and skill.

Building the Team:

To get Ontario’s igaming market up and running iGO needed a nimble, creative and innovative team. Throughout the 2021-22 fiscal year, we onboarded a small group of talented individuals that could think digitally first, understand the gaming landscape, and work quickly to solve challenges posed by operators, customers and government.

We researched and evaluated the effectiveness of other jurisdictions around the world. Using that expertise, we created clear policies and a detailed Operating Agreement that created a fair and competitive landscape for operators while protecting and promoting consumer safety and ensuring we meet our conduct and manage responsibilities. From there, we engaged individual account managers to shepherd operators through the onboarding process ensuring a competitive market come launch and the first step in combating the illegal market, thereby increasing revenue for the province and player protections for Ontarians.

Going Digital First:

Digitization is at our core. Given every product we currently conduct and manage is an online only product, our organization understands and values the unique benefits of being digital first. We cannot expect digital companies to be overseen by paper processes. Embedding this approach from day one – and ensuring continued digitization in the future – will mean a low expense-to-revenue ratio, thereby maximizing value for taxpayers and operators.

Fostering Creation and Innovation:

In preparing for the launch of the regulated igaming market, core decisions needed to be made about the type of market we wanted to help create. Many of the foundational decisions around the market (a competitive revenue share rate, no land-based tethering, no cap on licences, etc.) emphasized competition. True competition amongst operators means more choices for consumers and innovative product offerings to attract players. This principle of enabling competition and innovation has been core to iGO and will continue to shape the organization’s decisions going forward.

Launching the Market:

Of course, all these values and decisions led to the launch of Ontario’s igaming market on April 4, 2022. In the few short months between April 4 and August 10, 2022, the market has already seen 21 operators join, offering 35 sites, and 1,000s of unique games and betting options to consumers. That market, in a few short months, has quickly become one of the world’s largest regulated igaming jurisdictions and is on track to deliver real revenue to the province. We expect these numbers, across the board, to continue to grow.

The question for iGO, and its operators, now becomes one of growth and sustainability. Building on the organization’s early success is key. Continuing to attract internal talent, embrace digitization, and foster a competitive and innovative market that ensures player safety is prioritized will mean greater returns for government, operators, and players. With these foundations in place, iGO can continue to help build the world’s best gaming market.

Martha Otton
Executive Director, iGaming Ontario

 

 

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Description of Activities Over the Year

iGaming Ontario (iGO) is an agency of the Government of Ontario and set out in legislation as a subsidiary of the Alcohol and Gaming Commission of Ontario (AGCO) that conducts and manages internet gaming in the province when provided through private gaming operators who act as agents on iGO’s behalf. iGO is governed by a Board of Directors. Prior to the creation of iGO, all internet gaming in the province was provided through Ontario Lottery and Gaming Corporation, a crown corporation.

iGO enters into operating agreements with operators who meet rigorous standards of game and operator integrity, fairness, player protections and social responsibility, allowing all players to play with confidence. A share of revenues generated by these commercial relationships will be returned to the Government of Ontario to support provincial priorities.

iGO was officially created on July 6, 2021, however work to establish market readiness began even earlier under the AGCO prior to iGO’s incorporation on July 6, 2021. During this partial year of operation, the organization was tasked with creating the framework for the launch of Ontario’s legal, regulated, and safe igaming market, which launched on April 4, 2022. In order to achieve this goal in a short time frame, the organization set a series of operational priorities including: ensuring consumer choice and protection, growing the regulated market, building in-house infrastructure to process operator payments and data, reducing red tape, creating a people-centric organization, and establishing governance and operationalization capabilities.

Consumer Choice:

iGO created a framework that supports an attractive, open, and competitive igaming market to ensure world-class products and user experiences for Ontario consumers. In that work iGO signed over 100 Non-Disclosure Agreements with potential operators large, small, foreign, and domestic to ensure they were able to understand the requirements of the Ontario market before committing resources to launch. The organization also established the game catalogue and game conditions policies, which determined what offerings would be legal to provide in the Ontario market including peer-to-peer poker, sports betting, casino games, and novelty betting.

iGO created a player transition process to facilitate existing players moving from unregulated to regulated sites without carrying over wagers placed in the unregulated market. This work also included a full communications strategy, including the building of a website and social media channels, that ultimately became fully operational by April 4, 2022.

