Score Media and Gaming plans to significantly expand its technology workforce as the sports app prepares to roll out its gambling features in Canada. The Toronto-based firm will have to compete against major international players that are also making Canadian plans, spurred by legal changes opening up sports betting and provinces embracing private players in online gambling, starting with Ontario later this year. 

Deloitte estimates lawful wagers could be worth $28 billion within five years of legalization. Last week, the Senate adopted Bill C-218, which amends the Criminal Code to let provinces permit and regulate betting on individual athletic contests. Ontario is set to be the first market to open, with the Progressive Conservative government planning legislation this fall that will permit private operators to offer casino and table games as well as sports betting online. The 2019 provincial budget estimated residents spend $500 million annually on digital gambling.

“We’re tremendously excited the market’s opening up,” said Benjamin Levy, theScore’s president and COO, who estimates Ontario accounts for about 45 per cent of the national opportunity. 

But the company will have to compete against larger foreign platforms for online Canadian gamblers, just as it already does in the U.S. It opened its first sportsbook to bets in New Jersey in September 2019, and has since expanded to four other states as governments open up gaming. 

Online sports-betting platforms have spent hundreds of millions on advertising and promotions in the U.S., and marketing continues to be a major expense for operators in more established markets like the U.K. They’re likely to spend large sums in a bid to build awareness and win attention in Canada’s nascent market, according to industry watchers.

“Ontario alone is a meaningful market, and I think you’re going to attract some of the biggest players in the industry there,” said Suthan Sukumar, principal for technology and gaming research at Eight Capital. “And they’re going to come with their balance sheet.”

Boston-based DraftKings, which brought in US$614.5 million in 2020—and spent about US$495 million on sales and marketing—has signalled plans to expand northward. 

TheScore has also paid for gamblers’ attention. U.S. users wagered $137.4 million in settled bets in the firm’s first two fiscal quarters, generating $100,000 in gross gaming revenue for the company. But it lost $4.4 million factoring in promotions and outstanding bets.

Ontario will be a competitive market, acknowledged Levy, son of theScore founder and CEO John. “Is there going to be marketing? Yes, from us and others. Is there going to be promotion? Yes, from us and others,” Levy said. 

Levy cited theScore’s longstanding engagement with Canadian sports fans—via the company’s former TV channel and now its news app—as an advantage. “We get to fight this on our home turf, with the benefit of our users and our brand,” he said.

Sukumar said theScore has been “pretty conservative with their marketing spend in the U.S.” He anticipates the company will get “more aggressive” in Ontario to build on its existing user base, albeit on a smaller budget than the international incumbents. In March, the company raised US$186.3 million in a Nasdaq offering, adding to its existing listing on the Toronto Stock Exchange.

But the company’s real selling point is the user experience of its apps, according to Sukumar. “It’s a much smarter way of competing.”

Las Vegas-based Bet.Works initially provided the back-end betting technology linked to theScore’s apps. The sports-media firm was working to a six-month launch timeline, but projected it would take three years to build its own system. Levy said the firm is about two-thirds of the way through the transition. It’s using its own wallet and in-state infrastructure, while its player account-management system will be complete by the end of summer; the final module, which manages risk and trading, is still in the works.

“If you are going to be a business that has technology at its core, it is quite important that you control the technology [and] IP,” said Levy, “especially because our approach to market was to deeply integrate our betting product into our media product.” The setup also gives it the flexibility to adapt to differences in requirements between states and provinces, since neither the U.S. nor Canada operates as a single, national gaming market. 

TheScore currently employs more than 130 people in technology, engineering and software development, about a third of the overall workforce. Levy said he anticipates that team “doubling or tripling in size” over the next two to three years. 

Other Canadian firms will seek to be third-party technology providers for gambling brands as provinces open up. Under Ontario’s plan, the provincial gaming commissioner will “start granting licenses to private operators, which wasn’t the case until very recently,” noted Yaniv Spielberg, co-founder and chief strategy officer of Toronto-based Bragg Gaming Group. The firm produces online casino- and table-game content. “We are responding to RFPs,” said Spielberg.

Sukumar said Bragg could sign up Canadian casinos and lottery operators who are looking to enter the online gaming space following legislative changes. The company is also developing its own sportsbook, and will initially launch in Latin America and Eastern Europe, where the market for game-betting technology is less competitive than in North America and Western Europe. 

Even so, Spielberg expects benefits from sports betting’s legalization. 

“It legitimizes the industry,” he said, adding that it brings in “players that presumably otherwise would not have been part of the business.”