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Aussie Government to Ban Online Gambling

[Sydney, AUSTRALIA] The Federal Government has announced it will introduce legislation to prohibit online gambling service providers nationwide from delivering their services to Australians, following a moratorium on new services that has been in place since last May.

The ban will apply to gaming and wagering services such as poker machines, casino games, sports betting and lotteries that are delivered over the Internet or through interactive TV or mobile phone technologies, said Minister for Communications, Information Technology and the Arts, Senator Richard Alston.

The regime will not apply to older forms of interactive gambling such as telephone betting, or non-commercial, often social activities such as office footy tipping and Melbourne Cup competitions, even when they are conducted over the Internet.

The ban will extend to Australian gambling services providers only as far as restricting services to Australians, permitting these operators to continue providing their services to an overseas audience. "While it is a matter for other countries to decide on how they will approach online gambling, Australia's status as one of the world9s leading problem gambling nations demands that we take decisive action to protect the most vulnerable in our community," said Alston in defence of the Government9s stance.

The proposed ban has met with protests both from within the gambling industry and from Internet groups such as the Internet Industry Association. While the ban is designed to reduce problem gambling according to the Federal Government, its implications will be far more broad, said John Mortimore, general manager of Tattersalls online operation tatts.com.

"A lot of the people who buy our lottery tickets online are in rural or remote areas or are physically disabled," he said. "They need something beyond a physical retail outlet, and will have to go from self-reliance to relying on others, which can impact on their feeling of independence."

"Lots of now former customers are very upset about both the gambling moratorium and the proposed ban, and have added their names to a petition at our site, and I think some will be voicing their protests more openly. I just hope the Government will listen to the pleas of these customers."

In enforcing the proposed ban, Alston said the government will not completely look to ISPs to filter or block prohibited gambling sites. The Government displayed such reliance on ISPs last year in its crusade against offensive content on the Internet, in a move that sparked controversy among ISPs and the Internet industry.

Instead, Alston said the anti-gambling legislation would place the onus on gambling providers themselves to determine whether a user is based in Australia, and if they are, to prevent them from accessing the site.

In the case of offshore gambling sites, though, Alston said the Government is going to lean on ISPs for assistance. "The Government will apply a similar regime to the online content regime whereby ISPs whereby ISPs are required to inform and make available to their customers relevant user-based filters," said Alston.

"While this aspect of the regime will be complaints-based as is the case with online content, it will be administered proactively through the early identification of the finite number of overseas gambling sites which will then be passed on to filter manufacturers," he insisted.

The Government's action against Internet gambling follows the recent release of a report by the National Office for the Information Economy (NOIE) into the feasibility and consequences of banning interactive gambling. This investigation in turn came about from the Government9s moratorium on new Australian interactive gambling services, which took effect from last May(see story).

The NOIE report found that the Government faced no legal impediments to banning interactive gambling, and that around 70 percent of Australians believed gambling has done more harm than good, especially in light of the growing number of electronic gaming machines (or poker machines) in Australia's pubs and clubs.

The Government is acting in line with this observation by NOIE, as well as its findings that the Government is entitled to ban gambling and will be operating under its promise to protect consumers by doing so, according to Alston. While NOIE also agreed that content filtering was one of the technical methods through which the Government could ban interactive gambling services based overseas, it listed other options depending on the type of service and its country of origin. For local services, for instance, NOIE listed other options such as packet filtering, router filtering and detection-response filtering, while services delivered via digital broadcasting or mobile telephony 3would require legislative change only2.

NOIE's report maintained though that all of these technical methods "can potentially degrade general Internet performance". Alston disagreed with this finding, saying that the regime "will not result in any reduction in Internet performance" and adding that even so, the Coalition's greater responsibility is to guard against gambling's social impact.

Interestingly in terms of the possible success of the ban, the NOIE report warned in its list of technical methods for banning interactive gambling that "none would be 100 percent effective in preventing Australians' access to interactive gambling services; and implementation would take at least six to 12 months and would require consultation with the gambling industry, telecommunications carriers and ISPs."

As well as a possible battle from ISPs who may not be keen to be responsible for filtering or blocking content, the Federal Government has seven other potential foes in its mission to ban online gambling: Australia's state and territory governments, many of which have instituted their own programs of regulation to keep domestic online gambling services in check.

The Northern Territory has been among the forefront of this action, developing a regulatory framework that includes requiring gambling sites to provide assistance to a generally defined "problem gambler", enforce dollar limits, check the age of gamblers, and restrict access from constant gamblers. The Territory Government also restricts two of its biggest operators, Lasseters Online and Centrebet, from accepting money bets from users in their immediate region.

The NSW Government also supports online gaming services in a similar way, including sports betting site SportOdds.

tatts.com9s John Mortimore observed the paradox in the ban and its relationship to the state-based regulatory schemes. "We recently had people from the National Gaming Board in South Africa visit us, and after looking at Victoria's regulatory system they have gone back and are drafting a similar model for South Africa's national approach, with a view to then offering licenses," he said.

"In Europe, various nations are looking at regulation that follows Australia9s state-based regulations," he added. "The UK has approved the sale of lottery tickets online through UK Government-licensed provider Camelot. The French Government is doing the same thing, Austria has already started this, and the Dutch Government is looking at this in a few months."

"The irony is that Australia9s state-based regulatory frameworks for online gambling are good enough for the countries we claim to have ties with, and it9s not good enough for this country," said Mortimore.

The NOIE report predicted that an online gambling ban "may have modest or small economic benefits for Australia in terms of restricting access to a harmful activity, and possible aggregate benefits for State and Territory Taxation revenue," but added that more analysis into this impact of the ban was necessary. At the moment, States and Territory Governments that have regulatory models in place for interactive gambling also collect taxes from these operations, and the possible loss of this source of income has fanned the flame of their ire over talks of bans.

Law firm Minter Ellison expressed concern regarding the economic implications of an online gambling ban last year (see story), in terms of the possibility of lost revenue through taxation. "If Australians are forced to gamble offshore, the money they spend is lost to another economy," said technology and communications lawyer Robert Neely. It is this outgoing stream of money that the proposed ban aims to stop.

"With a controlled industry, at least that money can be taxed and operators can be forced to plough some of it back to assist problem gamblers," Neely suggested as an alternative to an outright ban. "A total prohibition may be attractive politically - in that it demonstrates a strong stand against the social evils associated with problem gambling - but it is likely to cause more harm than good."

Aware of the kind of disregard some states and territories have previously displayed for the Federal Government9s stand on online gambling, Alston said, "given that the Internet has the potential to make every home a virtual casino, it is disappointing that the States and Territories have been so dilatory in introducing a consumer protection and harm minimisation regime for online gambling."

Alston also called upon Federal Opposition Leader Kim Beazley, as well as Queensland Premier Peter Beattie and Victorian Premier Steve Bracks, to support the proposed legislation on the back of such "consumer protection" action.