Table of Contents
Letter from the Chair
On April 4, Ontario successfully opened the regulated igaming market. iGaming Ontario (iGO) was founded just nine months prior with a clear mandate. In that time, we built an organization from the ground up. Everything from small tasks like creating a website, to critical decisions like hiring the right staff and creating a seamless onboarding process for operators. Each decision was made with one goal in mind: to be the world’s best gaming market.
In building iGO from the ground up, we had an opportunity to redefine how a government agency works. What should an agency prioritize knowing that every process, employee, and decision is being made for the first time? In other words, how should we run the company? To be the world’s best gaming market, we needed to not just work with operators, but to understand their businesses and their issues while keeping our expenses low and our team lean.
We created a world-class onboarding process that operators have told us is the gold standard globally. This is an example of an ethos that runs throughout every decision iGO makes: make it easy to do business with us. iGO works with operators to provide world-class igaming options, meaning more choice, competition, and greater benefits for players and the province.
Looking forward, the future is bright. As iGO continues to onboard operators, protect Ontarians, and ensure proper market operation, we are already delivering real results for taxpayers. We anticipate more operators joining the market in 2023, growing the economic benefit and revenue stream for Ontarians. We will also ensure that the investments made by legal operators are protected and valued by taking further efforts to crack down on the illegal market. Illegal operators do not share revenue with the province and are not governed by our strict rules around responsible gambling, anti-money laundering, or player protection. For our thriving legal market to succeed, we must crack down on the illegal market. Combatting the illegal market will be a significant focus for iGO.
Lastly, we anticipate that the igaming market will become more dynamic, innovative, and competitive as the market grows. The private sector operators will merge, consolidate, expand, and change. New products and new demands from players will arise, as they should. By prioritizing innovation and flexibility, iGO can continue to help the private sector grow, provide choice to players, and maximize returns to the province.
It has been a very successful launch, with hundreds of thousands of Ontarians participating in our highly competitive market. The Board, the executive team, every staff member at iGO, and partners in government and at the regulator deserve credit. However, the work does not stop here, the future is bright for Ontario and by listening to operators and players we will learn, grow, and do our best to serve the interests of Ontarians.
Letter from the Executive Director
Starting up a new organization during the pandemic had its challenges. With the creation of iGO on July 6, 2021, our mandate was clear: conduct and manage the province’s online lottery schemes in a way that promotes responsible gaming and consumer choice. Achieving that vision, in nine short months, took great effort and skill.
Building the Team:
To get Ontario’s igaming market up and running iGO needed a nimble, creative and innovative team. Throughout the 2021-22 fiscal year, we onboarded a small group of talented individuals that could think digitally first, understand the gaming landscape, and work quickly to solve challenges posed by operators, customers and government.
We researched and evaluated the effectiveness of other jurisdictions around the world. Using that expertise, we created clear policies and a detailed Operating Agreement that created a fair and competitive landscape for operators while protecting and promoting consumer safety and ensuring we meet our conduct and manage responsibilities. From there, we engaged individual account managers to shepherd operators through the onboarding process ensuring a competitive market come launch and the first step in combating the illegal market, thereby increasing revenue for the province and player protections for Ontarians.
Going Digital First:
Digitization is at our core. Given every product we currently conduct and manage is an online only product, our organization understands and values the unique benefits of being digital first. We cannot expect digital companies to be overseen by paper processes. Embedding this approach from day one – and ensuring continued digitization in the future – will mean a low expense-to-revenue ratio, thereby maximizing value for taxpayers and operators.
Fostering Creation and Innovation:
In preparing for the launch of the regulated igaming market, core decisions needed to be made about the type of market we wanted to help create. Many of the foundational decisions around the market (a competitive revenue share rate, no land-based tethering, no cap on licences, etc.) emphasized competition. True competition amongst operators means more choices for consumers and innovative product offerings to attract players. This principle of enabling competition and innovation has been core to iGO and will continue to shape the organization’s decisions going forward.
Launching the Market:
Of course, all these values and decisions led to the launch of Ontario’s igaming market on April 4, 2022. In the few short months between April 4 and August 10, 2022, the market has already seen 21 operators join, offering 35 sites, and 1,000s of unique games and betting options to consumers. That market, in a few short months, has quickly become one of the world’s largest regulated igaming jurisdictions and is on track to deliver real revenue to the province. We expect these numbers, across the board, to continue to grow.
