Online gambling could prove highly lucrative in Canada’s most populous jurisdiction, but as Ontario Lottery and Gaming Corporation CEO Rod Phillips knows, the province has some catching up to do first
While the commitments keep growing for the president and chief executive of the Ontario Lottery and Gaming Corporation (OLG), as the organisation prepares to host online gaming and undergoes a lengthy privatisation process, he could be forgiven for giving up some of his extra-curricular responsibilities.
But this is not the way Rod Phillips works. If there is one thing he has learnt during time spent working in the private sector, politics and now as the chief of Crown Corporation OLG, it is that staying grounded is vital. This he knows from his volunteer work for a number of non-profit organisations, including being one of the leading fundraisers for Toronto’s Centre for Addiction and Mental Health.
“It certainly adds a lot of perspective, particularly in a leadership role,” he explains. “That kind of perspective, you can’t overstate how valuable it can be. And in gaming, whether its online or otherwise, addiction is a real issue.”
Life at the OLG is busier than ever right now. Responsible for all land-based and online gambling in the province under Canadian law, it is in the middle of a radical modernisation process which involves privatising its lottery, gaming and egaming operations. The rewards for the eventual winners of the management tenders – known to be hard fought contests – will be huge, with profits for the successful bidder for the egaming contract alone estimated at CA$75m over the course of the agreement.
The recipient of the internet gaming contract is set to be announced within the next two months, Phillips confirms, while the procurement process for land-based gaming and the lottery are at the request for pre-qualification (RFPQ) stage.
The end game will see the OLG evolve from a large government agency employing roughly 18,000 people to a smaller one employing a fraction of this total, with a much greater reliance on commercial activities. Phillips’ goal is clear, yet far from easy: boost the province’s public coffers by increasing OLG’s annual profit from $2bn to $3bn.
Time to play
PlayOLG.ca, its online gaming website, is the first step towards this aim, with games set to go live on it this autumn. Lotto Max and Lotto 649, two of Canada’s largest recognised national lottery games, will be the first to make their debut – shortly followed by slots, table games, poker, sports betting and bingo, as products are unveiled during the course of three to four launch phases.
With a wide variety of games promised, supplier deals will be signed to keep OLG’s offering “fresh and competitive”, Phillips says, in a bid to take away from offshore operators some of the estimated $400-500m wagered annually by Canadians on their grey market sites.
And having already been preceded by the likes of British Columbia, Quebec and Manitoba, it seems the launch of OLG’s first internet games cannot come soon enough. “Online is a huge part of the future of gaming, and it has already proven itself,” says Phillips.
“If anything, Ontario and OLG have lagged in terms of what has been done in other jurisdictions. Our role is to make sure that gaming is done in the right way and overseen properly, as we have the responsibility under the Criminal Code. So we’re glad to be catching up, and after that, we just want to stay ahead.”
Past and present
Prior to joining the provincial lottery in June 2011, Phillips was president of employee assistance provider Shepell-fgi, which offers services such as counselling and workplace training to more than eight million employees all over Canada, and it was here where he demonstrated the leadership credentials which led to OLG’s interest. But a broad career has also seen him serve as chief of staff to Mayor Mel Lastman during his first term as leader of the City of Toronto from 1997 to 2000.
“I have been lucky to have a mix of experiences,” says Phillips, “but principally I’ve operated in the private sector, and I think that’s a useful lens on a commercial operation like OLG.”
Phillips is close to seeing the completion of an internet gaming procurement process he has overseen every stretch of the way, but refuses to accept that the burden has been his alone: “Of course the most interesting thing in an environment is the people you get to work with, and what I’ve found here is a group of really dedicated professionals. Our initiative in egaming is a good example of people who have really embraced the opportunity of a new venue for providing OLG’s entertainment.
“But it is a challenge, absolutely, it’s a big organisation. We look at our responsibility around delivering lottery and gaming, not just through the single lens of maximising profit, but doing it in a socially responsible way. That’s the kind of public policy challenge that I love and I’ve found a team of people here who love it as well.”
