Navigation: Previous Page | Contents | Next Page
Introduction and background
Part 1 is an introduction and background to the issues covered in later chapters which focus on the Australian environment. It sets the context for online gambling, the growth experienced in the industry, the attractions, the risks, and the available research on the prevalence and problem gambling rates. It introduces the key advantages and disadvantages of prohibition and it details various regulatory models used in overseas jurisdictions.
Online gambling and problem gambling research
This chapter sets the context for online gambling, the size and growth
of the industry, the attractions, the risks, and the available research on the
prevalence and problem gambling rates as well as player profiles and play
patterns. A common theme in submissions was the lack of research and data in
this area and the need for more targeted research.
Global interactive gambling market
Online gambling represents one of the fastest growing segments of the
gambling industry. H2 Gambling Capital has reported that the market for global
interactive gaming will grow around 42 per cent to US$30 billion in 2012 from
US$21.2 billion in 2008: 'This is significantly faster than the 15 per cent
growth that H2 forecasts for the gambling industry as a whole over the same
Dr Sally Gainsbury and Professor Alex Blaszczynski noted that underlying growth
is strong at around 12 per cent
and that this growth is driven by a number of factors including:
- the increased availability of cheaper and faster broadband
increasing liberalisation of internet gambling regulations;
- marketing and promotions by providers, notably sports betting;
- innovative product offerings and player enticements including bonuses,
live betting and mobile applications.
In June 2011, there were approximately 2,443 online casino and gambling
sites and around 92 per cent of these were available to Australians.
In September 2011, 75 jurisdictions offered online gambling and 50 of
those had sites that support English and accepted play from Australia.
The top ten providers are: Malta (506 sites); Netherlands Antillies (332); Gibraltar
(261); Costa Rica (190); Kahnawake (Quebec) (146); UK (107); Alderney (96); Antigua
and Barbuda (67); Cyprus (58); and the Isle of Man (41). The US is ranked at number
11 with 22 sites and Australia at number 15 with eight sites. Australian
jurisdictions are listed separately: the Northern Territory is ranked at 14
with 11 sites; Victoria has six sites; New South Wales has three sites and Western
Australia, the Australian Capital Territory and Tasmania each have two sites.
Australian expenditure on gambling
In 2008-09, electronic gaming machines (EGMs) in clubs and hotels
accounted for $10.5 billion or 55 per cent of gambling expenditure. Casino
gaming accounted for $3.5 billion or 18 per cent,
lotteries, pools and keno were $2.3 billion or 12 per cent and wagering was
$2.8 billion or 15 per cent. Of the $2.8 billion spent on wagering, $2.6 billion
or 14 per cent was spent on racing and $0.2 billion or one per cent was
spent on sports betting.
In the 'unofficial' sector, the Productivity Commission (PC) reported that
expenditure could constitute around four per cent of gambling expenditure with
$790 million spent consisting of $541 million on online casinos and $249
million on online poker. The PC noted the difficulty of capturing online data
for the 'unofficial' sector 'since these activities are illegal and therefore
not captured by the tax system'.
Online gambling prevalence rates
Dr Gainsbury and Professor Blaszczynski noted that 'the empirical data
supports claims that a growing minority of Australians gamble online'.
However, the exact numbers for internet gambling participation are difficult to
determine as there is no national measure. Looking at rates overseas from a presentation
by Dr Gainsbury in 2010, she noted prevalence rates vary from 0 to 11 per cent
depending on the jurisdiction:
- UK – 10.5 per cent;
- Norway – 6.5 per cent;
- US – 4 per cent;
- Canada – 1.6–3.6 per cent;
- Australia – 1–4 per cent;
- New Zealand – 1.3 per cent; and
- Singapore – 1 per cent.
However, Dr Gainsbury cautioned that:
Prevalence rates gathered internationally have limited
validity in Australia due to the differences in Internet gambling policy and
culture. Research from jurisdictions similar to Australia, such as Canada and
New Zealand are useful, but direct replication in Australia would facilitate an
accurate comparison and jurisdiction-specific details. Furthermore, industry
estimates may be biased as these are generally based on a limited source of
data given the large number of and diversity of available sites, which limits
the reliability of this information.
In 2010, the PC estimated that between one and four per cent of
Australians participate in interactive gambling
suggesting that internet gambling is relatively limited in the general
population. However, a Roy Morgan poll conducted in 2010 found 30 per cent of
individuals aged 16 and over were gambling online.
Internet gambling rates appear to be higher in samples of gamblers such as
those who bet on sport:
...for example, 8% of individuals who bet on sports or races
usually use the Internet for this purpose compared to 1.8% of the general
Dr Gainsbury and Professor Blaszczynski pointed out that the variance in
figures reflects the difficulty of obtaining precise estimates on the
prevalence of online gambling, as offshore companies operate the majority of
online gambling sites:
In contrast to authorised sports betting and wagering online
services and Australian terrestrial (land-based) operators, internationally
based operators do not provide accurate data or report on levels of interactive
As a comparison, the recent British Gambling Prevalence Survey 2010, the
third such national survey, found that:
- 14 per cent of adults used the internet to gamble in the past
year. This included purchasing lottery tickets online, betting online, playing casino
games, bingo or other slot machines style games and playing the football pools
- in 2010, seven per cent of adults participated in online
gambling, an increase from six per cent in 2007. The increase was greater for
- 17 per cent of gamblers had gambled both online and in person and
only two per cent of gamblers in the past year had gambled online only; and
- the two activities which stood out as having a high proportion of
online activity were casino games and betting on other sporting events. Among
those who had played casino games in the past year, 39 per cent had done so
online and 27 per cent of those who bet on sport reported that they had placed
their bet online.
Dr Gainsbury pointed out that some high quality research has been conducted
within some states, which is informative, but 'the extent to which these can be
generalised to the entire population of Australia is limited given regional
Nationally representative research conducted by Roy Morgan
(2010) found that 2.6% of Australians who purchase lottery tickets usually
purchase these online. Subsequent analysis reveals that a higher proportion of
Tasmanians (4.1%) and Victorians (5.1%) usually purchase lottery tickets online
compared to individuals in New South Wales (1.5%) and Western Australia (0.5%).