The question for iGO, and its operators, now becomes one of growth and sustainability. Building on the organization’s early success is key. Continuing to attract internal talent, embrace digitization, and foster a competitive and innovative market that ensures player safety is prioritized will mean greater returns for government, operators, and players. With these foundations in place, iGO can continue to help build the world’s best gaming market.
Description of Activities Over the Year
iGaming Ontario (iGO) is an agency of the Government of Ontario and set out in legislation as a subsidiary of the Alcohol and Gaming Commission of Ontario (AGCO) that conducts and manages internet gaming in the province when provided through private gaming operators who act as agents on iGO’s behalf. iGO is governed by a Board of Directors. Prior to the creation of iGO, all internet gaming in the province was provided through Ontario Lottery and Gaming Corporation, a crown corporation.
iGO enters into operating agreements with operators who meet rigorous standards of game and operator integrity, fairness, player protections and social responsibility, allowing all players to play with confidence. A share of revenues generated by these commercial relationships will be returned to the Government of Ontario to support provincial priorities.
iGO was officially created on July 6, 2021, however work to establish market readiness began even earlier under the AGCO prior to iGO’s incorporation on July 6, 2021. During this partial year of operation, the organization was tasked with creating the framework for the launch of Ontario’s legal, regulated, and safe igaming market, which launched on April 4, 2022. In order to achieve this goal in a short time frame, the organization set a series of operational priorities including: ensuring consumer choice and protection, growing the regulated market, building in-house infrastructure to process operator payments and data, reducing red tape, creating a people-centric organization, and establishing governance and operationalization capabilities.
iGO created a framework that supports an attractive, open, and competitive igaming market to ensure world-class products and user experiences for Ontario consumers. In that work iGO signed over 100 Non-Disclosure Agreements with potential operators large, small, foreign, and domestic to ensure they were able to understand the requirements of the Ontario market before committing resources to launch. The organization also established the game catalogue and game conditions policies, which determined what offerings would be legal to provide in the Ontario market including peer-to-peer poker, sports betting, casino games, and novelty betting.
iGO created a player transition process to facilitate existing players moving from unregulated to regulated sites without carrying over wagers placed in the unregulated market. This work also included a full communications strategy, including the building of a website and social media channels, that ultimately became fully operational by April 4, 2022.
In the nine months of fiscal year 2021/22, iGO created policy requirements for operators related to responsible gambling, customer care and dispute resolution, and anti-money laundering (AML).
Specifically, future responsible gambling measures include industry-leading requirements to ensure responsible gambling-focused advertising from operators, accreditation from the Responsible Gaming Council and participation in a centralized self-exclusion program. In addition to these operator requirements, iGO is also commissioning ongoing research into problem gambling in Ontario. For customer care and dispute resolution, policies were developed that set out requirements and processes for players who have concerns or complaints related to products, services, or actions of an operator to ensure consumers are protected.
On AML, iGO created an AML and anti-terrorist financing program framework that includes policies, operational guidance, job aids and user guides for operators to ensure compliance with federal legislation. Operator procedures must be in compliance with iGO expectations and risk assessments have been completed for all operators. A mandatory training program for operator employees, as well as for iGO Board and staff members, was also created. Lastly, iGO continues ongoing engagements with FINTRAC, the federal AML regulator, to stay up to date with regulatory developments.
Regulated Market Growth:
iGO worked with government and prospective operators to create market conditions that supported economic development, addressed the unregulated grey market, and captured new provincial revenues. This included participating in government-led consultations, engaging potential operators via group and one-on-one conversations, creating an iGO portal for operators where draft policies and FAQs - in addition to other documents - were posted to ensure proper communication, consultation, and feedback. This included conducting a series of educational webinars on the various components of the proposed Ontario market.
iGO created an account manager model assisted by a small team of finance, AML, legal, I.T. and market insights experts to ensure that all potential operators had personalized assistance to navigate the onboarding process. iGO actively solicited and considered feedback from operators on the creation of its policies, which included: AML, game catalogue, marketing and advertising conditions, brand guide, finance procedures, systems data and record retention, transactional gaming data, privacy, and customer care and dispute resolution. The creation of the regulated igaming market also facilitated local economic development by creating work for Ontario-based legal, accounting, financial, marketing, and I.T. firm usage by potential operators.
Reduced Red Tape:
A key consideration when creating the rules and policies for the launch of Ontario’s regulated igaming market was to make sure the regulatory barriers were as efficient and commercially attractive as possible while ensuring compliance with applicable legislation and world-class consumer protections and standards.