While his charity work has ensured a sense of perspective in his current role, Phillips has found a few other ways to take his mind off work in his spare time. He enjoys his role on the board of the Toronto International Film Festival, walking his Labrador, Clementine, and engaging on Twitter, which he joined last month.
But he admits that “work has been reasonably consuming recently”, putting a limit on his free time – though being OLG president will always have its perks: “I get to give away $50m lottery cheques – there was a great young man last week who was the winner of a $20m cheque – so that’s the fun part of the job.”
The bidding process for the online gaming contract, for which the request for proposal (RFP) was issued way back in December 2011, has been long and rigorous – not just for the applicants, who also had to pass a vetting process conducted by the province’s gambling regulator, the Alcohol and Gaming Commission of Ontario, but for the OLG itself.
After the final contract negotiations with its chosen service provider, which will need a physical presence in the province as all player data must be stored in Ontario, are complete then all that will remain is for the Ministry of the Attorney General to review the contract. After that, the official announcement will be made.
“We know that we’re entering a competitive market, so it is critical that we have a competitive and enjoyable gaming environment,” says Phillips. “We had an exceptional response to the opportunity, probably not surprising because of the size of the jurisdiction. Today, Ontario is second in terms of gaming revenues in North America after Las Vegas. So it’s an environment where providers see opportunity.”
A question of sport
Generating further revenues, for the province as well as the contract winner, could become a whole lot easier if the Canada Senate passes MP Joe Comartin’s single-event sports betting bill.
OLG testified in front of a Senate committee last year to explain how it would oversee the operation of this form of wagering, but although Bill C-290 was approved by the House of Commons in March 2012, it was not voted on in the Senate before a 21 December deadline and discussions resume this month.
However, in the last 70 years, only eight bills passed by the House have never been passed by the Senate and Phillips is “fairly optimistic” of a positive decision this month, as he believes the cross-party support Comartin’s bill already has could be enough to see it over the line:
“We certainly see it as an exciting opportunity for our customers in Ontario. We know that in the grey market and black market, there is extensive single-sports wagering, and we want to provide an age-controlled regulated opportunity for it. “We currently have a parlay version of sports betting available through our lottery and it is quite popular, and of course through the land-based casinos in Ontario, there are a number of venues through which OLG would likely embrace the opportunity,” he adds.
“But we will have to see the process forward from the federal perspective and then of course work with our provincial government to determine the appropriate way to implement it. It’s an exciting initiative; it is an interesting example of the evolution of gaming.”
Online poker liquidity is unlikely to be a problem in a province with a population of more than 13.5 million – yet the numbers could be even greater if OLG decides to join the Canadian Poker Network (CPN) once Ontario’s egaming offering is up and running. An interprovincial online network currently including British Columbia and Quebec, the CPN would no doubt benefit from the boost in players, given that its seven-day average player total is only 189, according to PokerScout.com.
Discussions are underway regarding joining the CPN, Phillips confirms, and he knows that to offer a successful internet poker product in Canada, OLG will have to erode into the market share of grey market sites, of which the main one is of course PokerStars: “We never underestimate the challenge of competition, and the online poker market is one of the most hyper-competitive markets out there. That said, we think we have a couple of natural advantages.
“First, we’re going to need to, and we will provide, a competitive gaming environment where people can enjoy the game and of course be certain of the payout. Secondly, we also know that within the province of Ontario, OLG has exceptional penetration – close to 90% of Ontarians know OLG as the provider of their gaming entertainment – and our research to date says that’s going to be very appealing. Most people will want to play in a legal, regulated, age-controlled environment.”
A lot has happened since OLG chairman Paul Godfrey first announced in 2010 that Ontario would host egaming within the next few years, and now this vision is finally close to reality. Three years ago, the British Columbia Lottery Corporation took the initiative in North America by offering egaming on its PlayNow.com platform, which was also launched in Manitoba last month. Now Phillips plans to confirm Ontario’s position as the biggest North American gaming jurisdiction outside of Nevada, starting with PlayOLG.ca.