Ever since a speech by Dale Nally, the Alberta government’s Minister of Service Alberta and Red Tape Reduction, at the Canadian Gaming Summit in Toronto in June, it’s been full steam ahead for a new igaming regulatory regime in Alberta.

Attorney Ron Segev told CDC Gaming in August, “Our intel is that the Alcohol and Gaming Commission of Ontario is going to be supporting the back office of Alberta Gaming, Liquor and Cannabis in this new endeavor. And if that’s the case, then a fast rollout, I think, is to be expected. The AGLC has the resources to roll out quick. The government is aggressive. They want to see success yesterday. They don’t want to have to wait for the bureaucrat machine to spin up. The interest is going to be there.”

Segev LLP opened an office in Calgary in anticipation of helping clients access opportunities in the new frontier there.

In late July, Nally told CDC Gaming that consultation with First Nations had been completed (Alberta premier Danielle Smith had said First Nations would be front and center in the new igaming regulatory regime) and consultation with land-based casinos was next up, followed by racetrack operators.

An operator source told us it was his impression that there was a possibility the market would go live before Christmas. Other sources on the operator side said a launch date was likely early 2025.

Now, senior industry sources are saying Alberta needs to slow down the  market rollout and that this time next year is likely.

What has been happening? It depends on whom you talk to. One senior industry source told us a sticking point in discussions in cabinet has come down to the proposed 25 percent tax rate compared to 20 percent in Ontario.

“We’ve heard that rumor,” said Paul Burns, President & CEO of the Canadian Gaming Association.

Many in the industry think a tax rate higher than Ontario’s will negatively impact channelization. In Ontario, channelization has been very successful – 86.4 percent, according to an Ipsos study in February 2024.

Since major objectives in opening up an igaming market include stamping out gray-market operators, protecting consumers, pushing responsible-gaming practices and messaging, that channelization number is where Ontario can take a bow.

“Things have gone pear-shaped in Alberta,” the industry source added. A proposal went to cabinet, but that’s been shot down twice, the source said. “It’s gone sideways,” he said.

The talk about speed in going live had a lot to do with a proposal to approve any operator already registered in Ontario and wanted to do business in Alberta as well.

“If you are at 18-20 percent tax, that’s the sweet spot. Operators are going to come, submit for registration, and be happy to pay,” he said. “Alberta wants a 25 percent increase on what [operators] were expecting. That has created a lot of anxiety. A lot of other issues happened at cabinet that delayed this, but if they don’t fix that cornerstone issue … Ontario is attractive, because it is a reasonable environment to do business in.

“When you increase the tax rate too high, gray-market operators may say, ‘We’ll continue doing what we’re doing,” the source said.

Gray-market operators who come aboard at 25 percent might invest nothing in Alberta – no jobs, boots on the ground,  advertising, or marketing spend.

“The net effect is when your VIG goes up and RTP goes down, you’re not competitive with the black or gray market,” the source said. “And gambling is math-based entertainment. People understand when they’re getting a good deal and when they’re not. A high tax rate will drive people to the black market.”

The debate will be what Alberta’s channelization number will be if they go with a 25 percent tax rate.

“It’s not going to be what Ontario has,” he said, meaning net revenues will be lower. On the other hand, larger operators would be focusing on a more limited pool of competitors, when looking at the pros and cons of 25 percent.

So it sounds like no decision came out of cabinet, with the government not comfortable with the proposed direction for a new regulatory regime, and more time is needed to sort out the tax issue, as well as other issues.

If legislation is needed, designing their own regulatory regime rather than whitelist recognition for those already licensed in Ontario, that means a likely timeline would take us through next fall, the source added.

Another source told CDC Gaming the issue at the cabinet level came down to the speed in which this was all happening. Cabinet members weren’t comfortable with the structure and how they were going to launch to market. Cabinet members want a launch more rooted in legislation, with a regulator.

“They’re still looking to do this quickly, but there’s more interest in making sure they get it right,” Burns added.

CDC Gaming reached out to Minister Nally’s office for comment, but we’ve yet to hear back.

A CGA panel discussion on the topic of the Canadian market scheduled for Wednesday this week at G2E in Las Vegas will be headed by Burns and Nally is on the panel.

The message in all of this, as Burns said: Alberta is going to happen, but it will just take a bit more time.

One thing an industry source said, Ontario didn’t happen overnight either.

“[Ontario] had a mature, responsible, really effective regulator in the Alcohol and Gaming Commission of Ontario,” he said. “The executive team at the AGCO had been having back-channel conversations with the industry for years, so they were ready to move once they got direction from the top of the political pyramid in Ontario. They knew what they wanted to do … [based on] a broad and transparent consultation with the industry.