- »Torstar Plans to Launch Online Casino Via AGCO
Torstar Plans to Launch Online Casino Via AGCO
When the Ontario government decided to end its monopoly over internet gaming in its region, it took the monopoly away from the Ontario Lottery and Gaming Corporation (OLG). The expectation was that some well-known gambling companies might step up to express interest in obtaining a license.
Few people thought that the first major company to do so would be Torstar Corporation, the parent company of the Toronto Star, Canada’s largest daily newspaper.
The newspaper business has struggled in the past decade, trying to maintain a revenue stream but also keep up with technology-driven reporting for the masses who want the news at their fingertips…for free. It shouldn’t be a surprise that a company like Torstar would be open to new revenue ideas. The surprising aspect of it is the decision to pursue an online casino.
More Than Just an Idea
Far more than just chatter, the plan for Torstar to enter the internet gambling business is an actual plan. Torstar issued an official statement on March 1.
The media company submitted a proposal to the Alcohol and Gaming Commission of Ontario (AGCO). As it awaits approval, Torstar also awaits the official go-ahead of the Ontario government to proceed with an open igaming market. The legislation passed and awaits its proclamation and effective date.
Torstar hopes to launch its online casino before the end of 2021.
Chief Corporate Development Officer Corey Goodman noted his excitement regarding a regulated online gaming market in Ontario, as Torstar would be a local company and contribute to the economic growth of the area. “As an Ontario-based media business and trusted brand for more than 128 years, we believe Torstar will provide a unique and responsible gaming brand that creates new jobs, offers growth for the Ontario economy and generates new tax revenue to help support important programs in our province.”
To be prepared, Torstar added people to its igaming team with experience in that industry. Goodman will head up the team with Torstar Chief Investment Officer Lorenzo DeMarchi, but they hired specialists as well. Former attorney for the AGCO Don Bourgeois will oversee compliance and legal matters, and Experienced gaming industry professional Jim Warren, will bring 25 years of experience to the team.
Why Online Casino Gaming?
The most obvious reason for Torstar to pursue this endeavor is the revenue. Online gambling can be an incredibly profitable industry. That is more than a little appealing to a media company that hopes to continue its 128-year journalism mission but faces a grim industry outlook.
Online casinos, lotteries, online poker and sports betting are all lucrative businesses. According to most recent estimates, people in Ontario spend more than C$500 million gambling on websites that are based outside of Ontario. This means they pay no taxes to the province as would a site regulated by an arm of the Ontario government.
Torstar Chair and Co-owner Paul Rivett outlined two reasons for wanting to enter the igaming market.
“First,” he explained, “we want to ensure the new marketplace is well represented with a Canadian, Ontario-based gaming brand so that more of our players’ entertainment dollars stay in our province. Second, doing this as part of Torstar will help support the growth and expansion of quality community-based journalism.”
Would the Original Founders Approve?
Joseph Atkinson was a journalist from the age of 18 when he worked for the Port Hope Times in Ontario in the early 1880s. He worked for numerous newspapers in the decades that followed, eventually marrying a fellow journalist as well. The Atkinsons dedicated their lives to journalism and liberal activism.
A group of wealthy liberals approached Atkinson in 1899 about becoming the publisher of the Toronto Evening Star. The group wanted the paper to be a voice for the Liberal Party, but Atkinson took the job under the condition that the journalism be fair, not leaning toward a particular party. He also became one of the owners of the newspaper. He made the Toronto Evening Star a successful company – the most successful of all Toronto papers.
When Atkinson died in 1948, he willed his portion of the newspaper business to his own Atkinson Foundation, a charitable organization. In response, the Ontario government enacted a law forbidding charities from owning profitable entities, which included newspapers. That forced the trustees of the foundation to buy the paper. They did so and turned it into Torstar.
A private investment company called Nordstar Capital bought Torstar in the summer of 2020 for $60M. Rivett defended the deal by saying the long-term viability of the company depended on it. He noted at the time that the new ownership “will continue to serve as the organization’s intellectual foundation.”
Companies expand and diversify, and they adapt to the times.
Torstar’s move into the internet gambling business seems to be one of those situations. It recently launched a parcel delivery service and purchased SCOREGolf.
Torstar gaming industry consultant Jim Warren told CBC, “We don’t know how big the market is going to be in Ontario yet because it will depend on the consultation process within government, which is about to happen in the next couple of months. What we do know is that Torstar is looking at diversifying the revenue model of how we fund and pay for reporters, columnists, and editorial staff.”
Worries of Journalistic Integrity and Independence
It has become clear that Torstar will need to work closely with the Ontario government and regulator to enter the igaming market. Many worry that Torstar media outlets will lose their independence if dependent upon government partnerships for a potentially-important revenue stream.
Toronto lawyer Alex Davis recently penned an op-ed about this exact scenario involving Torstar.
One of his primary concerns is the notion of a nationally-recognized and trusted media organization promoting their own online casino. In line with that, will Torstar properly inform the public about igaming concerns and mistakes, bad actors and responsible gambling?
Davis points out that many people who may not have known about online gambling will be introduced to it through Torstar’s igaming endeavor and the promotion of it. That may lead, according to David, to Ontarians misjudging the risks of online casino play. “Torstar’s financial interest in the proposed online casino also poses the risk of affecting the integrity of the news coverage and analysis it provides on online gaming legislation.”
While Davis doesn’t underestimate the need for Torstar to pursue this business for financial security, he notes that there are many potential conflicts and concerns that should be examined.