iGaming Daily

Jessica Welman (00:01.762)
I know I say we will hardly ever talk about Donald Trump on this podcast, but dang it.

We're talking about Donald Trump again on this podcast. In today's episode of iGaming Daily, we're going to discuss why Trump tariffs are having a huge impact on the Canadian land-based gaming industry. And then I'm going to vent my frustrations about how land-based gaming in the US doesn't seem to face the same scrutiny as its online counterpart. Welcome to iGaming Daily. I am managing editor of SBC Media. I'm still getting used to the new title.

very exciting news. Jessica Wellman joined by senior writer for Canadian Gaming Business and SBC Americas as well as editor of Canadian Gaming Business Magazine Tom Nightingale back in the hot seat again.

Tom Nightingale (00:47.303)
All of a sudden you can't keep me away.

Jessica Welman (00:49.538)
Well, Canada had to go and make itself the center of attention today. Before we dive into the news, wanted to just give a big shout out and a thank you to OptiMove, our sponsors of the podcast. OptiMove is the number one CRM marketing solution for the iGaming market. All right, Tom, big news that Donald Trump is impacting gaming again.

went many years without having to talk about the president very often and this is like the fifth time this year that on the pod we've had to discuss him, but what is going on? Why are we talking about him again?

Tom Nightingale (01:27.138)
Yeah, well, mean, so this back and forth tariff war, which I feel like, I don't know about you, I feel like we are just scratching the surface of where this is gonna take us. But, you know, we only have 20 minutes or so, so let's not do that. Turns out that a whole range of Canadian provinces have advised governmental departments, which includes Crown corporations, which in Canada,

outside of Ontario. The only regulated gambling is run by government Crown corporations. These Crown corporations have been

directed not to purchase from US suppliers in a lot of cases. I have sent a variety of emails and spoken to a variety of people on this this week. Alberta, Alberta Gaming Liquor and Cannabis sent out a directive just straight up suspending all purchasing of US gaming equipment. We're talking slot machines, VLTs. At this point at least, we're talking retail, lamb based casino equipment. These are measures that have been

we've seen in other provinces as well, Saskatchewan's done the same thing. yeah, tariffs certainly have reached Canadian gaming.

Jessica Welman (02:48.066)
Yeah, for those of you who don't know, the lottery Crown Corps, it's not just the lottery and online gaming. They actually run and oversee the land-based casinos. There are some that are done in tandem with First Nations, where it's like a revenue share kind of thing. And I believe in, well, in Quebec, are those tribal casinos under Quebec lottery or no?

Tom Nightingale (03:15.222)
Yeah, so lot of Quebec has partnerships with various.

Jessica Welman (03:19.232)
OK, so same thing. yeah, Niagara Falls, kind of the one area of casinos where I think there isn't as much of an impact because it is Ontario. But the rest of them, we're talking the entire land based casino industry in Canada for the most part. I think, too, with Alberta, it kind of raises questions about online gaming.

I don't know if they can't, would it be something that they can expand to if you're a licensed operator you need to use U.S.? That probably feels like an overstep, but I'm an American and everything feels like an overstep, so you tell me.

Tom Nightingale (03:57.785)
Yeah. Yeah, mean, it's tricky, isn't it, with Alberta? There's a reason that Alberta, think, is the province that has made headlines this week with this stuff, because obviously they're continuing their iGaming review and looking at launching that. So I don't know. It's difficult to say how it will extend. What we know for now is that

slot machines, VLTs, all of a sudden governments and the folks in the Crown corporations who are tasked with procurement and all this sort of stuff now have to look elsewhere in the most part. It does vary a bit from province to province. So I was speaking to Lutteries and Gaming Saskatchewan and it sounds like for them it's mostly about...

VLT and slot machine upgrades not being sourced from US suppliers. BCLT it sounds like it's includes new contracts for it's new contracts for slot machines and VLTs. And I guess the question at the moment, well, there's several questions but one of the questions at the moment is how far this sort of goes, right? Like how far this reach it's because you start with slot machines and VLTs, where do you kind of...

Jessica Welman (05:16.748)
Next thing you know, you aren't selling coke in the casinos anymore.

Tom Nightingale (05:19.086)
Where do you draw the line on what can and can't be supplied from the US? So I do think this is... Somebody in one of the provincial governmental departments did say to me that they think this is the first step of something that may rumble on for quite some time. So we will see.

