BCers Bet Billions On Unregulated Gambling Sites

A never-released government report says British Columbians may be gambling billions on unregulated online gambling sites, costing the province tens of millions of dollars in potential tax revenue.

A 2021 report compiled by H2 Gambling Capital for the provincial government estimated that residents were wagering as much as $5.3 billion on unregulated online websites per year, with total gross revenues of more than $200 million — a figure the B.C. government believes has nearly doubled in the years since.

The gambling sector analysis also found the most-visited unregulated websites were major players in the global online gambling market who have spent years lobbying the B.C. government to let them operate legally in the province.

Michael Thompson, the executive director of the BC Gaming Industry Association, which represents brick-and-mortar casinos in B.C., noted the report also spoke positively about the province’s legally regulated online betting website, PlayNow.

He says this is evidence British Columbia should resist pressure to open up the market to private competitors.

“There are legitimate ways to capture this market that do not require that the government bend to the pressures of these multinational corporations,” Thompson said.

The report, though nearly four years old, contains some of the most detailed information collected about the extent of unregulated online gambling in B.C., a widespread problem Thompson said governments have largely failed to stop.

The H2 report suggests that hundreds of unregulated gambling websites operate in B.C. with relative impunity. The British Columbia Lottery Corp., or BCLC, has said those actors range from established multinational companies to more dubious websites that government officials warn may be linked to organized crime.

A 2024 confidential note prepared by the BCLC says these websites “pose risks related to money laundering, problem gambling behaviour, game integrity and effective age-of-majority controls.”

In 2021, the H2 report estimated unregulated online operators made roughly $216 million in the past year. That would mean B.C. lost out on as much as $65 million in tax revenue, assuming a profit margin of about 30 per cent for operators.

At that time, the report argued that PlayNow — the gambling website operated by the BCLC — had a larger share of the online market than those illegal websites and was on track to grow at a faster rate.

However, B.C.’s Ministry of Public Safety and Solicitor General, which commissioned the H2 report, said in a written statement it now believes the unregulated market is growing faster than projected. The statement attributed that to Ontario’s decision to legalize private online gambling starting in 2022, which led to an explosion of countrywide advertisements for those websites.

It is not known today how much British Columbians are betting on the offshore online market, and B.C. government spokesperson Chris Donnelly cautioned that information about the financial status of such websites is difficult to accurately project, given their unregulated status.

But Donnelly said the province now believes unregulated online companies had gross revenues of around $400 million in the 2024 fiscal year, based on updated market data from H2. That’s almost on par with the BCLC’s legal online gambling operations, which generated $442 million that year.

The Ministry of Public Safety and Solicitor General initially refused to release the 2021 report when the Investigative Journalism Foundation requested it under freedom of information legislation, which allows members of the public to ask for government records.

The IJF appealed that decision to the provincial Office of the Information and Privacy Commissioner, which scheduled an inquiry into the branch’s decision. Shortly after that inquiry was scheduled, the B.C. government abandoned its case and consented to releasing all the records, unredacted.

That process took roughly 16 months.

Asked why the government suddenly released the report after initially refusing to, Donnelly said the information in it was now outdated.

“The data in the report was collected right before the legalization of single event sports betting in August 2021 and the launch of iGaming Ontario in April 2022, which contributed to a significant shift in the online gambling market. Given the significant shift in the market, the original decision to not release the report was deemed no longer relevant,” Donnelly wrote.

Spencer Murch, a post-doctoral researcher with the University of Calgary and a cognitive scientist who studies addictive behaviours, cautioned that much data about the unregulated online gambling market is by its very nature uncertain.

“These estimates are notoriously tricky. The devil is really in the details. As we make assumptions about this or that or we borrow data from other jurisdictions, we wind up in a place where it’s unclear what the estimate is saying and how valid it is in the first place,” Murch said.

The H2 report also contained estimates of which specific gambling websites B.C. residents were visiting most often. It estimated that 84 per cent of visits to unregulated gambling websites went to just 30 market competitors, most of whom are large companies that are licensed in other jurisdictions.

The largest of those, by far, was bet365, which the report suggested accounted for about a third of the unregulated online gaming market in 2021 in B.C.

Bet365, which is incorporated in the United Kingdom, is part of the Canadian Online Gaming Alliance, a group that has been lobbying B.C. and other provinces to open up the online gaming marketplace to private competitors. Troy Ross, the leader of the alliance and the president of TRM Public Affairs, a Toronto-based lobbying firm, told the IJF in an email that he was not aware of the H2 report.

He said he could not comment on how much B.C. residents were gambling on the bet365 website. Ursula Servis, a spokesperson for bet365, also declined to comment. Ross argued that opening the online gambling market to private operators would ensure compliance with provincial laws and generate new tax revenue for the province.

“Regulating the existing online gaming activity is good public policy, it will provide consumer choice, consumer protection, responsible gaming features and more money to treasury,” Ross wrote.

Ontario is the only province that allows online gambling websites to operate legally. However, Alberta announced this year that it would also look to formally open its online gaming market.

Thompson, though, argued B.C. should not follow suit. He said the H2 report provides more evidence that PlayNow has been able to compete relatively effectively with the private, unregulated market, even if the landscape has changed since Ontario opened its online betting market.

“PlayNow is unique in terms of its level of market penetration, and the report suggests that there is strong potential for PlayNow to penetrate the market even further,” Thompson said.

He also argued that regulating private companies would allow them to advertise even more freely in British Columbia, which would let them grow their market even more.

“You have to ask yourself, if they have these incredible advantages, why on earth would they be asking to be regulated? And it’s because the industry is mature and they need new avenues to penetrate the market,” Thompson said.

He believes provinces should focus efforts on enforcement. But previous attempts have yielded limited results.

In 2016, B.C.’s Gaming Policy and Enforcement Branch sent letters to a number of online gaming companies, including bet365’s parent company, demanding they cease offering their services in B.C. Most of those companies appear to still be active in the province today.

Last month, Manitoba obtained a court injunction against the gambling website Bodog. The judge in that decision wrote that the website’s continued operation “inflicts new and ever increasing and incalculable harm” on that province’s lottery corporation.

Thompson argued the Bodog decision could provide a framework for how provinces can crack down on online operators.

“The industry is arguing that regulation is needed to advance consumer protection. But that’s not why they want it. It’s because there’s a business advantage to it,” Thompson said.