iGaming

The launch of Ontario’s igaming market on April 4, 2022, was a major milestone.

The AGCO developed a regulatory model for this new, competitive market that protects consumers and provides them with choice, reduces red tape and supports legal market growth and provincial returns.

This model reflects the AGCO’s regulatory objectives for igaming while meeting the unique requirements of the igaming open market. It was informed by a series of engagements with industry stakeholders on the Registrar’s Standards for Internet Gaming (Standards) and the eligibility and compliance approaches for igaming. Following the federal government’s legalization of single-event sports betting, the AGCO also undertook stakeholder engagement on the regulatory standards for sports and event betting, which apply to all sports, esports, novelty and betting exchange.

Through the igaming regulatory model, the AGCO undertook several strategic shifts in its operational compliance and eligibility activities to ensure market participants act in accordance with the law, with honesty and integrity, and in the public interest.

Engagements were also initiated with other jurisdictions to inform the creation of the AGCO’s player service model to ensure information and assisted services met player needs.

The updated risk-based registration model emphasizes applicant ability to meet the Standards and previous experience of applicants, including history in leading jurisdictions. Compliance activities focus on ensuring regulatory objectives are met through innovative, targeted approaches. This includes setting compliance expectations for entry into the market through game and critical system testing, confirmations of full system compliance with the Standards, as well as setting and monitoring priority compliance areas with targeted monitoring and interventions where appropriate.

The AGCO provided smooth and transparent service delivery to igaming customers, including:

• publishing guides on its website to assist prospective igaming Operators and Gaming-Related Suppliers with the registration process (for example, the Internet Gaming Operator Application Guide) and to help them understand compliance requirements when participating in Ontario’s regulated market (for example, the Internet Gaming Go-Live Compliance Guide);
• collaborating with iGaming Ontario (iGO) on the development and coordination of a robust onboarding process to ensure igaming Operators have met all requirements to enter the market;
• implementing a robust customer service model for handling both regulatory and iGO matters, including responding to complaints and inquiries; and
• making enhancements to the AGCO internet gaming portal, including the creation of a new player support section to provide players with information about the new igaming model and additional resources.

The AGCO also implemented system changes to support the launch of the new igaming market. This included updates to the iAGCO online portal to include igaming applications, processes for complaints and inquiries and development of a digital system to monitor and manage ongoing compliance activities through regulatory intelligence data.

Over the course of 2022-23, the AGCO supported 45 operators to launch in Ontario and meet AGCO compliance requirements. This includes the transitioning of 33 operators from the unregulated market into the regulated market.
 

Liquor modernization

The Liquor Licence and Control Act, 2019 (LLCA) came into effect on November 29, 2021, marking a major milestone for liquor regulation in Ontario. The new liquor framework under the LLCA enables the AGCO to modernize the way it regulates the sale, service and delivery of liquor and allows for a more flexible approach.

The new liquor framework is designed to reduce burden, facilitate better monitoring and compliance and reflect the changing liquor landscape for the benefit of Ontarians. It includes the introduction of a new liquor licence and permit structure and the transfer of the regulatory authority for some activities from the Liquor Control Board of Ontario (LCBO) to the AGCO.

The Registrar’s Interim Standards and Requirements for Liquor (Interim Standards) came into effect under the LLCA and primarily maintain and consolidate many of the previous requirements. Over the coming years, the AGCO will build on this work to develop a comprehensive outcomes-based regulatory model, consistent with our overall strategic approach for other regulated sectors.

Enhanced social responsibility measures were also introduced with the creation of a new re-certification requirement for licensees relating to the responsible sale, service and delivery training (such as Smart Serve). The AGCO adopted this industry best practice in recognition of the significant modernization of Ontario’s liquor sector and the need for continued commitment to social responsibility and public protection in the liquor sector.
 

Cannabis

In June 2022, the AGCO amended rules related to inducements in the Registrar’s Standards for Cannabis Retail Stores to create an additional exemption permitting agreements between retailers and federally-licensed producers (LPs) for store brand products. The objective of these changes was to reduce anti-competitive practices. As the cannabis sector evolves, the AGCO will continue to be responsive, including supporting innovation and flexibility in the sector while regulating in accordance with the principles of honesty and integrity and in the public interest.