Jessica Welman (05:41.358)
Also, I don't think this is going to be a Canada only issue. There are other countries with these tariff issues. in the headlines here about these kinds of things in Europe as well. So don't be surprised if you have the Ted's and Victor and Martin on here in a couple of weeks talking about something very similar. You mentioned Alberta online gaming. I just want to quickly note, we have a bit of an update on when that

timeline is going live because it has changed a bit. So what's the latest go live date? I know hopes were football season 2025, but that's looking unlikely.

Tom Nightingale (06:22.446)
I, if you're asking me right now, which you are, yes, I think that's looking, I think that's looking unlikely.

Jessica Welman (06:27.619)
Yes, that is how this works. I wish you could get back to me and we could edit it in a couple of months, but sadly.

Tom Nightingale (06:35.542)
I think the next formal update I am expecting...

to get is something around the agency that will conduct and manage gaming in Alberta because we already know that that will not be the lottery corporation. It will be a separate, know, similar, you know, Ontario has iGaming Ontario, which it's a bit complicated because that was originally a subsidiary of, you know, the AGCO, but is now becoming separate. I think Alberta are going to go down that kind of separate route. So I think we're going to get an update on that in the coming weeks rather than months, I think as for the actual go.

Live Date, we haven't had a firm update yet from you know the horse's mouth so to speak but one thing that has been noticeable is a lot of major operators are in earning calls pushing their projections for Go Live Date back and are now saying that they don't expect any kind of Alberta to be reflected in their financials until Q1 of 2026 so juries out.

Jessica Welman (07:24.27)
they expect.

Jessica Welman (07:29.759)
And yeah, I...

As we know from financial calls, operators like to be optimistic rather than pessimistic. Though with projections, it's always good to kind of downplay them in case you miss them. But I think the fact that I've heard across the industry that Q1 26 is looking more and more likely. All right. So if they can't go get VLTs and slots from American companies, who kind of stands to benefit from this decision in terms of who these guys can turn to?

Tom Nightingale (08:03.106)
Well that in itself as well is an interesting question because I saw an estimate from EKG for my listen that the top three I think it's like IGT, Light and Wonder, Aristocrat between them reportedly supply about 80 % of gaming equipment sales in Canada. That's across Canada as well. We're not just talking about Alberta or particular provinces.

We've already seen, I saw a statement from an IGT spokesperson pointing to the fact that they do have, you know, they have hundreds of employees in Canada. They do produce Canadian VLT content in Canada rather than the U S and they were quick to point out that they do have the ability to make all of their VLT cabinets outside the U S if necessary. So we're already, I think at that kind of point, where, where is the line that you draw? Do you say if you're an American company, that's it you're done or is it about where the production takes

place or if you're talking about sourcing completely different suppliers.

Then I wonder if you look to, doesn't necessarily have to be Canadian, but I know that some provinces are prioritizing not just non-American, but Canadian first. There are lots of sort of smaller suppliers in Canada. I'm thinking people like Jackpot Digital, who have been in the news recently because they've entered Ontario and Saskatchewan. They do sort of live, pokerless dealer tables, that sort of stuff. There are other options out there.

So in terms of who could stand to benefit, you maybe we see some of these Canadian homegrown companies getting a little bit of a leg up that they otherwise wouldn't have got. But I mean, from the operational standpoint, it's a hell of a shift, isn't it? That you're sort of having to work out on the fly. I spoke to one prominent casino operator who have properties all over.

Tom Nightingale (09:56.438)
and was basically told that they couldn't give an on the record statement because the situation is so fluid that they are having to figure this out day by day.

Jessica Welman (10:04.46)
Yeah, mean, you look at, it's gotta be tough for casinos too. As you point out, it's not like some guy is like with a dolly removing slot machines from the casino right now.

This is more just in the future, once contracts lapse, that sort of thing. take for example, IGT. IGT owns all of the Wheel of Fortune slots. Wheel of Fortune, one of the most popular branded slots there is. Slot players are very driven by titles and intellectual property and games that they know they like.

Tom Nightingale (10:20.846)
Mm.