To do this, iGO consulted regularly with the Ministry of the Attorney General (MAG) while drafting the Operating Agreement for prospective gaming operators. This ensured the Operating Agreement complied with the conduct and manage requirements of the Criminal Code of Canada including an active financial model, ensuring separateness of operations, providing full and unrestricted access to data for iGO, establishing a strong visual identity, and setting world-class responsible gambling requirements. Part of this work included receiving necessary government approvals, hosting top to top meetings with prospective operators, responding to over 650 questions from operators, and participating in discussions with government and the Ontario First Nations Limited Partnership.
Given iGO’s inception this year, the organization needed to recruit and train staff in an efficient manner while ensuring the organization built the foundation of an inclusive, forward-thinking, and engaged workforce. This work included establishing iGO’s organizational structure, creating job profiles and hiring new staff, onboarding staff, developing a senior leadership team, standing up employee engagement processes in a virtual setting, and making plans for office space and the necessary equipment to perform iGO’s core functions.
Governance & Operationalization:
Finally, iGO also needed to ensure it was immediately complying with government directives and legislation, including a commitment to openness and transparency. As part of this work in year one, iGO needed to develop a financial and accounting framework to ensure proper financial reporting. The iGO model also required iGO to ensure compliance with the complexities of the GST/HST elements of the Excise Tax Act, implement banking relationships with major financial institutions, design and implement a financial system, sound internal controls, back-of-house processes to enable the execution of Operating Agreements with operators, forecasting and analytics tools, and to ensure seamless operation once the market launched. This work will continue into future fiscal years to automate and refine these processes to create the most efficient operational system possible.
When it comes to governance, iGO also used this time to create and implement a governance model for Board meetings and prepared for and supported 8 Board meetings during the fiscal year as the interim Board guided the organization towards market launch. This governance work also included participating in Treasury Board submissions and the development of a draft Memorandum of Understanding with MAG, AGCO and iGO.
iGO will create its first formal business plan shortly, including key performance indicators. As the business plan is forward looking, the organization has strived to achieve the goals set out in its mandate in O. Reg 517/21 under the Alcohol, Cannabis and Gaming Regulation and Public Protection Act, 1996 and continued under O.Reg 722/21 under the Alcohol and Gaming Commission of Ontario Act, 2019:
- To develop, undertake and organize prescribed online lottery schemes.
- To promote responsible gaming with respect to prescribed online lottery schemes.
- To conduct and manage prescribed online lottery schemes in accordance with the Criminal Code (Canada) and the Gaming Control Act, 1992 and the regulations made under those Acts.
iGO’s core mandate, and thus the objective of the organization, is to conduct and manage prescribed igaming lottery schemes while promoting responsible gambling. The work described earlier in this report enabled the organization to launch the igaming market on April 4, 2022, thereby completing the strongest priority of the organization for its first year and achieving the central goal needed to carry out iGO’s mandate. In the years to come, iGO will continue to grow, organize, and conduct and manage
Ontario’s igaming market in accordance with its mandate while ensuring responsible gambling is promoted throughout this market. As part of this work, key performance indicators and operational targets will be formally established and reported upon in subsequent reports.
Throughout the nine months of the 2021/22 fiscal year where iGO was in operation, several risks presented themselves as barriers to the operational success of the organization. These risks are best categorized into external and internal risks.
iGO does not deliver igaming products on its own. Rather, iGO has entered into operating agreements with private gaming operators, who operate internet gaming sites on behalf of iGO in accordance with these operating agreements. iGO took numerous steps to ensure a smooth transition to the regulated market, including dedicated account managers and an information portal for sharing documentation. External factors, including strategic decisions by private operators, determined whether they would be ready for iGO’s market launch date. On April 4, 2022, iGO was proud to open the regulated and safe igaming market to Ontario players through a variety of competitive operators. By the end of the first week of operations, 13 operators across 21 different websites were live in Ontario.
Similarly, these operators could have been affected by a host of external factors including securing insurance or banking approval, the COVID-19 pandemic, talent shortages, the Ukraine-Russia War, cash flow issues, and completing the various iGO requirements such as end-to-end testing. A majority of these concerns were outside of iGO’s control, however, much was done to ensure Canadian businesses in adjacent areas, such as financial institutions, were aware of the coming legalization and iGO’s world-class requirements to ensure they would be prepared to consider working with prospective operators looking to join the new regulated market in Ontario.