Consumer Protection:

In the nine months of fiscal year 2021/22, iGO created policy requirements for operators related to responsible gambling, customer care and dispute resolution, and anti-money laundering (AML).

Specifically, future responsible gambling measures include industry-leading requirements to ensure responsible gambling-focused advertising from operators, accreditation from the Responsible Gaming Council and participation in a centralized self-exclusion program. In addition to these operator requirements, iGO is also commissioning ongoing research into problem gambling in Ontario. For customer care and dispute resolution, policies were developed that set out requirements and processes for players who have concerns or complaints related to products, services, or actions of an operator to ensure consumers are protected.

On AML, iGO created an AML and anti-terrorist financing program framework that includes policies, operational guidance, job aids and user guides for operators to ensure compliance with federal legislation. Operator procedures must be in compliance with iGO expectations and risk assessments have been completed for all operators. A mandatory training program for operator employees, as well as for iGO Board and staff members, was also created. Lastly, iGO continues ongoing engagements with FINTRAC, the federal AML regulator, to stay up to date with regulatory developments.

Regulated Market Growth:

iGO worked with government and prospective operators to create market conditions that supported economic development, addressed the unregulated grey market, and captured new provincial revenues. This included participating in government-led consultations, engaging potential operators via group and one-on-one conversations, creating an iGO portal for operators where draft policies and FAQs - in addition to other documents - were posted to ensure proper communication, consultation, and feedback. This included conducting a series of educational webinars on the various components of the proposed Ontario market.

iGO created an account manager model assisted by a small team of finance, AML, legal, I.T. and market insights experts to ensure that all potential operators had personalized assistance to navigate the onboarding process. iGO actively solicited and considered feedback from operators on the creation of its policies, which included: AML, game catalogue, marketing and advertising conditions, brand guide, finance procedures, systems data and record retention, transactional gaming data, privacy, and customer care and dispute resolution. The creation of the regulated igaming market also facilitated local economic development by creating work for Ontario-based legal, accounting, financial, marketing, and I.T. firm usage by potential operators.

Reduced Red Tape:

A key consideration when creating the rules and policies for the launch of Ontario’s regulated igaming market was to make sure the regulatory barriers were as efficient and commercially attractive as possible while ensuring compliance with applicable legislation and world-class consumer protections and standards.

To do this, iGO consulted regularly with the Ministry of the Attorney General (MAG) while drafting the Operating Agreement for prospective gaming operators. This ensured the Operating Agreement complied with the conduct and manage requirements of the Criminal Code of Canada including an active financial model, ensuring separateness of operations, providing full and unrestricted access to data for iGO, establishing a strong visual identity, and setting world-class responsible gambling requirements. Part of this work included receiving necessary government approvals, hosting top to top meetings with prospective operators, responding to over 650 questions from operators, and participating in discussions with government and the Ontario First Nations Limited Partnership.

People Centric:

Given iGO’s inception this year, the organization needed to recruit and train staff in an efficient manner while ensuring the organization built the foundation of an inclusive, forward-thinking, and engaged workforce. This work included establishing iGO’s organizational structure, creating job profiles and hiring new staff, onboarding staff, developing a senior leadership team, standing up employee engagement processes in a virtual setting, and making plans for office space and the necessary equipment to perform iGO’s core functions.

Governance & Operationalization:

Finally, iGO also needed to ensure it was immediately complying with government directives and legislation, including a commitment to openness and transparency. As part of this work in year one, iGO needed to develop a financial and accounting framework to ensure proper financial reporting. The iGO model also required iGO to ensure compliance with the complexities of the GST/HST elements of the Excise Tax Act, implement banking relationships with major financial institutions, design and implement a financial system, sound internal controls, back-of-house processes to enable the execution of Operating Agreements with operators, forecasting and analytics tools, and to ensure seamless operation once the market launched. This work will continue into future fiscal years to automate and refine these processes to create the most efficient operational system possible.