Jessica Welman (10:39.372)
So for the casinos, you potentially take a revenue hit if suddenly you can't offer Wheel of Fortune anymore. But you bring up a good point that international gaming technology could just spin off CGT and make its own company incorporated in Canada. And I wonder if that would be something. You see companies do this all the time.

looking at all of the sweepstakes lawsuits, there's VGW Holdings, that's the US version versus VGW, the Australian version, and that sort of thing. You create companies at a local level that, don't know, one, how incorporation works well enough, and two, what exactly is laid out in these bands, but I wonder if that might be some solution that they lean into in the future.

Tom Nightingale (11:35.148)
Yeah, I mean, you'd have to think that it's a It's interesting as well because one provincial governmental department said to me that it's understood that there is an exemption process in the eventuality that truly no non-American alternative for certain pieces of equipment can be sourced. So I wonder if that's where that kind of...

brand name thing comes into play where it's like, well, if you've got a contract for certain, you know, to continue the wheel of fortune example, you know, if you have a contract for a certain number of wheel of fortune branded machines, like what, if you suddenly there's a directive saying you can't get them, it's not like you can just get, you know, wheel of fortune light from somebody else or, you know, hand write it on. So maybe that's where those kinds of exemptions come into play. You know, I think the real answer honestly is that nobody really knows at the moment.

and Jess what's happening?

Jessica Welman (12:32.395)
Yeah, I mean, I think of too as a poker player, but this applies to certain table games too. You think about a product like an automatic shuffler where there's basically two organizations that sell this. I only know this because I know when the shufflers break down at the room that I play at, like the shuffle master guy has to come and service it. That's part of the contract.

Tom Nightingale (12:40.878)
Mm.

Jessica Welman (12:57.064)
is that if it breaks, you have to use the company person who to go and fix it. So if I'm pretty sure the only two automatic shuffle companies are American companies. So if you had automatic shufflers, for example, they just break down and you're like, well, so well that it'll be interesting to see if people will push for exemptions. All right. We've got the rundown of that on Canadian gaming business dot com. You will.

Tom Nightingale (13:03.352)
Right.

Jessica Welman (13:26.198)
Be happy to head over there and see comments from everybody. We have the link in the description below. We're gonna take a quick break and then I warned Tom I have set aside the back half of this show for me to just get a rant off of my chest after a hearing that we were watching just yesterday.

Jessica Welman (13:47.582)
All right. Welcome back to iGaming Daily. Tom, how familiar are you with historical horse racing machines?

Tom Nightingale (13:57.87)
I would, if I was picking specialist subjects, it would not be listed. That's how I will say that. Yeah, so it's using something about using past results, Is it to simulate future? You need to explain it.

Jessica Welman (14:02.338)
Do you know what they are, generally?

Jessica Welman (14:12.75)
Okay, yeah, so for HHR, for those who don't know, can take a couple of different forms. There are HHR machines which use results of old races to create virtual horse races that you can bet on.

Those exist. The much more popular thing that you see in the United States, at least, is a machine that uses the numbers from historical horse races in place of a random number generator. And the screen has reels and symbols and lines that pay out, but don't call them a slot machine.

They're a pair of mutual wagering experience. Thank you very much My favorite thing about this hearing so there was a hearing yesterday in Maryland Was it ways and means or budget and taxation? I can't even wains and means that's kind of the first stop for gaming bills in the assembly that

Tom Nightingale (15:09.62)
It was Ways and Means.

Jessica Welman (15:19.774)
Many gaming bills were discussed, including sweeps, which you can go read about that on SBC America's Tom wrote that up. But the bill after sweeps was to allow HHR machines at off-track bedding parlors. And I have never heard anybody argue this in my life. Someone honest to God was like, well, HHR machines are a game of skill.

Because, and this is true, you can like go to the top of the machine and it won't tell you what the race was. It won't be like Man of War wins Kentucky Derby or whatever. But you will get certain amounts of data about the jockeys and the horses that in theory, if you are, I don't know, like John Nash, that are good will hunting, you can use the math of this to get better at the slot machines. But it's crazy.

to suggest, to be perfectly honest. Every hearing we've had about online casinos, what do we hear about? We hear about cannibalization. And with sweeps, you covered this in the sweeps hearing, they're like, aren't these just casinos by a different name? Basically is what happened, right?

Tom Nightingale (16:32.406)
Yep, that is pretty much the line that we hear time and time again.