Another external risk affecting the fulfillment of iGO’s mandate concerned the date of launch which was to be determined by the government. iGO worked to ensure preparedness as soon as possible ensuring its ability to adapt to changing circumstances. Ultimately, the date chosen was April 4, 2022.
The steps taken to mitigate these external risks led to a successful launch, with dozens of new operators bringing real competition and choice to Ontario’s gaming landscape. The number of operators expressing interest and joining the market in Ontario continues to grow at an accelerated rate.
To ensure employee safety and provide flexibility, the organization adopted work-from-home policies immediately and, as high-pressure deadlines approached, in-person meeting opportunities were limited. Given the newness of the organization this created organizational risks that needed to be mitigated to ensure a proper working relationship and clarity and accountability among all staff members. The organization completed all necessary onboarding and training in a remote environment, which created complications of its own.
Next, iGO needed to both develop numerous policies and quickly pivot to ensuring potential operators were aware of and in compliance with these policies. This required flexibility and quick decision-making within the organization to ensure the requirements were as effective as possible. It also meant understanding the timelines associated with onboarding an operator to meet the April 4, 2022 market launch timeline. Internally, this onboarding process adopted a minimal viable product and I.T. approach for day-one and the organization continues to build on the foundation to ensure automated and efficient I.T. and internal infrastructure to support operators and achieve iGO’s organizational goals.
In accordance with O. Reg. 722/21 under the Alcohol and Gaming Commission of Ontario Act, 2019, the Minister of Attorney General appoints a maximum of seven members to the Board of Directors of iGO on the recommendation of the Board of Directors of the AGCO. The Minister is accountable to designate one member as chair of the Board and one member as vice-chair and ensure that the majority of the Board is not composed of directors, officers, or employees of the AGCO.
Appointees of the Board of Directors are paid the remuneration fixed by resolution of the Board of Directors of the AGCO subject to the approval of the Minister. The rate of remuneration is on a per diem basis of $200 per day for Board members, $250 per day for the vice-chair, and $350 for the chair.
Appointees are reimbursed for reasonable work-related expenses while engaged in the business of iGO in accordance with the Travel, Meal and Hospitality Expenses Directive and any other Treasury Board and Management Board of Cabinet directives. Board members and their terms are noted below.
- Chair (Part-Time) DAVE FORESTELL
04-Apr-2022 - 03-Apr-2025 Toronto
- Vice-Chair (Part-Time) NEVEEN TAKLA
04-Apr-2022 - 03-Apr-2023 Mississauga
- Member (Part-Time) ALAN GERTNER
04-Apr-2022 - 03-Oct-2023 Toronto
- Member (Part-Time) MIKE BUNN
13-Jan-2022 - 12-Jan-2024 Ramara
- Member (Part-Time) GIOVANNI (JOHN) TRIVIERI
04-Apr-2022 - 03-Apr-2024 St. Catharines
- Member (Part-Time) KARIN SCHNARR
04-Apr-2022 - 03-Apr-2025 Kitchener
Achievements in Accordance with Mandate
Given that iGO was formally established on July 6, 2021, and will file its inaugural business plan shortly, the mandate of the organization is currently detailed in its establishing regulation, O. Reg 517/21 under the Alcohol, Cannabis and Gaming Regulation and Public Protection Act, 1996 and continued by O.Reg 722/21 under the Alcohol and Gaming Commission of Ontario Act, 2019. This regulation mandates the organization to develop and establish certain lottery schemes as prescribed, promote responsible gambling, and conduct and manage the prescribed lottery schemes. Those prescribed lottery schemes to be conducted and managed are all non-Ontario Lottery and Gaming Corporation controlled igaming products in the province of Ontario including online casino, sports betting, peer-to-peer poker, and novelty betting activities.
To execute this mandate, iGO spent the entirety of the 2021/22 fiscal year since its inception in July working towards the launch of Ontario’s regulated igaming market. That launch occurred on April 4, 2022, thereby constituting a major milestone for the organization in the achievement of its mandate. In the years to come, iGO will continue to conduct and manage the igaming market, foster, and develop the market, and ensure it complies with all existing provincial and federal legislative requirements, as consistent with its mandate.