Building on the relationships built between the AGCO and First Nations during the cannabis engagements, the AGCO’s compliance team has further strengthened its relationship with leadership in multiple First Nations communities through the establishment of regular communication mechanisms. The AGCO has set up quarterly roundtable meetings with several First Nation representatives to maintain open lines of communication and keep First Nations apprised of any new developments.

In November 2022, the Registrar submitted a letter to the Expert Panel leading the review of the Cannabis Act, outlining the AGCO’s perspective on possible amendments to the federal Cannabis Act to give provincial regulators more flexibility in developing and enforcing regulatory requirements related to cannabis display, promotions, and advertising.
 

Gaming modernization

Gaming modernization is focused on identifying the successes and lessons learned from the implementation of the igaming regulatory framework and their applicability to casino gaming, as well as identifying specific opportunities for burden reduction and how to better target potential harms in the casino sector. This strategy also encompasses the regulatory work to support OLG Lottery Expansion, which involves the introduction of 1,400 self-serve terminals in the province starting in November 2023, and the ongoing transition of the igaming and sport and event betting frameworks to regular operations.

Key accomplishments from the 2022–23 year include:

• completing internal work to review current standards, eligibility and compliance in the casino sector in preparation for external consultations in 2023. This work builds on many of the innovations introduced in igaming and aims to address casino concerns about creating a fair and competitive regulatory environment across gaming sectors;
• supporting MAG in its work to make the necessary regulation changes under the Gaming Control Act to permit self-serve lottery terminals, as well as completing the regulatory analysis to identify potential impacts to the Registrar’s Standards for Gaming: Lottery Sector; and
• completing a number of external engagements related to making adjustments to the  Registrar’s Standards for Internet Gaming.
   

Charitable Gaming

In Winter 2022, AGCO supported the charitable gaming industry through a number of strategic updates to simplify processes and reduce burden with the objective of providing more effective fundraising for charities. These updates focused on:

• clarifying collaborative fundraising opportunities;
• updating temporary COVID-19-related flexibilities to provide permanent flexibility where possible;
• updating rules for Bingo Revenue Model Halls to reduce burden by permitting the use of credit and debit cards and decreasing the number of charity representatives required to be present at the hall;
• updating terms and conditions for Break Open Tickets to be more standards and outcomes-based; and
• increasing permissible use of proceeds for Service Clubs and Royal Canadian Legions and clarifying additional ways these organizations can use charitable funds for general operating and maintenance costs of their own premises.

 

Equine welfare

As part of the AGCO’s ongoing commitment to protecting Ontario’s racehorses, enhancing the integrity of racing and providing a regulatory framework appropriate for today’s racing industry, we have worked with industry participants on four welfare reforms that are anticipated to take effect in Spring 2023, which include:

• a new rule and a revision to the Thoroughbred Rules of Racing to ensure safe and acceptable loading practices in the starting gate, for both horses and starting gate personnel;
• certain medications and substances will now be regulated in horses participating in an Official Workout (Thoroughbred and Quarter Horse) or in a Qualifying Race (Standardbred);
• a new rule that will require licensed trainers to report all stabling locations they operate under their licence, including any location changes to the Registrar within five (5) calendar days; and
• a revision of 22.19 of the Standardbred Rules of Racing will update language and the penalty structure that prohibits a driver’s foot to make contact with the horse in any manner, aligning it more closely with the urging provisions.

Service metrics

The AGCO’s Contact Centre and Communications teams serve licensees, registrants and authorization holders as well as members of the Ontario public. The following tables show interactions via the AGCO’s customer service channels, communications with stakeholders and inquiries and complaints as of March 2023. The tables also include volumes from the previous fiscal year.
 

Table 2—Service provision

 

Table 3 —Communication with AGCO stakeholders

 

Table 4 —Inquiries and Complaints

 

Table 5—Online Service and auto-renewal

The following table shows the percentage of licences, registration and authorizations in regulated sectors that were automatically renewed, further contributing to a streamlined process and reduced burden.

Note: Cannabis renewals significantly increased in 2022-23 due to the increased number of cannabis retail stores in the province. This resulted in an increased total number of renewals flagged by AGCO’s eligibility criteria, disqualifying them from auto-renewal and decreasing the percentage of cannabis auto-renewals.