When it comes to governance, iGO also used this time to create and implement a governance model for Board meetings and prepared for and supported 8 Board meetings during the fiscal year as the interim Board guided the organization towards market launch. This governance work also included participating in Treasury Board submissions and the development of a draft Memorandum of Understanding with MAG, AGCO and iGO.

 

 

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Operational Performance

iGO will create its first formal business plan shortly, including key performance indicators. As the business plan is forward looking, the organization has strived to achieve the goals set out in its mandate in O. Reg 517/21 under the Alcohol, Cannabis and Gaming Regulation and Public Protection Act, 1996 and continued under O.Reg 722/21 under the Alcohol and Gaming Commission of Ontario Act, 2019:

1. To develop, undertake and organize prescribed online lottery schemes.
2. To promote responsible gaming with respect to prescribed online lottery schemes.
3. To conduct and manage prescribed online lottery schemes in accordance with the Criminal Code (Canada) and the Gaming Control Act, 1992 and the regulations made under those Acts.

iGO’s core mandate, and thus the objective of the organization, is to conduct and manage prescribed igaming lottery schemes while promoting responsible gambling. The work described earlier in this report enabled the organization to launch the igaming market on April 4, 2022, thereby completing the strongest priority of the organization for its first year and achieving the central goal needed to carry out iGO’s mandate. In the years to come, iGO will continue to grow, organize, and conduct and manage

Ontario’s igaming market in accordance with its mandate while ensuring responsible gambling is promoted throughout this market. As part of this work, key performance indicators and operational targets will be formally established and reported upon in subsequent reports.

 

 

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Risk Events

Throughout the nine months of the 2021/22 fiscal year where iGO was in operation, several risks presented themselves as barriers to the operational success of the organization. These risks are best categorized into external and internal risks.

External Risks:

iGO does not deliver igaming products on its own. Rather, iGO has entered into operating agreements with private gaming operators, who operate internet gaming sites on behalf of iGO in accordance with these operating agreements. iGO took numerous steps to ensure a smooth transition to the regulated market, including dedicated account managers and an information portal for sharing documentation. External factors, including strategic decisions by private operators, determined whether they would be ready for iGO’s market launch date. On April 4, 2022, iGO was proud to open the regulated and safe igaming market to Ontario players through a variety of competitive operators. By the end of the first week of operations, 13 operators across 21 different websites were live in Ontario.

Similarly, these operators could have been affected by a host of external factors including securing insurance or banking approval, the COVID-19 pandemic, talent shortages, the Ukraine-Russia War, cash flow issues, and completing the various iGO requirements such as end-to-end testing. A majority of these concerns were outside of iGO’s control, however, much was done to ensure Canadian businesses in adjacent areas, such as financial institutions, were aware of the coming legalization and iGO’s world-class requirements to ensure they would be prepared to consider working with prospective operators looking to join the new regulated market in Ontario.

Another external risk affecting the fulfillment of iGO’s mandate concerned the date of launch which was to be determined by the government. iGO worked to ensure preparedness as soon as possible ensuring its ability to adapt to changing circumstances. Ultimately, the date chosen was April 4, 2022.

The steps taken to mitigate these external risks led to a successful launch, with dozens of new operators bringing real competition and choice to Ontario’s gaming landscape. The number of operators expressing interest and joining the market in Ontario continues to grow at an accelerated rate.

Internal Risks:

To ensure employee safety and provide flexibility, the organization adopted work-from-home policies immediately and, as high-pressure deadlines approached, in-person meeting opportunities were limited. Given the newness of the organization this created organizational risks that needed to be mitigated to ensure a proper working relationship and clarity and accountability among all staff members. The organization completed all necessary onboarding and training in a remote environment, which created complications of its own.

