Until very recently, Canada only allowed parlay (multi-stage) betting on sports. All this is now set to change with the legalizing of single event sports betting, a boon for bettors and sportsbooks alike. iGaming stocks are already on the up as this large, prosperous nation finally moves into the 21st century when it comes to sports betting.
To European ears it might sound odd, but until very recently indeed both the United States and Canada had a restrictive legal approach to sports betting. In Canada it was not legal to bet on sports unless it came as a parlay bet (also known as an accumulator or multiple), a multi-stage series of linked contingencies such as the results of six separate matches. Naturally this drastically reduced the chances of any given bet coming off as one single failure meant the whole bet failed to come off.
There has long been a drive to end this stringent state of affairs, not least because a lot of Canadians were simply betting either overseas or on the black market, where single event sports betting was possible. The major advantage of being able to bet on a single event is that it's much more straightforward and players are far likelier to end up in the black. With the US, unusually, having a more progressive approach to online betting and loosening up first, Canadian lawmakers were increasingly concerned that bettors would simply wager on major league sports in the US rather than in Canada.
Now single event sports betting on the most popular Caadian sports including hockey, basketball, Formula One and other categories will become legal in Canada, after a private member's bill (Bill C-218) received Senatorial approval. This is the final political step that needed to be satisfied ahead of receiving the rubber stamp of Royal Assent. Previous attempts to legalize single event sports betting had made some progress but failed to become law, and this new success is something which will also satisfy provincial governments (who have long supported such a measure).
Many online betting sites include both casinos and sportsbooks under one virtual roof, and these iGaming stocks, alongside dedicated sportsbooks, have obviously received a real shot in the arm with the legislative move in Canada. The country is large, prosperous, and has a pro-gambling population, with the vote by the Senate putting a smile on the face of both those who gamble on and those who invest in iGaming sites.
In sporting terms Canada is in an interesting position as the only other country besides the USA to participate directly in major league sports, the wealthiest sports leagues in the world. And with plenty of Canadians playing casino games already, the easier access to sportsbooks and single event betting has driven up iGaming stocks significantly.
Score Media & Gaming (NASDAQ:SCR), which is based in Toronto, has been highlighted as one of the iGaming stocks that particularly benefited from the move. A large part (almost a fifth) of Score Media's traffic comes via theScore media app, and the iGaming stock has seen a rise in excess of 70% over the course of a month, due at least in part to the positive developments revolving around Bill C-218.
Credit Suisse analyst Benjamin Chaiken has described Score Media as the biggest winner from the Bill's success, noting that a quartet of US states also have access to theScore betting app which only enhances the positive impact of the legislative situation for the firm.
When the Senate passed Bill C-218 it received the warm approval of theScore's Chairman and Chief Executive Officer, John Levy. Levy singled out for praise the politicians who had spearheaded the bill, naming MP Kevin Waugh and Senators David Wells and Brent Cotter. Levy went on to describe the legislation as an important step towards creating a safe and trusted environment in which Canadians can wager on sports. This is to be expected as there is a significant opportunity for theScore to expand its operations in Canada and the firm (along with many other iGaming stocks in comparable positions) has been making preparations ahead of time to seize the moment and forge ahead.
Ontario itself is a significant marketplace with many online casino options in BC. In light of this theScore has estimated its potential in the online gaming sphere as around US$1.7 billion to US$2.1 billion in annual gross gaming revenue. In addition, Ontario represents over a third of current Canadian users of theScore (1.43 million out of a Canadian total of 3.75 million).
DraftKings (DKNG) is another obvious winner among iGaming stocks from the progression of Bill C-218 in Canada. Probably the biggest such brand south of the border, while Score Media aims to expand its presence in the USA, DraftKings is looking to move in the opposite direction and build up its Canadian customer base. The legalization of single event sports betting paves the way for significantly increased sports betting and related activities.
By partnering with the NFL and becoming football's official Canadian fantasy partner DraftKings has stolen a march on much of the competition to get started building a presence north of the border. By the end of 2023 DraftKings might even see its annual revenue swell by some $100 million from the potential of the Canadian marketplace, according to Rosenblatt's Bernie McTernan.
Whether in anticipation of the liberalizing move in Canada, or merely a coincidence, there's also been a significant PR deal that may have a significant impact on the Canadian sports betting market. There is no brighter star in the country's sporting firmament than champion Wayne Gretzky and he's been hired by BetMGM to act as a brand ambassador. BetMGM is a joint venture from MGM Resorts International and Entain, and the multi-year deal signed with Canada's greatest ever sportsman is a pretty clear signal of intent to Canadian (and American) bettors. BetMGM has indicated it views the Canadian online casino market as being worth some $7bn, making it a very substantial market for online operators and will likely become something of a battlefield as competitors seek to outdo one another.
Estimates do vary as to the possible size of Canada's iGaming market, though, with Chad Beynon, an analyst at Macquarie Group, suggesting the sports betting market could be worth $2.2bn by 2030 with another $2.4bn on top of that for iGaming. However, Beynon has indicated he views these as conservative figures, so the real figures could end up being higher (and closer to BetMGM's assessment). Beynon also said that a quintet of sports betting operators were in a good place regarding Canadian sports betting, specifically Score Media and Gaming (in Canada) and four US outfits: DraftKings, Caesars Entertainment, BetMGM, and Penn National Gaming.
With Canada opening up province by province for single event sports betting, this obviously makes things more convenient for sports bettors and rewarding for iGaming stock investments. But there's a second, related piece of positive news to enjoy. This wealthy new market coming online means there's very likely to be something of a sportsbook war as rivals compete for the attention of Canadian sports fans and bettors. In practice this means we could see something akin to the world of casino betting. This ferociously competitive marketplace has seen betting sites put together incredibly generous no deposit bonuses, match offers and recurring bonuses in a bid to both attract and retain players. This is often seen at top sportsbooks like Sports Interaction and Bodog. In short, it's very much a player's market.
This can be repeated almost like for like with sports betting but there's a second string which is uniquely good for sports bettors. More sportsbooks means more competitive pricing (better odds). This materially improves the chance of winning. Better yet, it can be coupled with smart betting strategies in a way that does not apply to casino betting. For example, players will be able to sign up at multiple sportsbooks at once, and utilize welcome bonuses in matching but opposite ways (backing different teams in the same game, for example) to guarantee a profit one way or another. Switched on Canadians paying attention to Twitter and the like will also be able to take advantage of the five minute window it takes a sportsbook to react to breaking news and amend a market when a player gets injured or suchlike, without needing to try and make six bets all at once to satisfy the parlay requirement.
Canada is not a wholly new market for sports betting, of course, but the previously parlay only approach was highly restrictive and acted as a deterrent for many players. Sports betting is likely to rise substantially, and provides great opportunities for iGaming stocks to rise, not least because of the significant overlap between the sporting scene in the USA and Canada. Expect to see record betting interest in the Stanley Cup the next time it's held thanks to this recent legal change.
With the new legislation on the statute books Canada is moving on from a rather archaic approach to online sports betting into a more modern, pro-business, and consumer-friendly way of doing things. iGaming stocks are already on the rise and there's plenty more scope for improvement, so consider carefully if you're looking to invest in sportsbooks and related apps.