While exact prevalence rates for online gambling in Australia and
elsewhere may be difficult to determine with precision, evidence to the
committee indicated that the rates are going through a period of growth. Despite
online gambling currently being less popular than other modes of gambling, these
high rates of growth combined with increased advertising, particularly for
sports betting, are likely to mean that online gambling will have an increasing
effect in society. The committee agrees that nationally representative research
is required to accurately present the prevalence rates and risks of online
gambling in Australia. The need for research is further discussed below. While
acknowledging the difficulties of measuring online problem gambling and the
lack of definitive research in the area, major findings to date are informative
and indicative and are outlined below.
Online gambling research findings
A report prepared for the Ontario Problem Gambling Research Centre in
2009 acknowledged the ambiguities and gaps in the knowledge about online
gambling, including the characteristics of gamblers, the dynamics of internet
gambling behaviour and the potential link between internet gambling and problem
gambling. In an attempt to address these deficiencies, the report presented the
results from two surveys. The first was a random digit dial telephone survey of
8,498 Canadian adults conducted from January 2006 to June 2007. The second was
an online self-administered survey of 12,521 adults from 105 countries
conducted from June to December 2007. The key findings are summarised below.
The major findings regarding the demographic profile of international
internet gamblers were:
- they are predominantly male (78 per cent);
- the prevalence of internet gambling appears to vary significantly
between countries/regions with higher rates in European countries and the
Caribbean and lower rates in North America, Asia, Australia and New Zealand;
- marital and employment status tends to reflect the distributions
found in the general adult population;
- most are of European ancestry (80 per cent);
- all age groups are represented and there is no age group that is
overrepresented. The average age is 45.7. Nonetheless younger age was still a
significant predictor of internet gambling;
- they have high past month rates of substance use (44.3 per cent
for tobacco and 11.7 per cent for illicit drugs);
the average household income is US$60,100 and average household
debt is US$76,728;
- on average they are slightly better educated than most people
with 41.2 per cent having completed college or university; and
their reporting of physical disabilities and/or chronic health problems
(14.9 per cent) and mental health problems (10.3 per cent) was not
significantly different from non-internet gamblers.
An Australian Communications and Media Authority (ACMA) research report
noted that using the internet for gambling is more popular among men as the figure
Differences between internet applications by gender, February 2008
This information was sourced from Nielsen
Online's The Australian Internet and
Technology Report 2007-2008, a telephone and online survey of a random sample
of Australian internet users aged over 16 years. sample=1,356, Multiple
responses. Note: Excludes ‘Anything else’ and ‘None of the above’. Chart
displays activities with points of difference more than 5 per cent of use
between male and female users.
Internet gambling was also found to be one of the top ten activities
conducted online by all age groups as shown in the table below:
Table 2.1: The top ten activities
performed online by age group, February 2008
News, sports or
forms or information to government websites
News, sports or
News, sports or
forms or information to government websites
News, sports or
forms or information to government websites
Source: Nielsen Online (2008) The Australian Internet and Technology Report,
February, 16+ years old, sample=1,356, Multiple responses. Note: Excludes
‘Anything else’ and ‘None of the above’.
Anglicare Tasmania noted that Tasmania's first Social and Economic
Impact Study looked at internet gambling in 2008. While the sample size was
small, it found that internet gamblers were more likely to be male, younger
than 29 years old and on a higher income (above $70,000). It also found that
young people earning between $20,000 and $50,000 were most likely to place
Dr Gainsbury and Professor Blaszczynski advised that research is
currently underway to examine the characteristics of internet gamblers in
Australia. Launched in December 2010, an online survey was available until
August 2011. Over 4,000 responses have been received to date. Preliminary
research on the first 1,697 responses indicates the most popular forms of
internet gambling are horse/dog race wagering, sports betting and poker. The
majority of internet gambling is conducted by computer (76 per cent) with
mobile phones accounting for only four per cent. However, mobile gambling
accounted for seven per cent of internet sports betting. The researchers found
that internet gamblers are more likely to be male and involved in multiple
forms of gambling. Overall monthly expenditure was significantly higher for online
gamblers than non-internet gamblers. Importantly, the research indicates that
internet gamblers 'did not appear to be more involved in electronic gaming
machines (EGMs), indicating that EGM play may appeal to a different type of
Mr Andrew Twaits, Chief Executive Officer, Betfair, told the committee
that his agency had seen a shift in the younger customer demographic from
betting on racing to betting on sports.
Mr Cormac Barry, Chief Executive Officer, Sportsbet described his
company's average customer as 'male, 25 to 40, middle class and holding a
credit card'. He also noted that online and electronic gaming machine gamblers are
a 'different social demographic'.
Committee majority view
The committee majority notes that evidence suggests a different
demographic between poker machine players and those who gamble online. This has
important implications for the argument often used by the industry that the
introduction of mandatory pre-commitment will force EGM players to gamble
Motivations and concerns
The report prepared for the Ontario Problem Gambling Research Centre in
2009 found that international internet gamblers overwhelmingly identified the
24 hour availability and convenience of internet gambling to be its main
advantage. Other motivations included: a better game experience; being more
physically comfortable; lack of crowds; anonymity; better payout rates; less
smoke; being able to smoke; and that certain forms of gambling, e.g. betting
against other people rather than the house, are more conducive to an online
Research conducted by Jessica McBride and Dr Jeffrey Derevensky found
that the most popular reasons provided for gambling online were: convenience
(93.3%), not having to leave the house to play (86.1%) and 24 hour
accessibility (89.1%). Other reasons included bonuses (65.1%), high-speed play
(62.6%) and privacy (61.8%).
The Responsible Gambling Advocacy Centre offered a number of factors
that attract people to gamble online including: the ease of access, websites
and the convergence of technology and higher speeds of web access. Others like
that it is anonymous and private.
Preliminary research conducted by Dr Gainsbury and Professor Blaszczynski
on the characteristics of internet gamblers in Australia found that internet
gambling was used for:
...convenience, comfort, to gamble in private without other
unpleasant people and because online site[s] offered better payout rates and
The report prepared for the Ontario Problem Gambling Research Centre also
asked about the disadvantages of online gambling. The international internet
gamblers identified: difficulty verifying fairness of games; worry about
monetary deposits being safe; lack of face-to-face contact; tendency to spend
more money; too convenient; illegality; poorer social atmosphere; too
isolating; and poor game experience.
