‘Marketing like crazy’

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This article was published 25/05/2024 (811 days ago), so information in it may no longer be current.

If you want to bet whether your favourite hockey player scores within the next few minutes of the big game, there’s not just an app for that. There are several.

Online sports gambling seems to be everywhere. You pretty much cannot watch any sport activity without seeing ads enticing you to gamble.

Over the last few years, provinces legalized to some extent or another single-event sports betting (the ability to bet on the outcome of just one game). That includes the PlayNow Manitoba website operated by Manitoba Liquor & Lotteries.

Certainly, Canadian provinces and American states have a good reason to regulate online sports gambling. Otherwise, their citizens will gamble online sending their money to other jurisdictions, while provinces lose out on revenue while bearing all the downsides (i.e. treating problem gamblers).

Among all Canadian jurisdictions, Ontario’s legalization scheme stands out because its advertising is the most prominent.

“It’s the only province that legalized and regulated commercial online gambling,” says Dr. Nigel Turner, a researcher specializing in online gambling and problem gambling.

While other province’s run online gaming access, Ontario has allowed corporations like MGM Resorts International to run the gaming sites — more than 70 — and limit access to Ontarians only.

“It’s a bit of an oddity (with their hybrid commercial model) in limiting its market to Ontarians because other countries specifically target people who are not from their country to draw in money.”

That said, even we Manitobans witness the advertising barrage. Some of those ads are for grey market online casinos like Bet365, which is regulated by the United Kingdom, and licensed in Ontario, but also accessible to Canadians in other provinces, including Manitoba.

Of course, for most viewers, all the marketing equate to more commercial to endure and ignore between the whistles.

Others do delight in the digital playgrounds. After all, it’s all in good fun with some money going to the common good.

That is until it’s not.

Sport gambling’s heavy marketing can be a special kind of torture for problem gamblers.

“All the advertising is like to trigger people with a problem,” Turner says. “That said, the marketing also helps establish the problem in the first place.”

Governments have long walked a moral tightrope with gambling, says Dr. Michael Ellery, who teaches psychology at University of Winnipeg.

“When they made VLTs legal in Manitoba in the early ‘90s, a certain percentage of revenue actually had to be set aside for treatment and research,” says Ellery, a registered psychologist, who occasionally works with problem gamblers.

He also conducted research on VLTs (video lottery terminals) for several years. VLTs produced so much revenue at first, he notes, “the government couldn’t spend it all on treatment and research.”

So most money went to health care. “That’s when money seemed to fade for treatment, leading to an under-funded situation.”

Certainly, legalized gambling does add to the overall common good for Manitoba, though it is not as lucrative as many might assume.

Of all the roughly $1.6 billion in revenue generated by MLL for the fiscal 2022-23 year (ending March 31, 2023), online gambling — including sports gambling — made about $75 million.

Certainly, those tens of millions of dollars can fund a lot of services. That said, the province’s latest budget calls for $24 billion in annual spending. By comparison, the annual profit — what’s left over after costs — from Manitobans’ legal vices last year were $741 million — all of which presumably is used for public services, like health care.

In Ontario, where it saw nearly $36 billion in bets wagered in the first year after legalizing online gambling, the government’s share was about $302 million in profit for funding services and other needs.

That’s not just sports betting. In reality, most of the money generated arises from online casino games.

“Online gambling takes in the bulk of revenue,” Turner says, adding it has also fuelled the rebound helpline calls after the COVID-19 pandemic back to pre-pandemic levels.

Only in 2019, most helpline calls were for VLT problems. Now many more people gamble from their device (i.e. mobile phone).

That online casino gambling is more profitable, while potentially causing more problems than online sports gambling, makes sense from an addiction model perspective, Ellery says.

“With (casino games), you can play multiple times very quickly … and you are getting more (psychological) reinforcement, feeling more compelled to keep going,” he explains, while noting research shows problem gamblers generate a disproportionate share of revenues.

“Sports betting frequency is a little slower.”

Yet, the seeming ubiquitousness of sports gambling marketing demonstrate there is no lack of effort by industry to get more people wagering (albeit responsibly).

“When a new state or province legalizes, these guys are marketing like crazy,” says Michael Goldberg, sector lead of sport finance ratings at Morningstar DBRS in Toronto, who tracks the industry. “And right now, it’s a dogfight for market share.”

Even companies like Caesars, MGM, DraftKings and FanDuel — all in Ontario — have not turned much profit if at all, he adds.

“They’ve mostly been losing money” because they are spending so much on marketing to win market share.

So while sports gambling is not going anywhere (for better and for worse), the heavy advertising may indeed become lighter, as the eventual victors — the companies that don’t go out of business — receive more of the spoils.

However, even profitability is likely to be somewhat muted with the state as your partner, Goldberg says.

“With gambling in general, if you start to make too much money, the government jumps in with higher taxes, so it’s always a fine balance.”

Joel Schlesinger is a Winnipeg-based freelance journalist

joelschles@gmail.com