Is Alberta the new gold rush for Canadian gaming?

In light of the Alberta government’s review of potential paths towards a commercial gaming industry, and Minister Dale Nally’s declaration that the province will follow an Ontario-style open model, that question was posed to numerous experts at the 2024 Canadian Gaming Summit.

The consensus was that the size of the opportunity is huge and the potential “tremendous.”

According to figures cited by moderator Alon Segev, managing partner of Segev LLP, on a panel fittingly titled Alberta: The New Gold Rush?, Alberta gaming generated over $2.9 billion last year with Alberta Gaming, Liquor and Cannabis and its Play Alberta platform as the only regulated operator. That number, said Segev, is expected to soar by $1.5 billion in 2024 with commercial gaming potentially on the horizon.

Segev called Alberta “one of the most penetrated gaming jurisdictions in North America.” Even though Play Alberta holds a monopoly over licensed gaming, the province’s gaming market is certainly mature. Experts at CGS noted that the province has a sizeable core of gamblers who have been betting online for years. Estimates suggest more than half of that activity is done on unregulated sites.

One only needs to look at Ontario, to understand the potential rewards of bringing that grey-market activity under regulated oversight. 

Industry consultant Troy Ross noted on a separate panel titled Alberta’s iGaming Evolution that the Ontario model has proven to work “infinitely better than we thought it would,” reaching a channelisation rate of over 80% within the first year.

“If Alberta follows a very similar regime with a similar type of regulatory principles and a similar tax rate, it is going to get a similar result,” he said.

Ontario is three times the population of Alberta and home of Canada’s only MLB and NBA team. It recorded $1.5 billion in operator revenue in its second full year of operation. According to Citizens JMP Securities projections, Alberta’s forthcoming iGaming market could generate more than $950 million a year in revenue by the third year. 

“There’s no disputing that [Ontario’s] model has been successful.”

iGO’s Martha Otton

What Alberta will opt for as a tax rate is uncertain, but experts such as the Canadian Gaming Association’s Amanda Brewer have been vocal in suggesting that more than Ontario’s 20% rate could be a deterrent for operators considering entry. 

Ross and Entain SVP Martin Lycka each predicted that Alberta will do as well or perhaps even better than Ontario in terms of per capita revenue by bringing that activity into the light.

“The Alberta sports betting market has always been rather lively,” Lycka noted.

In addition to the low corporate taxes mentioned by Nally in his speech, many experts cited the high disposable income of the Alberta population as a factor that should benefit an open market.

VP at Environics Analytics Michael Scida said data shows that Albertans typically have anywhere between 22-25% more of their paycheques left over after taxes, rent or mortgage payments and other necessary spending than people in the rest of Canada. He added that data also suggests Albertans spend anywhere between 30-35% more on games of chance than residents of any other province due to a combination of factors including high income and the widespread availability of VLTs across the province.

“Alberta has a tremendous opportunity for success.”

Environics Analytics’ Michael Scida

“When you see the revenue numbers on a per-capita basis or a gross spend, Alberta always punches well above the other jurisdictions,” opined Ross. “If Ontario was earning almost half a billion dollars in net new taxes in year two, it wouldn’t be surprising if Alberta didn’t conservatively see at least $100 million in net new taxes.”

There’s also the fact that Alberta is the fastest-growing province in Canada in terms of population. Scida notes that between inter-provincial migration, new immigrants, temporary workers and other arrivals, Alberta had 250,000 new people cross the border last year.

“That presents new opportunities to attract business to your iGaming sites,” added Scida. “Then when you look at the spend and discretionary incomes, the total pie is so much larger than anywhere in the country. When you combine it all, Alberta has a tremendous opportunity for success.”

While Ontario has laid out the roadmap, experts have reiterated the importance of Alberta finding a solution that works for its residents. It’s important that Nally, the government and regulators keep in mind that Alberta’s existing gaming infrastructure is unlike any other province.

Alberta has 29 land-based casinos with more than 15,000 slot machines and hundreds of VLTs and table games, plus online casinos, commercial lotteries run by AGLC and First Nations and significant charitable gaming activity. Alberta’s land-based casinos are run differently from any other provinces, noted Century Casinos SVP Geoff Smith: electronic games are AGLC-run, table games are charities-run.

“Alberta has always been a gold rush.”

Century Casinos’ Geoff Smith

The likes of Smith, Lycka, Brewer and HLT Advisory Managing Director Rob Scarpelli stressed that Alberta has an opportunity to improve upon Ontario’s model by allowing those land-based casinos in on the ground floor. After all, they arguably know Alberta’s local players better than anyone. The same goes for First Nations, whom Nally and Alberta Premier Danielle Smith have placed at the forefront of consultation.

“Alberta can take a freer and more open attitude towards letting casinos do what they need to do to take advantage of this opportunity and to grow their businesses,” noted Brewer. “Things like partnering sportsbooks, launching their own skins, getting licences, and thinking about that true omnichannel experience.” Smith suggested that even simple, “low-hanging fruit” such as allowing live table games to be 24 hours and facilitating greater cross-pollination between racetracks in the and Play Alberta or arriving commercial operators, could have a big impact. 

Ultimately, Scarpelli warned that Alberta must tread carefully.

“Don’t screw up what you’ve built in the past 20 years, which is a well-developed, well-penetrated market.”

Is Alberta the new gold rush? “It’s always been a gold rush,” concluded Smith. “But we have to do our homework.”