FanDuel, DraftKings Pull DFS from Ontario Ahead of Ring-Fenced Market Launch

Ontario daily fantasy sports fans will soon have to cross borders to get their fix. FanDuel and DraftKings have said they will cease offering the real-money DFS vertical in the province when the ring-fenced online gambling market kicks off April 4.

While both are among 16 operators itching to launch sports betting and casino games next Monday, the risk of offering DFS is not justified by the expected reward.

That’s because DFS was included as a gambling product in the province’s new regulations, which means operators would have to pay an annual licensing fee of $100,000 every year and a 20% tax on revenue.

Meanwhile, ring-fencing the market means operators cannot pool liquidity legally with other provinces or countries. Much like online poker, DFS relies on a critical mass of players to generate big prize pools and game variety.

Ontario is Canada’s biggest province, with a population of 14.5 million. But the cost of doing business is too high in a DFS market that could stagnate. And if FanDuel and DraftKings are choosing to sit this one out, smaller operators are even less likely to step in to absorb the costs.

Due to a change in government regulations, FanDuel will not be able to offer paid or free daily fantasy contests in the province of Ontario starting on April 1st,” the operator said in a message on its website this week.

“Ontario residents can participate in daily fantasy contests while physically located in other provinces and within US states where daily fantasy is permitted. Additionally, Ontario residents will be able to utilize the FanDuel Sportsbook and Casino products launching in Ontario beginning April 4th.”

Some online poker operators are prepared to take a chance on Ontario. Last week, GGPoker announced it would launch in the province in early April, while 888 has committed to including poker among its online casino offerings. In February, PokerStars told PokerFuse it was working with regulators to find an “attractive offering” for players.

A population of 14.5 million could sustain two or three online poker sites. But any more than that, and it would quickly become saturated.

Canadian Gaming Association President and CEO Paul Burns told Covers.com this week that he hoped the market would not stay ring-fenced forever. And, in the future, inter-provincial liquidity sharing compacts could be the answer.

There are legal issues unresolved around having international liquidity in Ontario which we [hope] are resolved in the coming months,” he said. “This is the most significant barrier to offering DFS.