The report prepared for the Ontario Problem Gambling Research Centre
found that virtually all internet gamblers also gamble on several land-based
gambling formats with 4.1 being the average number of total gaming formats for
the international sample. It also found that:
- engage in all types of gambling more frequently than their
land-based counterparts as well as having higher average gambling expenditures
($195.09) relative to non-internet gamblers ($19.26). It therefore appears that
internet gambling is primarily used as an additional form of gambling for
people already heavily involved in gambling;
- poker is the most popular online form of gambling. 64.0 per cent
play skills games (mostly poker); 26.4 per cent gamble at online casinos; 23.2
per cent bet on sports; 12.7 per cent bet on horse or dog racing; 11.1 per cent
play lotteries; and 7.4 per cent play online bingo;
- certain types of online gambling are preferred by one gender over
another. Sports betting, horse/dog race betting and games of skill are
overwhelmingly preferred by males, whereas online bingo is preferred by
- the internet is preferred for sports betting, poker and horse and
dog race betting;
93–94 per cent use their home computers;
- the large majority reported that the fact they are using a credit
card or electronic bank transfer rather than cash has no effect on their
- 4–11 per cent report that internet gambling has disrupted either
their sleeping or eating habits;
- 14 per cent report using alcohol often or always while gambling
and 3.6 per cent report using illicit drugs often or always while gambling.
Harms associated with online gambling
The Royal Australian and New Zealand College of Psychiatrists (RANZCP) noted
that problem/pathological gambling is highly comorbid with other diagnoses such
as depression, hazardous alcohol use and smoking as well as personality
disorders. It added that there is a clear link between problem/pathological
gambling and mental health problems, such as depression or anxiety,
particularly among vulnerable populations.
A study of internet gambling behaviour conducted by Jessica McBride and Dr
Jeffrey Derevensky raised concern about the lack of protection for vulnerable
players online such as those under the influence of alcohol or drugs. They
Forty-five percent of respondents reported consuming alcohol
while gambling online, 33.2% reported using tobacco, 8.8% reported using
marijuana or hashish, and 3.8% reported using other illicit drugs (eg.
cocaine). Problem gamblers were significantly more likely than social gamblers
to use alcohol.
Relationships Australia told the committee that the negative
consequences of problem gambling are the same as for other forms of gambling
but have the potential to be greater:
Relationships Australia’s experience in working with online
gamblers indicates that the negative outcomes of excessive gambling are the
same for online gamblers as for gamblers who attend a venue: there can be major
financial losses, negative impacts on intimate and family relationships,
friendships, employment and health, including mental health. The ease of access
to online gambling and its 24-hour-a-day, at work, in a
café and at home availability could even exacerbate these negative outcomes as
gamblers are in a position to lose more money faster with the use of credit
cards. The wide availability of gambling opportunities can add to the fantasy
element of gambling, the belief that the person will win. Regular gambling may
lead to problem gambling for a significant proportion of people, and the wide
accessibility of gambling opportunities contributes to the development of
Additionally, access to gambling via mobile devices has the
potential to keep gambling habits more secretive, thus not giving partners and
friends the opportunity to help in resisting opportunities.
Online problem gambling rates
The report for the Ontario Problem Gambling Research Centre found that
the prevalence of problem gambling is three to four times higher for internet
gamblers compared to non-internet gamblers. Among the international sample,
16.6 per cent were either moderate or severe problem gamblers, whereas the
rate for land-based gamblers was 5.7 per cent. It also found:
- several variables that statistically predict whether someone is an
internet problem gambler in order of importance are: gambling on a greater
number of gambling formats; a higher gambling expenditure (internet problem
gamblers accounted for 27 per cent of all reported losses for the international
data set); having mental health problems; having a family history of problem
gambling; being of Asian ancestry; being single; a lower household income;
having a greater number of gambling fallacies; country/region; having more
negative attitudes toward gambling; and having a history of other addictions;
- only around half of internet problem gamblers report there is a
specific type of gambling that contributed to their problems more than others.
For the international sample these were slot machines (23.8 per cent); poker
(21.7 per cent); and internet gambling (11.3 per cent). So it would seem that
while internet gambling is an important contributing factor to gambling
problems for a portion of gamblers it does not appear to be the main cause of
problem gambling for most of them. This is consistent with the finding that
internet gamblers are heavy gamblers to start with who have simply added internet
gambling to their repertoire.
The study conducted by Jessica McBride and Dr Jeffrey Derevensky found
rates of problem gambling consistent with Wood and Williams' research and the
findings 'imply the rate of problem gambling among Internet gamblers may be
higher than the rate among the general population'. The study found that,
compared with social gamblers, problem gamblers:
spend more time gambling per session, are more likely to
gamble alone, from school, or with a cell phone, gamble with more money, and
lose more money gambling online. Problem gamblers are significantly more likely
than social gamblers to choose to gamble on the Internet because it is easier
to hide their gambling from others. This result makes it particularly important
that online sites have measures in place to help those with gambling problems.
Problem gamblers are also more likely to wager online while consuming alcohol
or illicit drugs.
In the UK, in 2005, the Gambling Act 2005 (the Act) came into
effect which covers all forms of gambling in the UK including online gambling.
Comparing the findings from the 2007 and 2010 British Gambling Prevalence
Survey, problem gambling prevalence rates were as follows:
problem gambling prevalence in 2010 was 0.9 per cent or 451,000 adults, up from
0.6 per cent in 2007. However, the report cautions that this increase is at the
margins of statistical significance;
- problem gambling prevalence rates as measured by the Problem
Gambling Severity Index did not increase significantly between 2007 and 2010;
- problem gambling prevalence was highest among those who played
poker at a pub/club (12.8%), followed by those who had played online slot
machines style games (9.1%) and fixed odds betting terminals (8.8%). Online
gaming activities were broken down as follows: any online betting
(3.0%), any other online gambling
(3.0%) and any online gambling (excluding the National Lottery (5.3%). The
survey found that on average problem gamblers participated in over six forms of
these problem gambling prevalence rates were similar to other
European countries such as Germany, Norway and Switzerland but lower than rates
in Australia, the US and South Africa.