The AGCO provides services to a wide group of licensees, registrants and authorization holders. The following tables show AGCO’s current active licensees, registrants and authorization holders as of March 2023. The tables also include volumes from the previous fiscal year.

Table 6—Total number of AGCO licensees and registrants

 

Table 7—Total number of liquor licences

 

Table 8—Total number of gaming registrations

Note: The 2021-22 Annual Report included AGCO Subsidiary (iGO) in this table, however, the subsidiary is not a registrant of the AGCO. As a result, iGO has been removed from this year’s Annual Report.  

 

Table 9—Total number of cannabis licences and authorizations

 

Table 10—Total number of horse racing licences

The AGCO’s Operations Division is responsible for reviewing and processing new, renewal and amendment applications for licences, permits, authorizations and registrations for the sectors regulated by the AGCO. Eligibility Officers, Senior Eligibility Officers and Managers review applications to assess an applicant’s eligibility to hold a particular licence, permit, authorization or registration. When necessary, they enlist the services of additional AGCO departments, such as Compliance Services and the OPP Investigation and Enforcement Bureau, to facilitate further review or investigation of an application.

As part of the AGCO’s risk-based licensing approach, the AGCO considers various factors in reviewing applications. These factors include an applicant’s type of business, location, compliance history and experience. Some applicants pose a greater risk to public safety, public interest and/or non-compliance with the law. Additionally, when reviewing an application, past conduct, financial responsibility, experience, training and honesty and integrity of an applicant are considered. If the Registrar believes that the issuance of a licence or registration is not in the public interest, the Registrar may issue a Notice of Proposal (NOP) to review or refuse to the applicant or licensee, who may request a hearing on the NOP before the Licence Appeal Tribunal (LAT).

If the Registrar believes that a licensee or registrant may require additional assistance or support to remain compliant with the applicable acts and/or the Registrar’s Standards, additional conditions may be attached to their licence, permit, authorization or registration. Licensing and Registration (L&R) performs risk-based assessments during the lifetime of all licences, permits, authorizations and registrations to ensure potential risks posed by a licensee or establishment are considered and evaluated.

Highlights for licensing and registration activities in 2022–23 include the continued processing of high volumes of cannabis retail operators and retail store authorizations as the regulated cannabis market continued to evolve at a fast pace. In addition, several net new registrations were issued to internet gaming operators and gaming related suppliers to support the establishment of a competitive and open internet gaming market in Ontario.

The following tables outline the number of licences and registrations issued during the fiscal year. It is important to note that the following tables represent applications that have been approved and issued, not all applications submitted.

Table 11—Liquor licences issued, renewed and amended

 

Table 12—Gaming registrations issued, renewed and amended

Note: The 2021-22 Annual Report included AGCO Subsidiary (iGO) in this table, however, the subsidiary is not a registrant of the AGCO. As a result, iGO has been removed from this year’s Annual Report. 

 

Table 13—Charitable lottery licences issued, renewed and amended

Note: The Social Gaming Licence is not issued under the charitable component of the Criminal Code. All wagers under this licence are paid out to winners and this is not a charitable fundraising opportunity.

Note: Charitable Gaming Eligibility was removed from this table. It is a required step within the broader Charitable Gaming licensing process, not a licence on its own. It’s inclusion in this table would result in a double count of licenses issued, renewed or amended.

 

Table 14—Cannabis licences and authorizations issued, renewed and amended

 

Table 15—Horse racing licences issued, renewed and amended

 

Table 16—Response to Public Notices—Alcohol and cannabis

Operations

The AGCO promotes compliance with relevant legislation, regulations and Registrar’s Standards to protect the public interest and align with government and ministry priorities. The AGCO undertakes a number of core regulatory activities which enable the agency to effectively fulfill its mandate in Ontario’s alcohol, lottery and gaming, horse racing, cannabis and internet gaming sectors.

The AGCO delivers regulatory services in a manner that is evidence-based, risk-based and outcomes-focused while being as efficient as possible. Compliance Services respond to and proactively address compliance concerns when and where they occur, taking a multi-sector approach to reach desired regulatory outcomes. In addition, the financial investigations team conduct due diligence in support of licensing and registration processes and financial investigations regarding allegations of fraud. These branches conduct regulatory compliance activities across all industries and sectors that the AGCO regulates, including delivery of education, inspections, compliance reviews, along with audits and financial investigations across these sectors.