Next, iGO needed to both develop numerous policies and quickly pivot to ensuring potential operators were aware of and in compliance with these policies. This required flexibility and quick decision-making within the organization to ensure the requirements were as effective as possible. It also meant understanding the timelines associated with onboarding an operator to meet the April 4, 2022 market launch timeline. Internally, this onboarding process adopted a minimal viable product and I.T. approach for day-one and the organization continues to build on the foundation to ensure automated and efficient I.T. and internal infrastructure to support operators and achieve iGO’s organizational goals.

 

 

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Board Details

In accordance with O. Reg. 722/21 under the Alcohol and Gaming Commission of Ontario Act, 2019, the Minister of Attorney General appoints a maximum of seven members to the Board of Directors of iGO on the recommendation of the Board of Directors of the AGCO. The Minister is accountable to designate one member as chair of the Board and one member as vice-chair and ensure that the majority of the Board is not composed of directors, officers, or employees of the AGCO.

Appointees of the Board of Directors are paid the remuneration fixed by resolution of the Board of Directors of the AGCO subject to the approval of the Minister. The rate of remuneration is on a per diem basis of $200 per day for Board members, $250 per day for the vice-chair, and $350 for the chair.

Appointees are reimbursed for reasonable work-related expenses while engaged in the business of iGO in accordance with the Travel, Meal and Hospitality Expenses Directive and any other Treasury Board and Management Board of Cabinet directives. Board members and their terms are noted below.

1. Chair (Part-Time) DAVE FORESTELL
   04-Apr-2022 - 03-Apr-2025 Toronto
2. Vice-Chair (Part-Time) NEVEEN TAKLA
   04-Apr-2022 - 03-Apr-2023 Mississauga
3. Member (Part-Time) ALAN GERTNER
   04-Apr-2022 - 03-Oct-2023 Toronto
4. Member (Part-Time) MIKE BUNN
   13-Jan-2022 - 12-Jan-2024 Ramara
5. Member (Part-Time) GIOVANNI (JOHN) TRIVIERI
   04-Apr-2022 - 03-Apr-2024 St. Catharines
6. Member (Part-Time) KARIN SCHNARR
   04-Apr-2022 - 03-Apr-2025 Kitchener

The Board of Directors of iGO transitioned from an interim Board of Directors to a permanent Board of Directors on April 4, 2022.

 

 

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Achievements in Accordance with Mandate

Given that iGO was formally established on July 6, 2021, and will file its inaugural business plan shortly, the mandate of the organization is currently detailed in its establishing regulation, O. Reg 517/21 under the Alcohol, Cannabis and Gaming Regulation and Public Protection Act, 1996 and continued by O.Reg 722/21 under the Alcohol and Gaming Commission of Ontario Act, 2019. This regulation mandates the organization to develop and establish certain lottery schemes as prescribed, promote responsible gambling, and conduct and manage the prescribed lottery schemes. Those prescribed lottery schemes to be conducted and managed are all non-Ontario Lottery and Gaming Corporation controlled igaming products in the province of Ontario including online casino, sports betting, peer-to-peer poker, and novelty betting activities.

To execute this mandate, iGO spent the entirety of the 2021/22 fiscal year since its inception in July working towards the launch of Ontario’s regulated igaming market. That launch occurred on April 4, 2022, thereby constituting a major milestone for the organization in the achievement of its mandate. In the years to come, iGO will continue to conduct and manage the igaming market, foster, and develop the market, and ensure it complies with all existing provincial and federal legislative requirements, as consistent with its mandate.

When it comes to the portion of the mandate that requires iGO to promote responsible gambling, the responsible gambling measures include industry-leading requirements to ensure responsible gamblingfocused advertising from operators, accreditation from the Responsible Gaming Council and participation in a future centralized self-exclusion program. In addition to these operator requirements, iGO is also commissioning ongoing research into problem gambling in Ontario. For customer care and dispute resolution, policies were developed that set out requirements and processes for players who have concerns or complaints related to products, services, or actions of an operator to ensure consumers are protected.

 

 

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Management’s Discussion and Analysis

The following Management’s Discussion and Analysis (MD&A) is a commentary on the statement of financial position and financial performance of iGaming Ontario (iGO or the Corporation) and should be read together with the audited Financial Statements of iGO for the period ended March 31, 2022. The Financial Statements have been prepared in accordance with Canadian Public Sector Accounting Standards. Amounts are presented in Canadian dollars.

