Up until now, Australia’s online gambling market was considered a gray zone. There was no specific law that that prevented or allowed Australians to gamble online and, as such, a thriving industry grew between offshore igambling operators and Oz gamblers. To operators, Australia is known by far to be their most lucrative gaming market. A report released this year by H2 Gambling Capital (H2G) showed that betting losses per resident adult in Australia amounted to just under $1,000 last year – 40% higher than Singapore who was next on the list. It is easy to understand then, why online gambling operators are keen to hang on to this lucrative market as long as possible. But changes are looming on the Australian legislative front, and already the country is starting to feel the effects. Big names in the industry, including the Isle of Man based online casino software provider, Microgaming, have announced their attentions to leave the market if the new bill passes, for fear of prosecution by the new laws being written up by the federal government Down Under.
Past Online Gambling Laws in Australia
When online gambling hit the scene in the mid-90’s, the Australian government was one of the first in the world to introduce some type of regulatory framework to address the issue. With their love of gambling, Australians quickly discovered online gaming and sports betting, and the government presented the country with the Interactive Gambling Act of 2001. Although a lot of work went into this piece of legislation, there were many factors missing that made it difficult to understand what constituted legal and illegal online gambling, and how the laws should be implemented. The Interactive Gambling Act only specifically legalized online lotteries and sports betting. Its one fatal error, though – from the government’s perspective of course – was that it did not specifically prohibit other kinds of online gambling such as online poker, online slots and online table games.
The global online gambling industry grew to incredible proportions, and today it is worth literally billions. Big name operators such as Microgaming have flocked to the shores of Australia, offering their games and services to local players, and inviting them through their virtual doors with offers of bonuses, promotions and other rewards. These companies took advantage of the fuzziness of the 2001 legislation and entered the market through loopholes that the government did not have the legal power to close.
Review of Existing Australian Gambling Laws
Over the last decade, more and more interest groups began calling for a review of existing Australian gambling laws. In 2015, the former Minister for Social Services, the Hon. Scott Morrison announced that a review with be undertaken to investigate ways to strengthen existing enforcement to ensure that Australian online gamblers were protected from what the government termed illegal gambling operators. Morrison said that the review would be completed by December 2015.
At the time of the review being conducted, statistics showed that 60% of the $1.6 billion online gambling revenue that was generated by the country went offshore to around 2,000 sites. The government, including the tax authorities, had no control over these sites. The review found that these offshore operators were under no obligation to monitor or report suspicious betting activity, nor did they have to comply with Australia’s laws. It should be noted at this point that many online gambling sites that served the Australian public were licensed in other jurisdictions such the United Kingdom and they took great care to ensure that their platforms were safe, transparent and secure. Australian gamblers knew that if they played at sites that were powered by big brands such as Microgaming, they could rest assured that they were not risking their money. Nevertheless, the government felt the need to protect their players from the few rogue sites that threatened local players and lumped all offshore sites under one umbrella.
Multiple stakeholders were consulted with during the review and the public was also given the opportunity to give their views on the subject. Many aspects were studied such as the economic impact of illegal offshore wagering, options – both technological and legislative – to alleviate the costs of illegal offshore betting, and effective and proven ways to protect the gambling consumer. Last year, the government published the final report of the Review of Illegal Offshore Wagering.
The Pull of Offshore Gambling Sites
At this point, we should look at why Australians preferred to wager at offshore casino and sports betting sites instead of sites that were licensed by the government. International bookmakers, because they were not obligated to pay high taxes and licensing fees to the Australian government, were able to offer low margins (and higher odds) to their customers. Locally licensed sites had to cover their overheads and thus were not able to compete with these odds. It was no wonder then that customers preferred wagering offshore – they simply got more for their money. Offshore sites also managed to attract Australian players through lucrative promotions and better deals.
Controversial Click to Call Option Brings Matter to a Head
What brought the matter of changes to legislation to a head was the controversial click to call option adopted by offshore bookmakers as a way to get around in-play betting. Licensed gambling companies pressured the government to allow live in play betting online, since bets on an event in-play could only be made over the phone or in person. In the meantime, offshore bookmakers found a loophole in the law by offering click-to-call services by using internet calls that did not connect. The pressure was on the government to close these loopholes as fast as possible. It could be said that the click to call saga brought the authorities to the point where they felt that they had to act.
In April last year, the Turnball government announced that live online betting during sports would remain illegal and loopholes would be closed. Human Services Minister Alan Tudge released the review of illegal offshore gambling and was quoted as saying: “We are of the view that they [offshore gambling sites] have been in breach of the intent of the law, if not the actual law. We do not intend to further expand the online betting market.”