When it comes to the portion of the mandate that requires iGO to promote responsible gambling, the responsible gambling measures include industry-leading requirements to ensure responsible gamblingfocused advertising from operators, accreditation from the Responsible Gaming Council and participation in a future centralized self-exclusion program. In addition to these operator requirements, iGO is also commissioning ongoing research into problem gambling in Ontario. For customer care and dispute resolution, policies were developed that set out requirements and processes for players who have concerns or complaints related to products, services, or actions of an operator to ensure consumers are protected.
Management’s Discussion and Analysis
The following Management’s Discussion and Analysis (MD&A) is a commentary on the statement of financial position and financial performance of iGaming Ontario (iGO or the Corporation) and should be read together with the audited Financial Statements of iGO for the period ended March 31, 2022. The Financial Statements have been prepared in accordance with Canadian Public Sector Accounting Standards. Amounts are presented in Canadian dollars.
The Board of Directors, on the recommendation of its Finance, Audit and Risk Management Committee, approved the contents of this MD&A on August 10, 2022.
iGO was established on July 6, 2021, pursuant to Ontario Regulation 522/21 under the Alcohol, Cannabis and Gaming Regulation and Public Protection Act, 1996 and continued under the Ontario Regulation 722/21 under the Alcohol and Gaming Commission of Ontario Act, 2019 (the "Regulation"). iGO's objects and duties are to develop, undertake and organize prescribed online lottery schemes, to promote responsible gambling on those lottery schemes, and to conduct and manage the lottery schemes in accordance with applicable federal and Ontario gaming law.
These financial statements reflect the first year of operations of iGO, from the July 6, 2021, date of establishment until its fiscal year end, March 31, 2022. iGO incurred expenditures only, and generated no revenues, as it carried out activities to implement the required resources, processes, procedures, policies, and contractual arrangements to enable the launch of the regulated igaming market in Ontario, on April 4, 2022.
As a newly formed entity, iGO did not have working capital and, as such, was funded through iGO’s parent, the Alcohol and Gaming Commission of Ontario (AGCO). This funding support was in place for the first period of iGO’s operations (July 6, 2021 to March 31, 2022). iGO will repay costs that the AGCO paid for on its behalf, amounting to $7.3 million and is reflected as Due to the Alcohol and Gaming Commission of Ontario on the Statement of Financial to the AGCO once iGO generates sufficient revenues, enabling it to become financially self-sufficient.
Activities to establish the regulated internet gaming market commenced in 2019 with the government’s announcement of the intent to legalize igaming through private operators. iGO’s Executive Director was hired in February 2021 and work commenced through the AGCO to establish the organization, which was formally done via regulatory change on July 6, 2021. This meant activities to establish iGO, including financial expenditures, began before the creation of the agency on July 6, 2021. Expenditures of $902,000 were incurred for the prior fiscal year of April 1, 2020 to March 31, 2021. Expenditures of $954,000 were also incurred from April 1, 2021 to July 5, 2021. Both amounts were funded by the AGCO and do not form part of these financial statements or the funding amount to be repaid to the AGCO.
iGO’s expenditures in readiness for market launch were primarily comprised of personnel related expenditures (i.e., salaries and benefits), technical, legal, and advisory services related establishing the entity, as well Shared Resources provided to iGO through the AGCO in accordance with a Shared Resource Agreement. These Shared Resource expenditures from the AGCO relate primarily to people resources for certain shared human resources, payroll, procurement, and information technology functions, and certain services.
The regulated igaming market launched on April 4, 2022, and accordingly, there were no revenues generated in the 2021-22 fiscal year. As a result, the Corporation ended the year with a net deficit from operations of $8.7 million.
In 000s $
Salaries & Benefits
General Operating, Administration & Other
Information Technology/Infrastructure Services
Marketing & Promotion
During the period ended March 31, 2022, iGO was engaged in setting up the various infrastructure and operating agreement activities to enable the launch of the regulated internet gaming market in Ontario. iGO initiated hiring its own employees during the year and also utilized shared resources from the AGCO, including office space to reduce government expenditures on rent and utilities.
The expenditures above represent the direct costs for iGO as well as shared AGCO resource costs for the period of July 6, 2021 to March 31, 2022. Salaries and benefit expenditures represent the costs for iGO directly employed employees as well as the salaries and benefit costs of AGCO shared resources. The General Operating, Administration and Other expense category includes professional services related to financial and management consulting, and various legal and advisory expenses related to establishing iGO’s policies and processes for financial reporting, anti-money laundering and various contract development activities. The Information Technology/Infrastructure Services expense category reflects the expenditures related to establishing backend financial and other systems and processes. HST expense represents the Corporation’s non-recoverable GST/HST payable to suppliers as well as the additional imputed tax payable to the Government of Canada on online gaming-related expenditures. The net tax attributable to online gaming activities results in a 26 per cent tax burden on most taxable online gaming expenditures incurred by the Corporation.