Dr Gainsbury and Professor Blaszczynski noted that there does appear to
be some association between problem gambling and internet gambling.
However, they noted that it is unclear whether 'problem gamblers gamble online
and exacerbate existing problems, or whether particular factors of Internet gambling,
including availability, convenience, use of credit, and speed of play, lead to gambling
problems'. They concluded it is highly likely that 'both are contributing
factors and that the association between interactive gambling and problem
gambling is multifaceted'.
This view was echoed by Dr Jeffrey Derevensky:
What we do know, if one looks at the studies that have been
done on internet wagering, is that there seems to be a disproportionately high
number of problem gamblers who are gambling on the internet or gambling via the
internet. But the real question is—and we do not know the answer to this
question yet— does internet gambling result in more problem gamblers or do
problem gamblers just use the internet as one more vehicle with easy
accessibility in order to gamble?
As with prevalence rates, reliable national data on online problem
gambling rates are not available. To illustrate this difficulty, a report prepared
for the Department of Families, Housing, Community Services and Indigenous
Affairs (FaHCSIA) in 2009 by the Allen Consulting Group reviewed jurisdictional
information available; however, the majority of the surveys the findings were
based on were not recent and most did not provide an estimate of problem
The 2010 study, An Exploratory Investigation of Online Gambling
Amongst University Students in Tasmania, found 10.8 per cent had a gambling
problem and 15.5 per cent were at moderate risk of developing a gambling
However, the extent to which such findings can be generalised nationally is questionable.
Recent preliminary research conducted by Dr Gainsbury and Professor
Blaszczynski on the characteristics of internet gamblers in Australia found
significant differences in rates of problem gambling
between internet and non-internet gamblers:
...with non-Internet gamblers being more likely to report no
problems (41% vs. 26%). However, differences in problem gambling were not as
significant as found in previous national and international research and this
will be investigated further in the final results. Over one-fifth (21%) of Internet
gamblers reported having gambling problems, and of these, approximately
one-third attributed these primarily to Internet gambling. The remaining
two-thirds of Internet gamblers reported other forms of gambling as their
primary problem and stated that they had existing problems before they gambled
online. This indicates that Internet gambling may cause problems for some
individuals, while also exacerbating and maintaining existing problems for
problem gamblers. Finally, 18% of Internet gamblers reported that using
electronic payment caused them to increase their gambling expenditure.
The Tasmanian Government reported that advice from the Tasmanian
Gamblers Help support services indicates only a small presentation of clients
whose problem gambling originated from online gambling. However, clients are
increasingly citing online gambling as part of their gambling activities.
Gambling counsellors are concerned that:
- people at risk are 'hidden' because of the nature of the product
with in-home/discreet access; and
- compared to venue-based gambling, it is much more difficult to
provide help, information or identify and intervene with support options for
The Tasmanian Government noted that online gambling could become the
next growth area for problem gambling:
While the available research into online gambling prevalence
rates is limited and the data is weak, it nevertheless suggests that gamblers
who play online have relatively higher rates of problem gambling than other
forms of gambling with the possible exception of EGMs. Further, those engaged
in online gambling may often do so in addition to frequent and regular use of
land-based venues; utilising online services when other gambling services are
unavailable, thus circumventing regulatory approaches already in place.
This view was supported by evidence in the community that numbers of men
in their late teens to early 20s with online gambling problems is increasing.
Major Brad Halse from the Victorian InterChurch Gambling Taskforce
reported that the numbers of people seeking help for gambling addictions due to
online gambling are small, but the Taskforce is concerned about the impact of
online gambling over the next 10 years if it continues to grow.
However, some organisations claimed 'there is no evidence to suggest
that individuals who participate in online gambling have a higher prevalence of
problem gambling than other forms of gambling'.
In doing this, Sportsbet was citing part of a literature review under taken by
the Allen Consulting Group for FaHCSIA in 2009. On closer inspection the report
admits that this conclusion is partly due to the 'difficulties in measuring
problem gambling prevalence across a small proportion of gambling
participants'. The report then goes on to outline evidence which was omitted
from the Sportsbet submission: 'Some researchers have asserted that the nature
of Internet gambling (particularly Internet gaming) has higher risks for
problem gambling because it can be repetitive and continuous, thereby making it
more difficult for players to be aware of how much they have gambled.' The
report concluded it is an area warranting further research.
After reviewing the available international and Australian evidence,
which it cautioned should be carefully interpreted, in 2010 the PC advised
In general, the evidence suggests that people who have
gambled online at some stage in the past tend, on average, to have a
considerably higher rate of problem gambling than people who have never gambled
The PC noted:
While the risks associated with online gambling are likely to
be overstated, the relatively high prevalence of problem gamblers is still a
cause for concern. At the very least, it indicates that the internet is very
attractive to this group and, though the evidence is weak, gambling online may
exacerbate already hazardous behaviour...
The PC reported on their review of the evidence of problem gambling
rates in the online environment and concluded:
...while none of the studies so far are adequate, they tend
to point towards higher rates of problem gambling from people who operate in
the online environment. Why that is, is not so clear. There may be a selection
bias that people who have problems tend more likely to go into the online as
first adopters, but we just do not know. The evidence at the moment is that
there appear[s] to be some high risks in the online environment.
Concern over growth of sports
Submissions indicated that the increase in online sports betting is a growing
area of concern as it has led to changes in the presentation of individuals
with problem gambling. The University of Sydney Gambling Treatment Clinic (the
Clinic) reported that:
In the past five years, as regulation around sports betting
has been loosened, there has been an increase in the number of clients
presenting to the clinic with problematic sports betting. Indeed, from
representing less than 5% of our clients in the 2006-2007 financial year,
problem gamblers with sports betting problems now represent 15-20% of new
clients in the current financial year. Thus, whilst still representing a
minority, reported problems with sports betting are rising, and rising rapidly.
Interestingly, the Clinic emphasised that the majority of clients
presenting with gambling problems are using Australian-based, legal sites:
Contrary to some of the myths surrounding online gambling,
very few of our clients who utilise online forms of gambling report that they
doing so via illegal or off-shore gaming sites. The vast majority of our sports
betting clients are primarily gambling on Australian-based, legal sports betting
operators. Whilst we would not want to dismiss the existence nor seriousness of
illegal activity in either local or overseas sports betting markets, this issue
does not appear to be a major contributing factor in the stories of the
majority of our clients.