Tudge promised to introduce laws as soon as possible to close the loopholes, however the Federal Parliament was dissolved shortly afterwards, with little chance that laws would be changed before the next election.
Interactive Gambling Amendment Bill Introduced
In November 2016, Minister Alan Tudge presented the Interactive Gambling Amendment Bill, known as the IGA Bill 2016. The bill intends to amend the existing online gambling laws, whereby it would be prohibited to supply unlicensed online gambling services to Australian players. It would also be illegal to promote offshore gambling services. International operators would need to obtain a license from local regulators to operate in Australia.
Tudge said when presenting the bill: “Currently hundreds of illegal gambling services are easily accessible on the internet and we know that people are more likely to get into trouble online – 2.7% of interactive gamblers are problem gamblers compared to 0.9% of all gamblers.”
“We expect online wagering providers to meet community expectations. The tougher laws will seriously disrupt illegal offshore providers from acting unscrupulously or targeting vulnerable Australians.”
“The government is committed to taking tougher action against illegal offshore wagering providers and this bill does exactly that.”
IGA Amendment Bill in a Nutshell
- Clarification of illegal offshore gambling and what it constitutes.
- Greater powers to the Australian Communications and Media Authority (ACMA) to ensure provisions. The ACMA will work within a stricter civil penalty regime, and the bill gives them the power to issue formal warnings and infringement notices, seek injunctions and more. The ACMA will also be allowed to conduct investigations in relation to complaints about illegal advertising and/or the provision of prohibited interactive gambling services.
- A distinction is made between regulated online gambling services and prohibited interactive gambling services. No entity is allowed to provide Australians with prohibited interactive gambling services. On the other hand, regulated interactive gambling services may be provided by licensed Australian operators.
- Those who provide prohibited interactive gambling services to Australians are liable for a civil penalty and criminal offense.
- The penalty for a corporate entity contravening the law is $4.5 million for a criminal offense and $6.75 million for a civil offense PER DAY of the contravention.
- In short, the new bill confirms that it is prohibited to supply online gambling services to Australians without a license under the laws of a state or territory.
How Will New Bill Affect Companies such as Microgaming?
Top tier online casino operators enjoyed a lucrative Australian gambling market and will do all they can to maintain their foot in this market. The question that remains to be asked is whether it will be worth these companies’ while to remain in Australia. Given the high taxation and licensing fees that the bill proposes, many companies will decide that it is not financially viable to set up shop in Australia. What is the alternative then, for companies that want to stay in the market but can’t afford to do so? They could continue offering their services as they have until now, of course, but that would mean that, officially, they are operating illegally under Australia’s new laws. The companies with a brand name to protect, meaning those companies who have a strict policy of avoiding ‘black markets’ at all costs, such as Microgaming, will have no choice but to leave the Australian market.
And this is where the problem with the new law lies. While good, solid and respectable brands will leave the Australian shores, other, more dubious sites will hang around and continue to attract local players. These companies have no reputation to protect and more than likely have questionable ownership, unprotected play payment policies and dubious operations. These operators are well aware of the potential to be found in Australia’s market and, with less competition, will be able to attract Australian players with no problem. In other words, the law may achieve exactly the opposite to what it hoped to – more players could be exposed to rogue online gambling sites than ever before.
The IGA Amendment Bill, in short, prohibits the provision of gambling services by offshore betting operators to people in Australia. It clarifies that it is illegal to under the new law to provide their services to those in Australia. A ‘name and shame’ policy will be followed by the CMA should the company contravene the new law. If companies contravene the laws, the authorities will take a tough stance to serve the appropriate penalties within their power.
It’s Not Over ‘Til it’s Over
While there is growing support for the Interactive Gambling Amendment Bill, and many believe that it could eventually be signed into law, there is also growing pressure to stop it in its tracks. Online gambling proponents, especially online poker players, are getting more organized about their opposition to the bill, such as the creation of the Australian Online Poker Alliance to help the local poker community in its efforts. In February 2017, online gamblers were granted a slight reprieve from the upcoming implementation of the law. Senator David Leyonhjelm of the Liberal Democratic Party introduced a secondary amendment that could keep online poker and blackjack out of the bill. Some groups such as the iconic online poker room, PokerStars as well as Microgaming, have taken a wait-and-see approach to the situation and will only leave the Australian gambling market once the legislation has been officially passed. PokerStars has already announced that it intends to block Australian players if the country passes the amendment bill. Others, however, such as 888Poker, have already left the market, too nervous to risk their own reputations. These casino operators look to other global examples such as the prosecution of companies serving the US market after the passing of the Unlawful Internet Gambling Enforcement Act in 2006, and want to avoid the same fate for themselves.