Management Statement of Responsibility for Financial Reporting
Responsibility for Financial Reporting:
The accompanying Financial Statements of iGaming Ontario (iGO) have been prepared in accordance with Canadian public sector accounting standards. The preparation of the Financial Statements necessarily involves the use of estimates based on management’s judgment, particularly when transactions affecting the current accounting period cannot be finalized with certainty until future periods. The Financial Statements have been properly prepared within reasonable limits of materiality and in light of information available up to August 10th, 2022.
Management maintains a system of internal controls designed to provide reasonable assurance that assets are safeguarded, and that reliable financial information is available on a timely basis. The system includes formal policies and procedures and an organizational structure that provides for appropriate delegation of authority and segregation of responsibilities. The Board of Directors that is responsible for ensuring management fulfills its responsibilities for financial reporting and internal controls. The Board has appointed a Finance, Audit and Risk Management Committee. The financial statements have been reviewed by the Finance, Audit and Risk Management Committee and approved by the Board of Directors.
The financial statements have been audited by the Office of the Auditor General of Ontario. The Auditor General’s responsibility is to express an opinion as to whether the financial statements are fairly presented in accordance with Canadian public sector accounting standards. The Independent Auditor's Report, which appears on the following page, outlines the scope of the Auditor's examination and opinion.
Senior Manager Finance
INDEPENDENT AUDITOR’S REPORT
To iGaming Ontario
I have audited the financial statements of the iGaming Ontario, which comprise the statement of financial position as at March 31, 2022, and the statements of operations and accumulated deficit, change in net debt and cash flows for the period from July 6, 2021 to March 31, 2022, and notes to the financial statements, including a summary of significant accounting policies.
In my opinion, the accompanying financial statements present fairly, in all material respects, the financial position of iGaming Ontario as at March 31, 2022, and the results of its operations and accumulated deficit, changes in its net debt and its cash flows for the period from July 6, 2021 to March 31, 2022 in accordance with Canadian public sector accounting standards.
Basis for Opinion
I conducted my audit in accordance with Canadian generally accepted auditing standards. My responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Financial Statements section of my report. I am independent of iGaming Ontario in accordance with the ethical requirements that are relevant to my audit of the financial statements in Canada, and I have fulfilled my other ethical responsibilities in accordance with these requirements. I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my opinion.
The Criminal Code of Canada (Code) only permits the conduct and management of commercial gaming by provincial governments. The term “conduct and manage” is not specifically defined by the Code and has not been interpreted by the courts in the context of internet gaming being provided by third-party gaming operators. iGaming Ontario, an agency of the Government of Ontario, has entered into commercial agreements with third-party gaming operators to allow them to offer internet gaming directly to Ontario consumers beginning April 4, 2022. iGaming Ontario has assumed the legal risk of whether this operating model meets the “conduct and manage” requirement set out in the Code.
Responsibilities of Management and Those Charged with Governance for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in accordance with Canadian public sector accounting standards, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, management is responsible for assessing iGaming Ontario’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless iGaming Ontario either intends to cease operations, or has no realistic alternative but to do so.
Those charged with governance are responsible for overseeing iGaming Ontario’s financial reporting process.
Auditor’s Responsibilities for the Audit of the Financial Statements
My objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes my opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Canadian generally accepted auditing standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
As part of an audit in accordance with Canadian generally accepted auditing standards, I exercise professional judgment and maintain professional skepticism throughout the audit. I also:
- Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for my opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
- Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of iGaming Ontario’s internal control.
- Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
- Conclude on the appropriateness of management’s use of the going concern basis of accounting and based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on iGaming Ontario’s ability to continue as a going concern. If I conclude that a material uncertainty exists, I am required to draw attention in my auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify my opinion. My conclusions are based on the audit evidence obtained up to the date of my auditor’s report. However, future events or conditions may cause iGaming Ontario to cease to continue as a going concern.
- Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
I communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that I identify during my audit.
Bonnie Lysyk, MBA, FCPA, FCA, LPA
August 10, 2022
Box 105, 15th Floor
20 Dundas Street West
B.P. 105, 15e étage
20, rue Dundas ouest
Statement of Financial Position
March 31, 2022
(In thousands of dollars)
See accompanying notes to financial statements.