The Board of Directors, on the recommendation of its Finance, Audit and Risk Management Committee, approved the contents of this MD&A on August 10, 2022. 

iGO was established on July 6, 2021, pursuant to Ontario Regulation 522/21 under the Alcohol, Cannabis and Gaming Regulation and Public Protection Act, 1996 and continued under the Ontario Regulation 722/21 under the Alcohol and Gaming Commission of Ontario Act, 2019 (the "Regulation"). iGO's objects and duties are to develop, undertake and organize prescribed online lottery schemes, to promote responsible gambling on those lottery schemes, and to conduct and manage the lottery schemes in accordance with applicable federal and Ontario gaming law.

These financial statements reflect the first year of operations of iGO, from the July 6, 2021, date of establishment until its fiscal year end, March 31, 2022. iGO incurred expenditures only, and generated no revenues, as it carried out activities to implement the required resources, processes, procedures, policies, and contractual arrangements to enable the launch of the regulated igaming market in Ontario, on April 4, 2022.

 

 

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Financial Highlights

As a newly formed entity, iGO did not have working capital and, as such, was funded through iGO’s parent, the Alcohol and Gaming Commission of Ontario (AGCO). This funding support was in place for the first period of iGO’s operations (July 6, 2021 to March 31, 2022). iGO will repay costs that the AGCO paid for on its behalf, amounting to $7.3 million and is reflected as Due to the Alcohol and Gaming Commission of Ontario on the Statement of Financial to the AGCO once iGO generates sufficient revenues, enabling it to become financially self-sufficient.

Activities to establish the regulated internet gaming market commenced in 2019 with the government’s announcement of the intent to legalize igaming through private operators. iGO’s Executive Director was hired in February 2021 and work commenced through the AGCO to establish the organization, which was formally done via regulatory change on July 6, 2021. This meant activities to establish iGO, including financial expenditures, began before the creation of the agency on July 6, 2021. Expenditures of $902,000 were incurred for the prior fiscal year of April 1, 2020 to March 31, 2021. Expenditures of $954,000 were also incurred from April 1, 2021 to July 5, 2021. Both amounts were funded by the AGCO and do not form part of these financial statements or the funding amount to be repaid to the AGCO.

iGO’s expenditures in readiness for market launch were primarily comprised of personnel related expenditures (i.e., salaries and benefits), technical, legal, and advisory services related establishing the entity, as well Shared Resources provided to iGO through the AGCO in accordance with a Shared Resource Agreement. These Shared Resource expenditures from the AGCO relate primarily to people resources for certain shared human resources, payroll, procurement, and information technology functions, and certain services.

The regulated igaming market launched on April 4, 2022, and accordingly, there were no revenues generated in the 2021-22 fiscal year. As a result, the Corporation ended the year with a net deficit from operations of $8.7 million.

 

During the period ended March 31, 2022, iGO was engaged in setting up the various infrastructure and operating agreement activities to enable the launch of the regulated internet gaming market in Ontario. iGO initiated hiring its own employees during the year and also utilized shared resources from the AGCO, including office space to reduce government expenditures on rent and utilities.

The expenditures above represent the direct costs for iGO as well as shared AGCO resource costs for the period of July 6, 2021 to March 31, 2022. Salaries and benefit expenditures represent the costs for iGO directly employed employees as well as the salaries and benefit costs of AGCO shared resources. The General Operating, Administration and Other expense category includes professional services related to financial and management consulting, and various legal and advisory expenses related to establishing iGO’s policies and processes for financial reporting, anti-money laundering and various contract development activities. The Information Technology/Infrastructure Services expense category reflects the expenditures related to establishing backend financial and other systems and processes. HST expense represents the Corporation’s non-recoverable GST/HST payable to suppliers as well as the additional imputed tax payable to the Government of Canada on online gaming-related expenditures. The net tax attributable to online gaming activities results in a 26 per cent tax burden on most taxable online gaming expenditures incurred by the Corporation.

 

 

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