The AGCO inspects, monitors and educates to ensure compliance with applicable laws and regulations. The AGCO’s compliance approach is risk-based and outcome-focused. Risk-based refers to the regulatory risks underlying the Standards, regulations, laws and requirements. A risk-based compliance approach focuses the greatest resources on mitigating the highest risk areas. Outcome-focused means emphasizing the results that regulated sectors are meant to achieve, rather than prescriptive activities that must be carried out.

The AGCO’s compliance approach emphasizes monitoring through a series of inspection activities, including unannounced inspections, responding to police reports and evaluating regulatory submissions and public complaints. The AGCO also conducts ongoing regulatory assurance activities, including regular audits, compliance reviews and mystery shopper visits. 

The Data Driven Compliance pilot application to better use data to inform and provide inspectors with intelligence of entities with the greatest likelihood of non-compliance activities in the liquor sector was launched in June 2022. The application allows the AGCO to strengthen the planning of high-impact compliance activities by providing Inspectors with the tools they need to focus on liquor licences that are anticipated to have the greatest likelihood of non-compliance. The application automates a significant portion of the research that Inspectors previously completed manually.

In the horse racing sector, the AGCO ensures compliance with the Rules of Racing by reviewing alleged rule infractions and having Race Officials present to officiate races. The AGCO supports the health and welfare of horses and horse racing participants by monitoring and enforcing the Equine Medication and Drug Control Program and ensuring an official veterinarian is in attendance to supervise live racing.

 

Partnerships

To support a coordinated approach to compliance activities, the AGCO’s compliance approach places significant emphasis on working with local community partners, including police, fire services, municipal by-law and public health units. In the liquor sector, this work also includes administering the Police Report and Last Drink Programs in partnership with the police.

 

Mystery Shopper Program

The use of mystery shoppers in the grocery sector continues to be an effective tool to aid in evaluating how grocery stores are performing in preventing youth access to alcohol. Throughout 2022–23, the AGCO expanded the Mystery Shopper Program to cover all liquor licensees operating within the province.

To adequately assess the sector’s ability to prevent youth access to cannabis products, the AGCO continues to use the Mystery Shopper Program to identify retailers who present an increased risk of permitting youth access. During this fiscal year, the AGCO enhanced the Mystery Shopper Program to support enhanced oversight of cannabis retailers operating close to high schools.

 

Educational activities

The AGCO proactively provides education to all sectors to increase their understanding of regulatory obligations and improve overall compliance. All new licensees or authorization holders in the liquor and cannabis sectors receive this education. In addition, any licensee or authorization holder can take advantage of these opportunities at any time throughout the life cycle of their licence.

Please note that all information in the following tables has been adjusted to align with the new methodology of categorizing inspections that was implemented in fiscal year 2021–2022.The category “Miscellaneous Compliance Activity” includes but is not limited to compliance activity driven by intelligence or investigation activity, the Mystery Shopper Program or criminal charges.

Table 17—Compliance Services inspections—Alcohol

 

Table 18—Compliance Services inspections—Lottery retailers

 

Table 19—Compliance Services inspections—Raffles

 

Table 20—Compliance Services inspections—Cannabis

 

Table 21—Cannabis private retail inspections

 

Table 22—Compliance Services inspections—Horse racing

 

Table 23—Rulings by Racing Officials

 

Technology regulation and igaming compliance

Ontario’s public confidence in gaming is supported by the AGCO’s delivery of a modern igaming compliance program that oversees all aspects of regulatory compliance in internet gaming. The agency ensures the technical integrity of gaming technology by developing minimum technical standards that products must comply with and by testing and providing approvals of games and related gaming systems against those standards. This technology is used throughout the province in all gaming industries and sectors regulated by the AGCO, including casino gaming, charitable and raffle gaming, and lotteries. However, for internet gaming, the AGCO has modernized the approach whereby the AGCO oversees the certification of internet gaming technology against the Registrar’s Standards for Internet Gaming by registered independent test labs rather than testing this technology inhouse and providing AGCO approvals.

