Maple rules: How reg changes could impact Canada's affiliates

It's no surprise that North American regulation has become a reference point for all major operators in the industry. In turn, regulations affecting operators, suppliers, and affiliates in this market have been closely followed by major gambling industry stakeholders.

But the industry must ask the question, what is coming next? And how is it going to affect our day-to-day operations, business, and core KPI's? To what extent will regulators be tempted to copy and paste regulation across multiple jurisdictions so as not to be considered the lax or lazy regulator?

For the Alcohol and Gaming Commission of Ontario (AGCO), a key issue is the diligent advertising and privacy rules that have been set for both operators and affiliates to follow. From players having to opt in to actively consent to receiving direct advertising, to ensuring that permitted advertising and marketing materials which communicate gambling inducements, bonuses, and credits have to disclose all material conditions and limitations.

These are complex areas of compliance, particularly where even very seasoned operators are unable to properly understand the opaque affiliate world in which compliance is extremely difficult to navigate and oversee.

As with other jurisdictions, in Ontario, the obligation is placed firmly on the operators to ensure that any affiliate marketing entities fall into line. Furthermore, operators are obliged to police wider business activities.

The regulations state:

"Operators must ensure that no independent third parties that engage in direct-to-consumer marketing, direct-to-consumer promotion, or player referral services for the operator under contract, in exchange for commissions, or for any other form of compensation also undertake such activities related to online gaming sites that facilitate or accept wagers from players in Ontario without an AGCO registration".

Operator policing

It is not clear how the operator is meant to police this on the AGCO's behalf, simply because it decided not to license the activity. The operator is not guaranteed to have the economic leverage to realistically achieve this either.

Assuming the operator has the safeguards in place (i.e. the affiliate warrants a shopping list of scout's honour promises), there are bound to be errors made when millions of adverts are posted daily. Yes, the operator may be able to terminate, but how does that help with the payment of the fine?

Not many affiliate companies would agree to indemnities or to get insurance (assuming any insurance company was prepared to underwrite the risk, which is highly unlikely). This is particularly so where regulators tend to increase fines for the same/multiple transgressions.

So, is the strict liability approach set in stone? Should the operator not be given credit for all reasonable attempts to prevent the matter from occurring and taking proactive action when it is aware of transgressions?

The answer is… we can only go on the current guidance that is given. In 2024, we saw updates to the Registrar's Standards for Internet Gaming, ensuring fair and safe regulation overall. The AGCO asserted the following:

"This approach offers greater flexibility for regulated entities to make decisions that best suit their business needs while meeting the regulatory outcomes". We are not able to see why this 'flexibility' was vouched for.

Embargo list

As with other regulators, the appeal to minors is key. The regulations include the following embargoes against:

1. Use or contain cartoon figures, symbols, role models, social media influencers, celebrities, or entertainers who would likely be expected to appeal to minors.
2. Use active or retired athletes, who have an agreement or arrangement made directly or indirectly between an athlete and an operator or gaming-related supplier, in advertising and marketing, except for the exclusive purpose of advocating for responsible gambling practices.

Individual jurisdiction

Again, the operator may not always be able to monitor or control the affiliate arrangements.

It may be possible that in the next three to five years, tools surrounding AI marketing and product will also begin to become more regulated as that industry progresses alongside gambling. However, for the greater part, regulators and even operators simply cannot fathom the technology's use and scope.

Perhaps the only answer is again to regulate the supplier, as it is the industry that is not prepared for such scrutiny as things stand. However, operators cannot be expected to man the barricades alone.

We can also expect further repercussions on the enforcement of affiliates operating in unregulated markets, not just by the AGCO. The AGCO has very much taken the line that 'the company you keep' reflects on suitability, but as above, we do not see it as a licensee's obligation to do a regulator's job.

Other Canadian provinces are likely to follow suit with regulated markets in each individual jurisdiction, meaning the market will only mature in Canada, with more operators, suppliers, and affiliates in turn operating at a high level of scrutiny. This may well be emulated in other jurisdictions.

Ultimately, this will change the way the affiliate ecosystem currently exists, but until regulators can be educated about the real/non-existent risks, regulations/sanctions will be unrealistic and unfair.