Three suppliers bid for US$450m Ontario lottery contract

GTECH G2, OpenBet and new Cryptologic and Chartwell owners Amaya are so far the only suppliers to have tendered for the lucrative Ontario Lottery and Gaming Corporation (OLG) contract, eGaming Review can reveal, with the RFP deadline closing today.

As exclusively reported by eGR last year, the Canadian lottery opened the tender process on 9 December, initially seeking a platform provider with casino games to allow it to launch with an online casino and lottery product. Since then a number of large providers have been busily putting together their applications for a slice of North America’s biggest online gaming contract outside the US estimated to be worth up to CA$75m in profit to the winner, however so far only three firms are known to have lodged formal bids.

Today’s deadline, however is understood to have been extended at the request of nine other companies thought be close to submitting proposals, a source close to the matter told eGR. A total of 12 firms are expected to apply, however the extension period is unknown.

Once OLG is satisfied with the number of proposals for the contract it will then take around seven weeks to consider each bid, cutting this down to a shortlist of companies after this has been completed. The second phase of the bidding process will then involve representatives of the OLG visiting each company in turn, while the final phase will involve contract negotiations with the successful bidder. A final decision is not expected until the summer of this year, the source added.

The successful bidder will also supply a player account management system, casino games, financial processing and customer service as well as integrate into the OLG’s lottery system to allow players to buy lottery tickets online. The proposal adds that the lottery plans to launch online bingo, poker and sports betting in a second development phase as well as enhance its lottery product. A third development phase will see an expansion of casino products, launch of mobile gaming products and an integration of the online and offline CRM systems.

The initial contract period for the successful vendor is thought to be five years. OLG will not confirm the term until entering into final contract negotiations with suppliers. The launch date for the online venture is also not mentioned in the RFP, although it is thought that it is likely to start at the end of this year with a full launch in the second or third quarter of 2013, based on previous statements by the OLG and delays in the publication of the RFP due to the Ontario election in October.

The RFP states that OLG’s best estimate of the current Ontario egaming market is that total annual revenues are between $425m and $450m. It expects this to grow substantially over the next five years, “driven by greater internet penetration, growing consumer trust in transacting online, increased acceptance of gaming by the Ontario population and improved acceptance of financial transactions relating to gaming by Canadian banks”. Ontarians currently spend an estimated CA$400m on offshore gaming sites.

The Canadian province of British Columbia launched North America’s first government-run online casino in July 2010. UK gaming software provider Openbet provides the platform for PlayNow.com operated by the British Columbia Lottery Corporation (BCLC) on the government’s behalf, allowing residents of the province to play games including blackjack, roulette and craps.

In February last year PlayNow joined Loto-Québec on the GTECH G2-powered Canadian Poker Network, allowing residents of British Columbia and Québec to play poker against each other online.