The AGCO’s Gaming Lab is accredited to the international standard ISO 17025:2017 for testing laboratories, considered the international benchmark for excellence in testing laboratories. This achievement sets the AGCO apart as the only known gaming regulator with an in-house accredited gaming laboratory. This accreditation provides annual third-party assurance of the ongoing quality of the testing performed by the Gaming Lab.

In 2022–23, the Gaming Lab conducted its annual survey of regulated entities, reaching out to Operators to request their anonymous evaluation and feedback. Seven (7) Operators responded to the survey, with 100 percent of responses indicating the Gaming Lab does either an excellent or very good job of satisfying its mandate of providing expert technical services and approvals supporting the regulation of gaming technology in accordance with the principles of integrity and public interest. The Gaming Lab will conduct its annual survey in 2023–24 to gather valuable feedback from regulated Gaming Related Suppliers to enable it to continue to provide industry-leading services.

Table 24—Gaming Lab

 

iGaming Compliance

In 2022–23, the Technology Regulation and iGaming Compliance Branch successfully implemented a new internet gaming (igaming) compliance program to oversee all aspects of regulatory compliance of the igaming open market that launched in April 2022. This includes functionality to produce sector-level compliance information, analysis, plans and priorities to direct compliance teams; the delivery of high-quality, impartial and independent services that assess and certify gaming technology products for use in Ontario; and a full suite of modern and effective compliance assurance activities that address compliance priorities and provide reasonable assurance of compliance for regulated internet gaming entities and technology. These areas lead a low-burden, priority-driven compliance program in the internet gaming space.

Along with the development of the AGCO’s regulatory model for igaming, the priorities for igaming compliance in 2022–23 were:

• Responsible Advertising—oversight of potentially harmful public advertising and messaging. Ontario prohibits the broad, public advertising of bonuses, credits and other gambling inducements.
• Responsible Gambling—protection of players from experiencing harm from gambling.
• Sport and Event Betting—new line of business for Ontario that launched with iGO on April 4, 2022.
• Game Integrity—requiring certification of all games and critical gaming systems linked to determination of game outcome.

The Legal Services Division provides expert legal advice on licensee and registrant compliance within the regulatory framework. The Division’s experienced counsel represents the Registrar by negotiating settlements and appearing at hearings of appeals before the Licence Appeal Tribunal (LAT), the Horse Racing Appeal Panel (HRAP), the Divisional Court and the Court of Appeal.

Table 25—Notices of Proposal (NOPs) and Orders of Monetary Penalty (OMPs)—Alcohol

 

Table 26—Alcohol-related settlements without a hearing

 

Table 27—Notices of Proposed Order (NOPOs) or immediate suspensions—Horse racing

 

Table 28—Gaming-related settlements without a hearing

Modernization, transformation and integration

2022–23 saw the implementation of several important initiatives to drive the Bureau Excellence strategic priority. Bureau Excellence includes a new coaching and mentoring program for all new full-time Investigation and Enforcement Bureau (IEB) members, members on temporary assignments to IEB as well as members from outside police services coming into IEB as part of a joint forces operation. The program enables new members to become proficient in their chosen area of expertise in the Bureau through assignment of identified coaches and promotes a structured and firm foundation of understanding for new IEB members on all AGCO lines of business.

 

Eligibility and Major Investigations

The Enhanced Cannabis Application Pre-Screening Interviews continue to be essential in supporting the honesty and integrity of licensees, registrants and authorization holders and allow for immediate flagging of any criminal associations. In 2022, Eligibility and Major Investigations (EMI) conducted 641 cannabis-related investigations and noticed a significant decrease in the identification of problematic applications. This is attributed to the message being conveyed within the cannabis industry that the OPP was conducting thorough background investigations on applicants and entities.

In the igaming sector, IEB implemented EMI’s pre-screening igaming CEO interview questions to identify any possible risks associated with the AGCO registration of igaming entities. IEB continues to receive requests to conduct investigations on igaming service providers and suppliers. The igaming market continues to grow and evolve and many of the operators and suppliers are requesting amendments, hiring new personnel and applying for new licences.

The EMI igaming interview process continues to successfully identify problematic applicants. In some cases, this results in the withdrawal of applications by igaming applicants and entities.

