How Canadian Governments Promote Online Sports Gambling

...But can't be bothered to control dangerous addictive platforms

I used to joke about how lotteries were a tax on people with a poor grasp of the principles governing statistics. Now it seems that legalized online sports gambling is a tax on people who are vulnerable to addiction disorders. And it’s no joke.

It doesn’t take much effort to find insightful discussions describing how online sports gambling is damaging both individuals and sports events themselves. This recent piece in The Free Press is a great place to start. But it’s a lot harder to find evidence that Canadian governments - busy legalizing sports gambling opportunities - have done much to minimize the harm.

First, some numbers. nation-wide revenues from all gambling industries in Canada had been fairly stable between the mid 1990’s and the COVID disruption in 2020. But as you can see from the chart, something definitely changed in 2022 that was much more than a “normal” post-COVID recovery.

Two regulatory changes likely sparked that growth:

• The 2021 legalization of single-event sports betting (Bill C-218, the Safe and Regulated Sports Betting Act)

• Ontario’s launch of regulated online gaming in April 2022 through iGaming Ontario (a subsidiary of the Alcohol and Gaming Commission of Ontario)

In fact, since 2022, revenue growth in the sector was much faster in Ontario than (nearly) any other province:

Ontario saw 101.38 percent growth in their gambling industry GDP between 2015 and 2024, more than double Quebec’s growth and nearly 10 times the growth in BC. Only Alberta saw a greater rate of growth: 127.43 percent.

If anything, Alberta has tightened its online gambling laws in recent years. So why are they seeing so much income from the industry? Understanding this might take us somewhere interesting.

If you examine industry statistics, you’ll see that employment numbers have mostly been falling since long before COVID. There were 40,448 Canadians working for the gambling industry in 2015 but just 38,063 by 2024 - a six percent decline. That combination of rising business volumes and declining employment suggests a general shift from bricks-and-mortar operations to labour- and capital-efficient online activities.

By contrast, Alberta’s employment levels in the sector have remained basically stable: going from a peak of 6,200 in 2019, through COVID declines, and back up to 6,137 in 2024. This could reflect stronger ongoing performance for physical gambling venues like casinos and VLTs - which could possibly also explain the increasing business activity.

Now let’s look at Ontario where employment in the industry since 2017 has dropped by 20 percent. Proportionally, Ontario’s industry productivity may not have grown as dramatically as in Alberta, but the raw numbers are far more attractive. That’s because - requiring so little labour - they come with higher profit margins. But also because they generate so much income for the provincial government.

Thanks to online deregulation, this is an industry that won’t provide much employment. But much like the case with the Liquor Control Board of Ontario, the income is just too attractive to resist.

How about the consequences? In the U.S., where online sports gambling has been legal for longer and where the problem has been more seriously studied, here’s what seems to be true:

• Approximately 2-5% of sports bettors develop a gambling problem

• Sports betting addiction accounts for about 15-20% of all gambling disorder cases

• Around 3 million Americans are addicted to sports betting

• Online sports betting accounts for nearly 70% of sports betting addiction cases

• Sports betting addiction increases the risk of criminal behavior by about 25%, due to financial desperation

In addition, research has identified what are known as “dark patterns” (design elements that subtly push users toward undesirable or harmful behavior) specifically in online gambling platforms. These include:

• Harder-to-find controls for setting limits

• Urgency prompts

• Default high bet values

• Friction in closing accounts

• Complex bonus terms tied to continued play

AI and personalization features are linked in research to changes in gambling behavior. Algorithms can tailor promotions based on real-time behavior, such as offering bonus credit when someone is about to quit or has just lost. Such interventions can change a player’s perception of risk and betting frequency.

Closer to home, a Statistics Canada study published in 2022 - before the impact of the Safe and Regulated Sports Betting Act could be measured - found that:

• 1.6 percent (304,400) of past-year gamblers were at a moderate-to-severe risk of problems related to gambling

• The number of gambling activities played increased the risk for gambling-related problems

• 7.9 percent of Canadians (15 and older) engaged in sports betting in 2018

That gives us a helpful baseline snapshot of gambling in Canada before the introduction of legalized online platforms. Although we still have no idea how things are working out at street-level.

As it turns out, neither the federal government’s Safe and Regulated Sports Betting legislation nor Ontario's deregulation in 2022 came with any controls over potentially addictive user experience features in “regulated” online gaming platforms. Not only is it hard to identify any relevant safeguards built into the risky legislation, but, as far as I can tell, there doesn’t seem to be any serious ongoing research into the consequences.

And if all that sounds a familiar to you, perhaps it’s because we recently saw the same process playing out in the context of the legalization of cannabis.

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