The committee notes that sports betting is discussed in more detail in
chapters 10 and 11.
Although the research is not conclusive on the prevalence of online
problem gambling, the available data and findings are a cause for concern and
caution. Even if the committee accepts as a premise that online gambling will
be no more harmful than land-based forms of gambling, such levels of harm would
be alarming. The growth rates of online gambling are evident and, given the
link between accessibility and frequency of play which may result in people
developing a problem, a cautious approach is warranted.
Risks of online gambling
The section below further details the risks of online gambling brought
to the attention of the committee. The Australian Christian Lobby (ACL)
summarised the risks of online gambling which include:
- ease of access;
- potentially a more socially isolating environment;
- use of credit cards;
- decreased ability of providers to monitor gambling behaviour; and
- greater risk to young people.
Increased access and availability
Online gambling and the associated advances in technology bring increased
convenience and accessibility for gamblers who can potentially access any form
of gambling anytime and anywhere. This increased accessibility enhances the
risk of greater frequency of play. The ACL noted there is greater access in two
ways: no geographical barriers beyond access to the internet and no time
This means that just about anyone in the entire country, from
anywhere in the country, has access at any time of the day, every day. Even
those who live close to casinos, for example, are still physically required to
enter, and leave, the casino. This physical requirement does not exist in the
online gambling context. This can allow for a much wider reach and greater
frequency of gambling and may increase the rates of problem gambling.
J.G. Phillips and Professor Blaszczynski advised:
The converging capabilities of computers, mobile phones,
interactive television, set top boxes and games platforms potentially allows
online gambling to be available on any of these devices and to be accessed by
consumers any time of the day from anywhere in the world. This increased
availability could lead to increases in gambling-related problems; however
research on the relationship between availability and problem gambling suggest
that potential increases in problem gambling could be mitigated if appropriate
controls are put in place.
Preliminary research conducted by Dr Gainsbury and Professor Blaszczynski
on the characteristics of internet gamblers in Australia found that 28 per
cent of the preliminary sample of internet gamblers reported that internet
gambling was too convenient, 25 per cent reported that it was easier to spend
more money and 13 per cent reported that it was more addictive.
They concluded that:
...it is possible that increased use of interactive gambling
may result in an increase in gambling-related problems with associated social
and financial burdens on society including psychological, health, legal, and
The PC acknowledged the risk posed by the accessibility of online
Greater access could increase the prevalence of problem
gambling and its associated harms. Some Australians, for reasons of
geographical isolation or disability, have no access to venues offering casino
games at all. Therefore, the provision of online gaming exposes a new
population group to the risks of problem gambling. Even for those who live in
cities that have casinos, the internet significantly reduces the time and
transportation costs associated with gaming. As this allows a greater frequency
of play, it may result in more people developing a gambling problem. Moreover, online
gambling can be slotted into very small periods, increasing convenience, but also
the opportunity for impulsive gambling (‘morning tea’ gambling).
The committee notes with concern the view put forward by the Productivity
Commission that 'greater access could increase the prevalence of problem
gambling and its associated harms'.
The experience of electronic gaming machines (EGMs), where liberalisation and
increased access has resulted in increased harms despite a number of harm
minimisation measures, should serve as a cautionary experience and the lessons
must be learned before considering increasing access to other modes of gambling.
Online gambling provides greater anonymity
A study of internet gambling behaviour conducted by Jessica McBride and Dr
Jeffrey Derevensky found that:
Significantly more problem gamblers (29.0%) than social
gamblers (4.7%) selected 'easier to hide gambling from others' as a reason to
The Social Issues Executive (SIE), Anglican Church, Diocese of Sydney,
believed that the anonymity of online betting is a particular concern as it
takes wagering and betting 'out of a social context and places it in an anonymous,
individual context, opening the way for problem gambling at levels unforseen to
Interactive gaming technologies that can be accessed in the
privacy of one's home establish a cultural context that normalises regular,
interactive gambling without the social or relationship accountability of
traditional gaming contexts. The SIE is concerned that this normalisation of
and increased access to interactive gaming in private, familial and everyday
contexts will make it very difficult for existing problem gamblers to break
behaviours and distance themselves from contexts that feed a desire to gamble.
The Tasmanian Government also noted similar concerns:
Online gambling is available at any time from the privacy of
a user's home, workplace, via a mobile telephone, Smartphone or portable
computer. Players not wishing to associate with other clientele or who are
excluded from land-based venues can gamble online, anytime and the range of
harm minimisation measures specific to land-based venues such as restriction on
the service of alcohol, lighting standards and staff intervention, are not
Dr Gainsbury and Professor Blaszczynski noted that the anonymity offered
by the internet continues to provide a challenge to detect underage gambling:
...given the anonymity and absence of interpersonal interaction
characteristic of Internet gambling, it remains a challenge to limit underage
They recommended that 'efforts be taken to implement effective public
education programs to inform people of the potential risks associated with
Internet gambling, including the lack of consumer protection measures on
The PC acknowledged the argument that online gambling may be more
Some particular gambling products — such as casino games or
simulated EGMs — may be more socially isolating in an online environment than
in venues. This may increase the likelihood of players of these games losing
track of time and their spending. However, other forms of online gambling can
have a strong social element (such as with poker and bingo).
Use of credit cards
There were conflicting views over the use of credit cards for online
gambling. The PC found that for non-problem gamblers 'the distinction between
using a savings account or credit account is no different for gambling online
than it is for shopping online or purchasing any other good or service from a
physical location'. However, it acknowledged that for problem gamblers 'the
reliance on credit cards in an online setting may magnify the financial harms
from excessive gambling'. It concluded that the 'potential for increased harm
to problem gamblers is a legitimate policy concern'.
Nevertheless, it emphasised that there are some features of account based
betting that may assist gamblers. For example, the monthly credit card
statement means that gamblers are confronted with their losses.
However, it could be argued that this is well after the event and well after
any excessive losses have already occurred.
While the Australian Christian Lobby agreed that the use of credit cards
may help gamblers to confront their losses, it argued that this could also
magnify the financial harms from excessive gambling:
Rather than merely putting the money they have through a slot
machine, for example, problem gamblers may accumulate large debts on credit
which they have no means of repaying. Not only can problem gamblers lose what
they do have, online there is the potential to end up deeply in debt.
