The Most Beautiful Word?
Donald Trump might believe that ‘tariffs is the most beautiful word in the dictionary,’ but Canadians and most other world citizens might beg to differ. To start with, it is not a traditionally beautiful word. Ethereal, serendipitous, or incandescent would usually find themselves higher up on a list of beautiful words, and sentiments like bountiful, generous, and cherish would also be highly rated. Tariff is a harsh word, and the likely outcome of any implementation is expected to be pretty ugly, too – and not just for those on the receiving end of their execution.
When writing about Trump’s decisions, getting the time context correct can be tricky. The only thing that is consistent with this administration is that Trump seems to flip-flop and change his mind over policy and direction. He loves tariffs and imposes them; then, he delays them by 90 days. Trump claims Canada is a friend, berates a trade deal that he signed when he was last in the Oval Office, and declares that he wants Canada to be the USA’s 51st state.
Bringing Canadians Closer
While the world and markets are reeling from his tariff announcements, Canadians had his number a while back. Trump’s talk of Canada becoming part of the USA and the trade wars had already unleashed patriotic fervor and brought Canadians closer together. Even in aspirationally independent Quebec, voters have made it clear to their leaders that they want them to stand up to the US President.
While the world as a whole adjusts to the new world order, Canadians have already had some time to start fighting back. What happens in one industry sector will be echoed across others, so as Canadian stores pulled US liquor from their shelves, the gambling industry was also taking action. The gambling sector is unlikely to be affected by Trump’s actions, and there has been a universal shrinking of the value of gambling stocks. However, market analysts tend to think that no matter what happens, the gambling industry is relatively recession-proof.
Global Business, Local Markets
iGaming is a worldwide business that, on the supply side, sees no borders. Ideas, products, and services flow freely, with designers and producers often based in different hemispheres. The big iGaming companies are global brands, and their services are tailored to individual markets to comply with regulators and local laws.
They operate on an international scale, whether they are offering sports betting sites and online casinos in Canada, Australia, or France. It is likely that the online world will react in a similar way to the physical world when it comes to the gambling market in Canada.
Alberta Fighting Back
Alberta took swift action when the Alberta Gaming Liquor and Cannabis Commission (AGLC) issued a directive calling for gaming machines to be acquired from suppliers with support services in Alberta or countries with whom Canada has a free trade agreement. The province is one of the country’s top gaming markets and accounts for around 4% of the total sales for gaming equipment suppliers. Around 16% of all video lottery terminals and physical slot machines in North America were sold in Canada in 2023. Compared to its population size, Canada punches way above its weight when it comes to gambling.
The directive has significant implications for US gaming companies, with those in Las Vegas potentially losing millions of dollars in sales as 83% of gaming equipment sales in Canada come from just three manufacturers. International Game Technology (IGT), Light & Wonder, and Aristocrat Gaming could be badly affected, particularly if other provinces follow suit. In addition, these companies supply online gaming software, so it is unlikely that their business will be unaffected. While online casinos can find alternative products and games, the producers are more vulnerable.
Chaos Reigning?
It has certainly been a chaotic time regarding Canadian and US relations, and the impact on the gaming industry is still being assessed. However, for the US producers, there is little doubt that the cost of electronics like chips will rise. Eilers and Krejcik have shifted its US/Canada sales estimates from +2% to -13%, largely due to expected retaliatory measures from Canadian government-managed operations.
The tariffs and trade war will undoubtedly impact the Canadian economy. Ironically, this could have a positive effect on the igaming industry. At the moment, only Ontario has a fully commercialized, open, and legal gambling market. The income flows into the province’s coffers have not gone unnoticed by other provinces. Alberta is now moving towards a similar model but having to do so without cannibalizing its existing (and highly profitable) state-run Play Alberta online gambling site.
Could A Threatened Recession Benefit iGaming?
If other provinces need revenues, they could lean towards opening up their online gambling markets to prevent money from flowing offshore. Canadians love to gamble, but many do so on the grey market.
That was why Ontario took a different approach, which seems to have paid off for them. The silver lining for the iGaming industry could be more Ontario-style regulation. However, as Alberta has discovered, trying to move half a market is easier said than done.
In times of economic downturn, governments have to think creatively to ensure that revenues keep flowing. iGaming is a relatively easy market to tap into. The customers are already there. The provinces would need to bring legislation forward to allow commercial operators (possibly not ones based in the US) to operate in their markets. It could potentially be a win-win situation. More money to the provincial coffers and more safety to Canadian online gamblers – regulated markets offer more protection against potential gambling harms.
Finding New Alliances
Historically, downturns have seen legislation for brick-and-mortar casinos relaxed across the American continent. In a digital age, it is unlikely that more physical casinos will be built, but there could be a proliferation of legalized online platforms and partnerships with operators from countries that are regarded as being on Canada’s wavelength politically.
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