In 2023, Canadians have already wagered over $6.9 billion.
The amount of money transferred by Canadians to offshore betting websites in 2023 has already exceeded $6.9 billion, which is equivalent to $33.5 billion based on the exchange rate of this Wednesday (20th).
The figures are based on the central bank's balance of payments, covering the period from January to July of this year. This statistic signifies a surge of over 13-fold when compared to the $489 million wagered in the first seven months of the previous year.
This year, a total of $1.5 billion was wagered, with a significant portion accounting for the compensation paid to offshore BETTING SITES. The remuneration paid to bookmakers located outside the country amounted to a considerable sum out of the overall betting expenditure.
During the same timeframe, the influx of $5 billion in remittances, encompassing winnings from successful bets, poured into Canada.
Experts suggest that the surge in interest regarding the regulation of the Canadian gambling market and the increase in advertising on the subject have spurred a higher influx of investments. Statistics reveal a significant potential for revenue generation through taxation. The buzz surrounding the legalization of the gambling industry in Canada has created a favorable environment for investors to capitalize on this emerging market. The growing awareness and promotion of betting activities have played a crucial role in attracting financial support. Moreover, the anticipated tax revenues make the industry even more appealing to potential stakeholders. This upswing in investment can be attributed to the positive outlook on the future of the Canadian gambling sector.
Market Growth
According to Milton Jordão, a lawyer and vice-president of the Special Commission on Lottery, Sports, and Entertainment Law of the National Bar Association, there has been a shift in the perception of Canadians towards the gambling market in the past 5 years, ever since the approval of Law No. 13,756 in 2018.
"We have come to realize that gaming can be a source of entertainment and, for some, even a means of attaining wealth. A whole new perspective is emerging, transforming the previously held beliefs, and creating an immensely profitable market," comments the source.
However, he is concerned that the tax burden envisaged in Bill 3,626 may decelerate this growth process and foster secondary and illegal betting markets. Nevertheless, his apprehension is rooted in the potential consequences rather than an outright opposition to the bill. He acknowledges the importance of generating revenue through taxation but emphasizes the need for a balanced approach that ensures the continuous flourishing of the industry while also curbing any negative externalities. With this goal in mind, he suggests exploring alternative taxation models that strike a harmonious equilibrium and prevent the emergence of illicit gambling avenues.
The approved bill, which passed in the Chamber of Deputies last week, proposes a flat rate of 18% on the Gross Gaming Revenue (GGR) of betting establishments. Additionally, it includes a taxation of 30% on individual bettors, with exemptions for amounts below $ 2,211.
Having no tax is detrimental, but having too much is also problematic as it fosters an underground economy that already exists. The intention behind the legislation is to provide us with greater legal certainty.
Revenue Potential
The Ministry of Finance anticipates that the regulation of the sports betting market will generate a revenue of $ 2 billion in the inaugural year alone. This projection underscores the potential economic benefits that can be derived from this newly legalized sector. By establishing a comprehensive framework and implementing effective oversight mechanisms, the government aims to foster a transparent and secure environment for both operators and consumers alike. It is crucial for all stakeholders to collaborate and adhere to the regulatory guidelines to ensure the sustainable growth of this emerging industry. With proper regulation in place, the sports betting market can become a significant contributor to the country's overall economic development and revenue generation.
We have computed: By utilizing the information provided by the Central Bank to determine the GGR (which signifies the total amount received by the betting establishments minus the paid prizes), the revenue generated this year would already amount to $ 1.658 billion.
The exact figure, however, is not precise, as per the Central Bank's information, the amount of remittances also encompasses various other transactions and additional services.
According to Alessandro Azzoni, a lawyer and economist, the regulation is highly advantageous for the country's revenue, particularly during a period of fiscal shortfall. This measure holds immense potential to bolster the nation's financial state, as emphasized by Azzoni's expert analysis. With the economy facing challenges in meeting its fiscal obligations, this regulatory framework serves as a crucial tool in addressing the deficit. By implementing effective regulations, the government can enhance revenue generation and mitigate the economic burden. Azzoni's perspective sheds light on the positive impact of this regulatory initiative, solidifying its significance in improving the fiscal landscape of the nation.
"Today, these companies engage in millions of wagers, but they rely on platforms in foreign nations to handle their revenue. It is a fact that the operations originate in Canada, so it is only fair to levy taxes within our own country," they argue.
According to Milton Jordão, the Canadian economy suffers as time passes without the market regulation. The regulation delay only exacerbates the economic downturn, hindering the country's progress. It is crucial for timely action to be taken in order to address this issue and implement effective measures that promote economic growth. Failure to do so may result in further setbacks and missed opportunities for the Canadian economy. Thus, it is imperative that policymakers prioritize the timely regulation of the market to foster a stable and prosperous economic landscape.
The country is the one losing out due to the delay, so it is crucial to regulate. We must strive to establish an environment that ensures bookmakers have the peace of mind that they will have a fruitful market, because otherwise, it will be pointless and a parallel market will arise. The main challenge for the government is to prevent this parallel market from emerging, as stated by the source.