On behalf of the Board:
Statement of Operations and Accumulated Deficit
For the period July 6, 2021 to March 31, 2022
(In thousands of dollars)
See accompanying notes to financial statements.
Statement of Changes in Net Debt
For the period from July 6, 2021 to March 31, 2022
(In thousands of dollars)
See accompanying notes to consolidated financial statements.
Statement of Cash Flows
For the period July 6, 2021 to March 31, 2022
(In thousands of dollars)
Notes to Financial Statements
For the period July 6, 2021 to March 31, 2022
(In thousands of dollars)
1. Nature of entity:
1.1 Nature of operations
iGaming Ontario (iGO) was established on July 6, 2021 as a subsidiary corporation of the Alcohol and Gaming Commission of Ontario (AGCO) pursuant to Ontario Regulation 517/21 under the Alcohol, Cannabis and Gaming Regulation and Public Protection Act, 1996 and continued under Ontario Regulation 722/21 under the Alcohol and Gaming Commission of Ontario Act, 2019 (the "Regulation"). iGO is a corporation without share capital.
The AGCO recommends appointments to the board of iGaming Ontario to the Attorney General. The Attorney General is responsible for appointing board members to iGaming Ontario based on these recommendations. The Minister of Finance determines the timing of any cash remittances from iGaming Ontario to the Province of Ontario. As a result, the financial results of iGO are not consolidated into the AGCO’s financial statements as iGO is controlled by the Province of Ontario and is consolidated into the Province’s financial statements.
iGO's objects and duties are to develop, undertake and organize prescribed online gaming schemes, to promote responsible gaming on those schemes, and to conduct and manage the schemes in accordance with the Criminal Code (Canada) and the Gaming Control Act, 1992. iGO makes payments out of the revenue that it receives from all prescribed online gaming schemes and that it generates from its conduct and management of those schemes in priority established in the Regulation.
Pursuant to the Income Tax Act, iGO is exempt from income taxes.
iGO’s head office and corporate office, respectively, are located at: 90 Sheppard Avenue East, North York, Ontario, Canada, M2N 0A4.
1.2 Launch of Internet Gaming Market
On April 4, 2022, iGO launched the new market for internet gaming in Ontario. On this date, private gaming operators that executed an operating agreement with iGO could begin offering their games to players in Ontario. Private gaming operators will operate internet gaming sites on behalf of iGO in accordance with these agreements.
As at August 10, 2022, iGO has entered into operating agreements with 21 private gaming operators. For the period July 6, 2021 to March 31, 2022, iGO earned no gaming revenue since the market was launched subsequent to the end of the period.
2. Significant accounting policies:
These financial statements are prepared by management in accordance with Canadian Public Sector Accounting (“PSAS”) for provincial reporting entities established by the Canadian Public Sector Accounting Board, and include the following significant accounting policies:
- Tangible capital assets: iGO capitalizes the cost of all additions to tangible capital assets that have an expected useful life of one year or longer. When tangible capital assets are disposed of, the cost of the asset and the related accumulated amortization are removed from the books and the resulting gain or loss on disposal, if significant, is included in net assets on the statement of financial position. The tangible capital assets are amortized on a straight-line basis over their expected useful life as follows:
These Financial Statements are presented in Canadian dollars.
The preparation of these Financial Statements in conformity with PSAS requires management to make judgments, estimates and assumptions that may affect the application of accounting policies and reported amounts of assets, liabilities, revenues and expenses. Actual results may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future years affected.
Areas requiring the use of significant estimates include: the useful life of capital assets and other employee future benefits.
iGO's financial instruments are measured as follows:
Due to the Alcohol and Gaming Commission of Ontario
iGO’s financial instruments are initially measured at fair value and subsequently measured at amortized cost.
All non-derivative financial assets are assessed for impairment on an annual basis. When a decline is determined to be other than temporary, the amount of the loss is reported in the statement of operations.
In accordance with PSAS, financial statements need to provide a comparison of actual and budgeted financial results. iGO was established as a legal entity effective July 6, 2021 and accordingly did not have an approved budget established by its Board of Directors or its oversight body, the Ministry of the Attorney General in its first period of operations. As such, a comparison of actual and budgeted financial results is not presented in the Statement of Operations and Accumulated Deficit.
