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.

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