How big could the Canadian single bet sports betting market get?
The steady drum beat in the direction of single play Canada Sports betting continues this month.
Canadian hopes for single game sports betting appear to be nearing realization. What individual bets will look like in each province remains uncertain, but there is at least seemingly strong support for a repeal of Section 207 (4) (b) of Canada’s Criminal Code in Parliament.
After the committee meetings, the draft law was sent back to parliament to review the minor adjustments in committee. While on the committee, Rogers Communications was a report from the Canadian media giant PricewaterhouseCoopers (PwC).
The February report includes an economic analysis of the impact of single game betting across Canada.
The report begins with detailing that it was commissioned by the company Compass rose group, a Ottawa-based group of “Public Affairs Counselors”.
The economic analysis of the report aimed to achieve four main points:
- Current size of the regulated and unregulated sports betting market in Canada
- A summary of how international markets have liberalized gambling laws and imposed regulatory changes
- Different scenarios for determining the potential size of a legal market in Canada based on international experience
- Overview of the economic and tax implications of legalizing single bets
What is sports betting like in Canada?
The first substantive section of the report notes that the Canadian market is currently segmented, divided into brick and mortar as well as online, and regulated online and unregulated online marketplaces.
The report currently estimates that 39% Sports betting is done through land-based retailers while only about 3% Sports betting is handled by regulated online providers (not all provinces currently allow online sports betting). This is in contrast to 57% of sports betting that takes place online through unregulated operators.
If accurate, even with limited regulated options, these numbers would indicate that Canada is already apparently holding much more money in the regulated market than estimates from the United Statesthat historically had only projected 1% of sports betting takes place in regulated markets.
Canadian Regulated Sports Betting Gross Gaming Revenue (GGR) in 2019 was estimated at $ 242 million. However, sports betting is only an estimate 1% of the Canadian gambling market, according to the report.
This was described in detail in the report Ontario accounted for more than half of all land-based sports betting GGR in 2019.
How big could the future be for Canadian sports betting?
PwC’s analysis used a number of different criteria to estimate the size of a future Canadian market. Interestingly, one solution that is generally considered less feasible in the US due to constitutional issues is the proposed blocking of direct access to unregulated locations as opposed to merely blocking payments through banking law (in the US, this is the place UIGEA come inside).
The report looked at both the US and US legalization models Europe.
The results of the legislative analysis predicted that Canada’s legalization path is most likely to follow Denmark, but PwC was shortlisted Sweden, and Delaware (which before the fall of PASPA also offered a similar Parlay product as the one currently available in Canada), also for comparison.
A number of caveats
The market analysis contains a number of caveats that could derail forecasts. However, based on the selected comparison areas, the forecast numbers would be substantial.
In particular, the PwC report projects up to 10 times The current market size within the first two years of legalized single game betting is estimated at $ 1.5 billion to $ 2.4 billion CAD.
The biggest driver would be the expansion of online sports betting, which is not surprising given the lack of regulated online sports betting in Ontario.
One of the factors that drive the assumptions in the models is that regulated products can cannibalize the unregulated market. This is known to be difficult to measure. While it is likely to be true to some extent that the regulated market will convert (and hold) some bettors, it is unclear in the US how successful this endeavor has been.
How much is that going to pay?
Across direct, indirect, and induced actions, the report adds projects that exceed $ 425 million to GDP and creates a little more than 2,500 Jobs across the country.
PwC used two models to measure impact, both assuming a 50% Tax on GGR from land-based income and 20% Tax for online regulated NHA in the low-growth model and 18% Tax in the high-growth model.
What is the takeaway?
In terms of sports betting reports, this one seems to have a touch of reality, which is not always the case.
While Canada seems poised to be ready to lift the barricade on stopping single game sports betting in the coming weeks or months, there is a ton of information on what Canadian sports betting will look like when it hits the various provinces.
How the rollout happens will have a huge impact on how much money it generates for the provinces.