3. Non-pension employee benefits:
Other post-employment benefit plans:
Certain employees of iGO participate in the Public Service Pension Plan (PSPP) and the Ontario P ublic Service Employees Union Pension Plan (OPSEUPP), which are defined benefit pension plans for employees of the Province and many provincial agencies. T he Province of Ontario is the sole sponsor of PSPP and a joint sponsor of OPSEUPP with the Ontario Public Service Employees Union. The sponsors of these plans determine iGO’s annual payments to the respective plans. iGO’s responsibilities with regard to PSPP and OPSEUPP are limited to its contributions. Payments made to the plans are recognized as an expenditure in the period the contributions become payable. iGO’s required annual payments of $190 is included in Salaries and Benefits in the Statement of Operations and Accumulated Deficit.
Separation costs made to employees are recognized as an employee benefits expense when payment is made. For the year ended March 31, 2022, these separation costs amount to $65.
Non-pension post-employment benefits:
The cost of non-pension benefits for eligible pensioners is paid by the Province of Ontario and are not included in the financial statements.
4. Tangible capital assets
The following table presents the net book value and changes in the cost and accumulated amortization of the tangible capital assets for the period ended March 31, 2022:
5. Harmonized sales tax (HST)
iGO makes GST/HST remittances to the Government of Canada on the basis of being a Prescribed
Registrant pursuant to the Games of Chance (GST/HST) Regulations of the Excise Tax Act. iGO's net tax for a reporting period is calculated using net tax attributable to online gaming activities.
The non-recoverable GST/HST payable to suppliers and the additional imputed tax payable to the Government of Canada on online gaming-related expenses were recognized as payments to the Government of Canada, which is recorded in HST expense in the Statement of Operations and Accumulated Deficit.
The net tax attributable to online gaming activities results in a 26 per cent tax burden on most taxable online gaming expenditures incurred by iGO.
6. General operating, administration and other
General Operating, Administration and Other expenses of $1,739, includes $1,160 of professional services related to financial and management consulting and $484 of legal advisory services.
7. Related parties
iGO is related to various other government agencies, ministries and Crown Corporations. All transactions with these related parties are within the normal course of operations and are measured at the exchange amounts, which are the amounts of consideration established and agreed to by the related parties.
Alcohol and Gaming Commission of Ontario (AGCO)
Effective September 6, 2021, iGO and the AGCO entered into a Shared Resource Agreement (SRA). The SRA provides iGO primarily with people resources related to certain shared human resources, payroll, procurement and information technology services on a cost recovery basis. In addition to the costs for these shared services, the AGCO paid for all of iGO’s transactions (including salaries and benefits of iGO employees and direct vendor invoices).
For the period July 6, 2021 to March 31, 2022, amounts charged to iGO, net of harmonized sales tax (HST), by the AGCO were as follows:
Direct operating expenses:
Salaries and benefits
General operating, administration and other
Information technology/Infrastructure services
Marketing and promotion
Shared resources expenses:
Salaries and benefits
General operating, administration and other
Information technology/Infrastructure services
The balance due to the AGCO, net of harmonized sales tax, of $7,264, is separately disclosed in the Statement of Financial Position. The associated HST on the amounts as presented in the table above is included in HST expense in the Statement of Operations and Accumulated Deficit and is included in HST payable in the Statement of Financial Position. Amounts are non-interest bearing with no specified terms of repayment.
Prior to the incorporation of iGO on July 6, 2021, the ACGO incurred $954 (2021 -$902) in costs relating to the development of a framework for a market for internet gaming offered through private gaming operators. These costs will not be recovered from iGO.
Ministry of the Attorney General (MAG)
The Ministry of the Attorney General provides the AGCO with leased office space and iGO is utilizing a portion of the space at no charge.
8. iGaming Ontario Board of Directors' remuneration
iGaming Ontario’s Board of Directors are part time appointees. Total remuneration paid to the Board of Directors during the year was $1.
9. Financial risk management:
Credit risk refers to the risk that a counterparty may default on its contractual obligations resulting in a financial loss. iGO is exposed to this risk relating to its cash. iGO holds its cash accounts with federally regulated chartered banks who are insured by the Canadian Deposit Insurance Corporation.
Liquidity risk is the risk that iGO will be unable to fulfill its obligations on a timely basis or at a reasonable cost. As noted in Note 5(a), the AGCO paid for all of iGO’s transactions for the period July 6, 2021 to March 31, 2022. Amounts due to the AGCO are non-interest bearing with no specified terms of repayment.