Clubs Australia pointed out that credit card betting is not allowed for
poker machines and expressed the concern that betting using credit cards represents
a risk to online customers:
...internet gamblers can legally use credit cards to fund
gambling sprees on online wagering sites. Some sites aggressively promote the
use of credit card gambling by offering the promise of lucrative free bets in
exchange for sign-up accounts and credit card details.
Clubs Australia argued that it is opposed to people gambling on credit,
either online or at a venue as:
Credit card gamblers are funding their habit through what is
effectively a short term loan. If the initial amount is not paid off within a
specified time period, interest accrues, increasing the likelihood of the
gambler encountering financial difficulty or mismanaging funds.
Clubs Australia also disagreed with the PC that credit cards enable
gamblers to accurately track their play:
By the time it takes for a credit card statement to arrive,
the gambler has usually “done the damage”...
However, the Australian Internet Bookmakers Association (AIBA) argued
Any ban on credit card usage would impact disproportionately
on the benefits to recreational gamblers who constitute by far the vast bulk of
online gamblers. It is also too late for such a proposition to have any effect.
Technology has overtaken the capacity to restrict the use of credit cards even
if that was desirable.
It must also be remembered that while credit cards pose an
acknowledged risk for problem gamblers, they also provide important fraud, anti-money-laundering and other
The AIBA did, however, acknowledge that 'credit betting' is a more
problematic practice and concluded:
This Association considers it sensible to maintain the
benefits to clients of credit betting, but look to the development of
appropriate controls to mitigate the risks. It is proposed the Committee recommend
the immediate issue of a reference to a national research body to consider
appropriate parameters governing the issue of credit.
The issue of providing credit in relation to sports betting is further
discussed in chapter 11.
While the committee accepts that a monthly credit card statement may
assist some people to confront the amount of money they spend gambling online,
the ability to repay only a minimum amount, increase limits and obtain multiple
cards does not make this a feature to be relied upon to assist problem
gamblers. In addition, by the time the statement has arrived, significant
losses may already have occurred. The committee notes the case of a 21 year old
man in Victoria who lost $10,000 in one month on his credit card from playing
Online gambling creates new gambling
There are community concerns that online gambling is attractive to and
will be accessed by younger and underage groups. Technology in this area is
evolving with new types of games
and wagering methods being offered by providers to gain a competitive
advantage. Gambling applications on iPhones appeal to the tech-savvy youth
market and make it easy to lose money.
The Responsible Gambling Advocacy Centre noted that the increased use of mobile
phones means greater accessibility and therefore use of interactive online
The Royal Australian and New Zealand College of Psychiatrists
highlighted that within the Australian population having gambling problems, the
younger age group (18-24) has the highest figures and requires a particular
The ACL noted its concern that online gambling may pose a greater risk
to young people:
Particularly with a growing trend of pervasive online
gambling advertising, both online and offline gambling is an increasingly
visible part of the culture, which will naturally heighten the curiosity of
It emphasised that 'the protection of children online is of paramount
importance, so it is essential that age verification is effective, stringent,
Relationships Australia expressed serious concerns about the growth of
online gambling and gambling advertising on young people:
Young people are highly technologically savvy and the group
most likely to adopt new ways of doing things. Mobile devices make gambling
instantly available wherever a person is, at any time of the day or night. As
Sally Gainsbury points out, both Australian and International studies show that
internet gamblers are more likely to be young.
Young people have witnessed the normalisation of sports
betting, and, for some, the innocent stakeless wager with a parent over which
team will win, will have turned into a regular online bet, albeit starting with
Dr Gainsbury and Professor Blaszczynski also noted the participation of
youth and young adults as an area of concern:
Youth are familiar and comfortable with interactive and
anonymous electronic media and use the Internet for a multitude of social,
entertainment, educational, and business interactions. Australian studies have
found that a substantial proportion of school students gamble online (Delfabbro
et al., 2005; Jackson et al., 2008). Furthermore, international studies
indicate that Internet gamblers are more likely to be younger adults (Wood & Williams, 2009). As young adults have been identified as being at
greatest risk for gambling-related problems compared to any other age cohort
(Delfabbro, 2008), this highlights the [particular vulnerability] of youth to
potential harmful consequences. This concern is supported by several research
studies that have found relatively high rates of Internet and associated
problem gambling amongst young adult populations (Griffiths & Barnes, 2008;
McBride & Derevensky, 2009; Olason et al., 2011)...
They emphasised that these findings highlight the need for further
research on this population to understand the effect of interactive gambling on
youth and young adults. In addition, they noted that youth are highly
influenced by gambling advertising.
J.G Phillips and Professor Blaszczynski found:
There are relationships between age and technology use, but
it is primarily interest in technology rather than age that predicts the use of
online interactive services. Indeed, whilst younger age may predict the use of
internet for sports betting, older age may predict the use of premium SMS
They noted that four factors could explain the use of interactive gambling
services: a tendency to respond impulsively; an interest in gambling; a
preoccupation with technology to entertain; and an interest in competitions:
'These factors were to some extent correlated'.
Dr Gainsbury noted that Australian research has found adolescents may
gamble online at higher rates than the general population and international
research has also found that internet gamblers are more likely to be young
The Tasmanian Government recognised the risks created by the growth of
interactive and online gambling and particularly its access by young and
vulnerable people. It added that a strong regulatory framework is required to
address these risks.
Existing research clearly identifies adolescents as at increased
risk of developing gambling problems. The online gaming environment uses
communication technologies and systems with which this group is familiar and
provided in a similar manner as social networking and other interactive forms
of entertainment. The instance of a young or underage person engaging with
these sites thus poses additional risk of harm.
Due to their familiarity and general perception of 'try it
and see' around accessing online networks generally, online gambling may
attract and entrap young people who are not experienced or aware of the risk
and potential harms from these products.