 

Anti–money laundering

Anti–money laundering (AML) continues to be a key focus. IEB continues to proactively monitor, detect and deter money laundering from occurring within or related to legalized gaming activities in Ontario by continuing to:

1. lead and leverage the AGCO’s law enforcement and regulatory response to money laundering through sound processes and collaboration between all stakeholders to help protect the reputation of legalized gaming in Ontario, and
2. enhance training, investigative and analytical approaches, leveraging OPP and AGCO resources, partnerships and information sharing that emphasize the prevention, detection and reduction of potential money laundering activities in Ontario land-based gaming and igaming sites.

Anti–money laundering efforts are aligned with the Auditor General’s Value for Money Report which required IEB to gather evidence on the sources of funds for patrons identified with suspicious cash transactions, including conducting source-of-funds interviews, and updating the new data analytics system that was established to determine patrons’ risk ratings with all relevant data from all casinos.

A data-driven mindset is key to the IEB’s anti–money laundering approach. An analytical Suspicious Transaction Report (STR), dashboard tool that helps to identify and initiate investigations of individuals who pose risks of engaging in money laundering activities, has now been fully implemented. By automating the intake of all STRs generated at Ontario gaming sites, this tool has significantly reduced the number of manual processes. Thresholds and indicators are built within the dashboard to establish investigative priority and identify individuals, enabling IEB to allocate resources effectively and efficiently to determine if criminal investigations and/or regulatory recommendations are warranted. The STR analytical dashboard has over seven years of STR data from all gaming sites in the province of Ontario from 2016. An automated process has been implemented to obtain all future STRs from gaming sites on a monthly basis and working towards transitioning to weekly updates to the system in the future.

A STR/AML file assignment program called Significant Target Analysis Report (STAR) has been implemented across the province. This is a proactive police tool to identify High Priority Individuals (HPIs) for investigation. The analytical dashboard uses a catalog of tools to conduct a risk assessment on individuals based on Player Gaming Activity Reports obtained from the Ontario Lottery and Gaming Corporation (OLG), Police Risk Rating Scores, FINTRAC reports, police database searches and open-source searches.

The STAR approach proactively identifies HPIs that warrant investigations, which allows IEB to utilize resources effectively and efficiently. In addition, the STAR approach eliminates the administrative burden for frontline investigators and allows for more time to be spent on investigations. This is one of many enhanced strategies to reduce money laundering at land-based casinos in the province. In addition, IEB has developed a tracking system that allows for monitoring and automated follow-up capabilities of all STAR investigations assigned to ensure completion.

This proactive policing approach framework assists with intelligence-based decision making and next steps, such as recommendations for criminal or regulatory investigations, submissions for an AGCO Direction to Exclude, or providing cautions to OLG and its service provider partners.

Partnerships are key to the success of these AML programs. This year, a video was developed and implemented to raise awareness of AML investigative analytic processes among stakeholders, including the OLG, the OPP, the AGCO and FINTRAC. These partnerships were further supported by utilizing IEB’s AML Coordination Model, where dedicated OPP, OLG and AGCO analysts worked closely to query and analyze their respective agency’s data sets to openly share and discuss information and identify individuals and activities that pose AML risks.

 

Anti–human trafficking

The IEB Anti–Human Trafficking (AHT) Working Group collaborated with the OPP Anti–Human Trafficking Unit, Criminal Intelligence Service Ontario and municipal partners to proactively focus on AHT activities. The working group created a 2022 list of AHT police contacts from police jurisdictions across Ontario that house casinos and/or racetracks. The collaborative effort of this initiative allows investigators to quickly mobilize a multi-jurisdictional response to AHT investigations.

In October 2022, all IEB members received AHT training. Members of IEB have provided AHT training to service providers at all casino locations across the province. To date these IEB members have trained over 1,900 casino associates such as security, surveillance, and hotel staff. 

Table 29—Eligibility investigations

 

Table 30—Number of IEB investigations

Note: The launch of Ontario’s igaming market occurred on April 4, 2022, resulting in a significant increase in the number of Internet Gaming investigations that took place in 2022-23.

 

Table 31—Lottery-related investigations

 

Table 32—Occurrences at casinos and slot machine facilities