Jessica Welman (16:36.48)
So explain to me, like Tom has the answer facetiously, somebody explain to me how this HHR bill goes through the hearing process and gets not a whiff of pushback from the committee about cannibalization or about

It is a freaking slot machine with just a random number generator replaced by horse data. So it's like, we just listened to, I mean, when I say Jeff Ifrah of the Social and Promotional Gaming Association got absolutely grilled about the definition and classification of what these games are, I don't think this is me projecting. That's fair assessment, right, Tom?

Tom Nightingale (17:23.268)
that is fair. mean, it took us down a path that involved Starbucks and Microsoft and McDonald's candy crush. Yeah.

Jessica Welman (17:27.022)
Candy Crush, because Candy Crush will come back in this. Like, grilled on the definitions. Every hearing in Maryland about online casino cannibalization, they get absolutely grilled and packed to the hilt with casino employees saying, we're going to lose our jobs if you let this happen. Yet a bill to put literal.

slot machines in the state gets none of this pushback. And the only thing they did kind of talk about is like, well, yeah, it cannibalizes land base, but we're like closer to Virginia than we are to casinos in Maryland. So we're helping you by keeping this revenue in Maryland and not in Virginia. And oh.

Tom Nightingale (18:10.392)
So I what do you, I was gonna say, so what do you think, what do you think explains the kind of, know, that lack of pushback? Cause to me it seems the sweeps, the sweeps debate, are very, there are, are many very pertinent points being discussed. So this isn't to say that that shouldn't be having the discussion that it is having, but it seems to me very much a kind of flavor of the month sort of thing where, in the way that some things get picked up and scrutinized and other things don't. Why do you think the, HHR issue is sort of going under the radar?

Jessica Welman (18:38.829)
I think.

with land-based and the horse industry in particular, you're talking about an industry that already exists and real tangible places that employ real tangible people in the state that are struggling. Unless you are Kentucky, Louisiana, Florida, maybe New York, like even California horse racing is really struggling. There's just a handful of states in which that industry is particularly healthy.

And they're dying, and you've got to give them something. And they were like, well, we thought retail betting would help us. And it's just like, who's going to go to an off-track betting parlor to watch sports betting? I don't know. So they need to do something to fix this industry. And so they feel the need to pass these bills to kind of keep propping them up, as opposed to letting them go out of business. So I think that is part of it.

I think some of it is also that that revenue stays in the state versus online casinos. The argument is that draft kings and fandols just hoover up all this money and don't really put it back into the economy. We're running low on time. So I just have to add one last bit of this because at one point a representative, MGM gets up there to oppose this bill.

with plenty of justification, by the way. And she's just like, hi, these are basically slot machines, and they're talking about that if they can do this, they're going to build a hotel and restaurant. So essentially, they're going to replicate our entire schtick. And.

Jessica Welman (20:22.688)
The nerve of this one lawmaker was like, you know, we were talking about Candy Crush earlier, and if you're claiming these HHR machines or slot machines and VLTs, well, Candy Crush has lights and pictures and noises and lines and scoring. Does that mean it's a VLT or a slot machine? Like, acting...

to gaslight this poor MGM woman like she's insane when she's making just an incredibly valid obvious point which is bonkers to me and I think you know I just want to leave the question do we have a government affairs problem when it comes to online gaming that

You know, very obvious issues with this bill are getting completely, like, just denied. Complete denial about it, yet every little thing about an online gaming bill gets nitpicked. Sorry, are you... End rant. Tom, closing thoughts from you.

Tom Nightingale (21:16.526)
Yeah.

Tom Nightingale (21:21.198)
mean, it's certainly difficult, it? I mean, it's similar to the conversation we were having around Hawaii sports betting. There is definitely a difficulty in getting lawmakers to, I would say, to speak the language of gaming or perhaps getting...

advocates or witnesses from the gaming industry to speak a language that lawmakers will not necessarily understand but be open to hearing to be honest in a lot of respects so it's another good example of the trials and tribulations of having these kind of legal discussions around gaming expansion or prohibition.

Jessica Welman (21:52.876)
Yeah, there's a reason these bills take five or six tries to pass and that's because there's just a very steep learning curve. All right, thank you guys for humoring my rant and listening to Tom be actually informative and intelligent. We've got the latest news on all legislative happenings on SBC Americas and any further developments on this tariff story on Canadian gaming business. Thank you for tuning in and join us tomorrow for another episode of iGaming Daily.

Tom Nightingale (21:56.622)
Hmm.