The committee notes that FaHCSIA has recognised the potential for
children and youth to become exposed to gambling products through the promotion
of live odds. It added that:
The proliferation of interactive gambling through the
internet and mobile phones may also be an issue for children and youth and
other vulnerable people who may experience increased exposure to online
gambling in their home environments. Younger people may also arguably be more
likely to adopt and be more susceptible to the harm from new and emerging
The Department acknowledges the need for further work in
The Responsible Gambling Advocacy Centre stated that the access to
online gambling by children and adolescents is of growing concern, citing work
undertaken by Dr Jeffrey Derevensky. Dr Derevensky's research, prevention and
clinical work has focused on youth gambling and problem gambling issues over
two decades. He told the committee that one of the risk factors for problem
gambling is early onset. 'The earlier one starts gambling the more likely they
are to continue gambling. And the more they continue gambling, the probability
increases that they may have gambling problems'.
He advised that 80 per cent of adolescents (depending on accessibility and
availability of types of gambling) gamble or have gambled during the past 12 months
but only around four per cent have a serious gambling problem.
He noted there is a growing body of research indicating that many young people
are gambling on dot net or practice sites which may lead to gambling on sites
for money. In addition, a number of gambling providers are using social media
as a way of attracting young people without strict adherence to age
Dr Derevensky mentioned that many of the Centre's
prevention programs are designed as school based programs. He explained that
adolescents do see the risks associated with gambling as well as the benefits
but that they do not attribute the risks to themselves and they view them as
occurring later in life. Dr Derevensky advised that most parents are concerned
with issues other than gambling for their children so they have included public
service announcements in an effort to educate parents and raise awareness that
some adolescents will become problem gamblers.
Professor Blaszczynski made the following suggestion in relation to
ensuring young people are aware of the risks of online gambling:
Mr NEUMANN: Finally, are you aware of any steps being
taken by school authorities or departments of education around the country to
address these problems of online gambling amongst students?
Prof. Blaszczynski: I am not aware of any formal
programs. I have certainly not researched that particular area of school based
education. My view is that it should be integrated within the health and
personal development courses within school alongside alcohol, smoking,
unprotected sex et cetera. Gambling should form part and parcel of that health
and personal development approach.
The committee notes with concern research indicating that the development
of attitudes and behaviour toward internet gambling among adolescents has implications
for longer-term involvement in gambling into adulthood and increasing the severity
of problems. The committee sees the value of further research in this area.
Normalisation of gambling
Submissions raised concern that the spread of gambling into new areas
has the effect of normalising it which:
...has the strong possibility of creating gambling patterns
in young people, especially males, who follow a sport. Males are three times
more likely to gamble than females, so the link with sports betting cannot be ignored.
It has already had the impact of removing the fun and exuberance of following a
team on some people whose concern has shifted to betting and winning on
multiple occasions during a game.
This normalisation of gambling is a particular concern in the area of
sport which is further discussed in chapter 12 on advertising.
Support and education
The issue of seeking appropriate treatment was canvassed by the report
prepared for the Ontario Problem Gambling Research Centre which found that of
the international gamblers:
- 9 per cent had sought help from the following sources: Gamblers
Anonymous (21%); counselling service (18%); friends (11%); psychologists (11%);
family doctor (7%); family (7%); pastor/minister/priest (7%); telephone
help/hot line (7%); and
- the majority would be more comfortable seeking help from a
face-to-face counselling service rather than an internet counselling service.
These results suggest that while online services serve as a useful adjunct to
land-based treatment, it is not likely to be a solution for this population.
The need for more support and education for gamblers in the online
environment was emphasised to the committee. For example, Relationships
Education about the dangers of online gambling comes with the
danger that it might draw attention to its attractions, but support is
essential for those whose gambling leads them into financial and personal trouble.
There is evidence that online therapy for gambling can be helpful to some, and
there is agreement amongst Relationships Australia gambling support
practitioners that they are only seeing a small number of those who need help.
It is important to promote services to on-line
gamblers and that more resources are directed into support programs. It needs
to be remembered that those close to the problem gambler - partners, parents and
children - need
to be supported as well. These people may have been hurt by the problem gambler
and suffered financial loss, but are the same people who will be vital to the
The committee notes and commends the first Australian advertising
campaign focusing on the risks and consequences of online gambling launched by
the Victorian Government in September 2011. The campaign was timed to coincide
with the AFL football finals and upcoming racing carnivals. It includes
television, press, online, radio, train and tram advertising to convey the
message 'Online gambling: It’s easy to bet, too easy to lose'.
The committee addresses the need for further public education in chapter
The need for more research
The need for more research into online gambling was a common theme in
submissions. The Productivity Commission noted that to properly analyse the
effect of the IGA on online gambling, reliable data on demand is necessary. It
found that 'the existing data are far from reliable, which limits statistical
Dr Gainsbury and Professor Blaszczynski further detailed the difficulties
of conducting research in this area:
The interactive gambling literature is characterised by few,
small-scale studies that often have methodological issues such as the use of
non-representative, self-selected samples, which limit the validity of results.
Furthermore, the findings of these become rapidly outdated as result of
constant changes in technology and the market. In addition, very little
research has directly examined interactive gambling in Australia. Consequently,
there is little information about the demographics of users, extent of use
and/or impact of online gambling in Australia making it difficult to develop
appropriate policy responses or predict market trends.
J.G. Phillips and Professor Blaszczynski noted the differences between
population samples online and offline:
Issues when recruiting an online sample include who has
access to the technology (sample demographics of interest) and how widespread
is it use[d] (what proportion of the population use the technology). In
addition, characteristics of online samples are important given that early
research into technological use has suggested psychological differences, with
people who were more withdrawn likely to have higher rates of technology use.
They noted that differences in data collection online and offline are
important in terms of identifying problem gamblers.
To address the lack of empirical data they recommended that the government
ensure that research funding is provided to independent researchers to
investigate the effect of online gambling at the individual, family and
community level. They also recommended that collaborative research funded by
the government be encouraged between academic researchers, industry operators,
state and federal governments and regulatory bodies in order to gain a greater understanding.
The Royal Australian and New Zealand College of Psychiatrists emphasised
that Australia 'must increase its research in the area of problem gambling in
order to improve the response to the growing online betting market'.
