iGO Imposes Unanticipated Fees on Casino Operators in Ontario

iGaming Ontario (from hereon also to be referred to as iGO) stated that all legally operating online casino and sports betting companies in Canada are to pay extra fees to pay off due diligence.

The authority has been held under the spotlight since this announcement on February 21st 2023.

The story was broken by Gaming News Canada, and it certainly has been making headlines within the community.

However, iGO refuses to comment further on the issue as they state that this is an issue of a "confidential nature" and that in fact, this information only concerns the operators it affects.

As expected, casino operators in Canada are quite frustrated at this sudden news which has imposed new, regular fees adding up to $150,000.

What is the reasoning behind these surprise fees?

One of the iGO's only comments on the matter is that its financial department faces long hours of work to be able to complete lengthy legal processes as more and more online casino operators join the Canadian market.

It reminds us that the regulated online gambling market in Canada is fairly new, suggesting that this is an experimental phase of the business in Canada, a learning process which has not yet been solidified.

For this, finance at iGO needs to be appropriately repaid which the authority believes, should be the responsibility of the online casino operators who want to join the market.

Online casino operators aren't the only source of the backlash being thrown towards iGaming Ontario following this seemingly impulsive and poorly explained decision.

The Canadian Gaming Association has also thrown in its own two cents with CEO Paul Burns describing how disruptive these sudden fees are to the flow of work and growth of the affected online casino companies.

He adds that no updates were given prior to the announcement which may have shed light on the issue. The companies affected were not informed of the possibility of additional fees for the due diligence being carried out by the iGO's finance department.

Operators are enraged not only at iGaming Ontario but also at several banks it has been collaborating with to manage its finances who sit in the background of the discussion playing a quiet role in this dispute.

Kindred Group's Canadian manager Amanda Brewer comments that banks involved in the management of funds for online casino companies are not aware of the limitations faced by these companies and the strict standards they are held to.

Unfortunately, the lack of interest on behalf of the banks being given this responsibility jeopardizes opportunities for these casino companies within the Canadian market.

Brewer continues by saying that this mismanagement and miscommunication also throw off potential companies and businesses from joining the local scene.

Tens of casino companies are being forced to pay fees going up to $150,000

iGaming Ontario has specified the group of casino and sports book operators which will be affected by this decision as those who launched their operations in Canada before the 31st of December 2022.

These include Bet365 and Caeser's Sportsbook among others.

In our opinion, this begs the question - are operators joining later than December 2022 not being held to the same standards?

It has not been explained why it is specifically this group of operators who must comply with these additional payments.

Secondly, not all operators are paying the same fee.

The payment due fluctuates between $25,000 and $150,000. iGO has supported this by saying that the fee each operator needs to pay will depend on the estimated revenue their platform makes annually.

iGaming Ontario has also referred to section 5.5.2 of its financial policy which discusses chargeback and fees to support its argument.

These fees are over and above the $100,000 each operator pays as a gaming site fee.

However, the possibility of additional fees is brought up in the third section of the Alcohol and Gaming Commission in Ontario's (from hereon AGCO) guidelines for prospective casino companies to operate in Canada.

The commission is also involved in overseeing the regulation and legalization of online casino companies in Canada.

It is clearly stated in these guidelines that operators might face additional fees as deemed necessary by the relevant authorities.

This makes us question Burns' comments regarding how the affected operators were not informed of these fees, seeing as the ACGO guidelines make it pretty clear in one of their clauses that additional fees are very possible at any point of the company's presence in the local market.

Will this make it difficult for the igaming scene in Canada to keep flourishing?

It is difficult to say what will come out of these events in the next weeks and months.

Ms Amada Brewer's sentiment which we mentioned above, is one that sits heavy on the shoulders of those of us spectating these events.

Between wanting to completely eradicate illegal online casino and sports betting companies from the market, and then introducing these fees out of nowhere for those operating legally, iGO is definitely playing a major role in how the industry's footprint will progress in Canada.

We're curious to wait for any other comments from iGaming Ontario on these recent events and to see whether there will be any rebellion from the affected operators.