Relationships Australia also called attention to the need for
'significantly more research and data collection about online gambling and
gambling advertising'. It added:
Relationships Australia supports research in this area,
including research as to how best to regulate the gambling industry and ongoing
research into how to best support those with a gambling problem. Other research
could consider the co-morbidities
that can exist with gambling – use of alcohol and prevalence of domestic
violence for example. It is known that use of online gambling is increasing, but
more needs to be known about the habits and demographics of its users,
including whether online gambling is in addition to other forms of gambling, or
is becoming a dominant form of gambling for some. Relationships Australia sees
it as a responsibility of the gambling and sporting industries to fund research
and to adopt the recommendations arising from such research.
The Victorian InterChurch Gambling Taskforce highlighted that there is a
'severe lack of knowledge about this population [of Australians who access
online gaming sites] and the proportion of people gambling [with] gambling
problems related to their use of this form of gambling'.
The Social Issues Executive, Anglican Church, Diocese of Sydney
suggested more research on:
...the extent to which online gaming and other forms of
wagering and betting are related to problem gambling and the development of
behaviours that may lead to problem gambling.
Telstra indicated that further research is required to:
...acquire the evidence needed to test recently expressed
concerns and to identify any specific harms that may be created as a result of
various forms of online advertising of internet wagering services.
Dr Derevensky supported the call for additional research. He told the
committee that research on online gambling is probably at the point where
alcohol research was 15 to 20 years ago. However, he noted that there are a
number of researchers in Australia who are actively involved in this area. He
particularly supported the Productivity Commission taking the leadership role
that it has in this area.
Dr Gainsbury and Professor Blaszczynski concluded:
Given the dearth of empirical evidence informing and guiding
policies and decision-makers, it is strongly recommended that a systematic
approach be directed toward funding research into the demographics,
characteristics and social and economic impacts of Internet gambling in
Australia. To this end, the concept of a research institute to provide a
systematic program of research should be given serious consideration.
Professor Blaszczynski emphasised:
My view is that there ought to be some funding allocated to
appropriate bodies—possibly to gambling research institutes that will
independently evaluate many of these aspects about responsible gambling to be
able, with the cooperation of the government and the industry, to carry out
appropriate research that provides valid and reliable outcomes rather than
people relying on first year university subjects using laptop computer
simulated games with non-problem-gamblers and non-gambling-type tasks. I think
that what we really need to do is to start looking at an appropriate, sensible
approach to trialling certain initiatives which are costly and may not provide
the benefit that is intended.
As an example of an area requiring research, the committee asked about
research covering adolescents:
Mr NEUMANN: I want to take an entirely different tack
and talk about the effects of gambling on young people and also your reference
to research relating to a substantial portion of Australian students gambling
online. The studies you refer to are a little old, from 2005 and 2008. I was
wondering if you had any research that showed whether the problem with
Australian students gambling online is worse now than it was a few years ago.
Dr Gainsbury: As far as I am aware, there have not
been any subsequent studies done in schools. There was some work done recently
in Victoria, but they did not specifically look at problem gambling or internet
gambling. We are currently doing a study at university student level and a
national prevalence study, but there is not a lot of research looking at youth
and schoolchildren right now that I am aware of.
Prof. Blaszczynski: I think it highlights the lack of
research evidence pertinent to the Australian context.
The Productivity Commission also supported the call for more research as
highlighted in its 2010 report:
We found in both those inquiries that we really struggled—and
I am sure you have, too—to find out what evidence we can believe, what
statistics we can believe, what methodologies we can believe and what people
you can believe...
...In our report, some of the recommendations that have not
had a lot of profile are our recommendations in relation to research: to create
a far better national basis for research to be done and to be done well, and to
be addressing policy questions that are important—questions that we have been
talking about today.
...We had a recommendation towards the end about that. We
have experimented with a kind of federalist approach to research, with a loose
kind of oversight arrangement and so on. Our experience after two years was
that it had not really delivered. It had not really provided the strong
evidence base we were looking for, in a whole lot of ways. At some point this
committee might turn its mind to thinking about the evidence base and perhaps
looking at that recommendation, or others, about how we could do better in
Australia to have a robust basis of information, addressing the important
policy questions on a more or less ongoing basis. I think that would help all
of us. I am not just being selfish, hoping that in 10 years time or whenever we
do our next review we will have more evidence to use!
One of the very clear messages to the committee is the need for greater
research into online gambling to formulate appropriate policy and other
responses such as harm minimisation. Despite the lack of conclusive research,
the committee notes there appears to be a growing body of literature about the
link between internet gambling and problem gambling. The committee commends the
recent foundation announced by the Victorian Government to be created under
legislation which will commission research into problem gambling.
However, the committee believes national research is required to provide a
better understanding of the online environment, to better understand the risks
and benefits for society and to ensure that responses are timely, targeted and
effective. Drawing together the suggestions provided to the committee, more
research is required on areas such as:
- prevalence rates and rates of online problem gambling;
- the potential for growth in the online market;
- demographics of online gamblers and whether they differ
significantly from poker machine players;
- the potential risks and harms, particularly for youth;
the behaviour of online gamblers, including those who start to
- the risks that could increase online problem gambling and measures
to mitigate them;
- effectiveness of harm minimisation measures;
- the characteristics and vulnerabilities of those people attracted
to online gambling in a less regulated environment;
- the risks associated with the development of new technologies
that could be used for gambling;
- appropriate regulatory models to mitigate against increases of
problem gambling; and
- the effects of online gambling advertising.
The committee will be particularly interested to see the outcomes of the
research currently underway by Dr Gainsbury and Professor Blaszczynski and
supports such research being funded by governments. In its previous report on
the design and implementation of a mandatory pre-commitment system for
electronic gaming machines, the committee noted the gaps in research around
problem gambling and recommended the establishment of a national, independent
research institute on gambling.
The committee reiterates its call for a national independent research institute
on gambling which would be the appropriate body to conduct research into online
2.109 The committee supports the need for national research on online gambling
to acquire data on which to base appropriate policy responses. As recommended
in its previous report, the committee reiterates its call for a national
independent research institute on gambling.
In the meantime, the committee also considers that the current DBCDE
review of the IGA must be able to commission research in areas such as those
outlined above to better understand the risks and benefits of the local online
2.111 The committee recommends that the review of the Interactive Gambling
Act 2001 being conducted by the Department of Broadband, Communications and
the Digital Economy commission relevant research on the local online gambling
Navigation: Previous Page | Contents | Next Page