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Effectiveness of the current regulatory framework
This chapter considers the effectiveness of the Interactive Gambling
Act 2001 (IGA). It details where the IGA appears to be successful and where
there are deficiencies. Rather than comment on aspects of the IGA throughout this
chapter, the committee will consolidate its views at the end of the chapter.
Clarifying the purpose of the IGA
To assess the effectiveness of the IGA, it is important to be clear
about its purpose. The Explanatory Memorandum for the Interactive Gambling Bill
2001 detailed the concern to be addressed by the IGA regarding the link between
greater accessibility and availability of gambling opportunities leading to an
increase in the prevalence of problem gambling:
The Government is concerned that new interactive
communication services will give interactive gambling service providers (IGSPs)
new opportunities to increase the size and accessibility of the gambling
industry in Australia. The Productivity Commission has found a strong link
between the accessibility of gambling services and the prevalence of problem gambling
in the community. In its report, Australia’s Gambling Industries (1999), it
states that ‘there is sufficient evidence from many different sources to suggest
a significant connection between greater accessibility...and the greater
prevalence of problem gambling.
The concern is thus that the growth in availability of
interactive gambling services to the Australian community will lead to an
increase in problem gambling.
The IGA aims to minimise the harmful effects of gambling on the
Australian community by limiting the provision of interactive gambling services
It is against this aim that the committee will consider its effectiveness.
The IGA was last reviewed in 2004 and this review concluded that:
The IGA had curtailed the development of the Australian
interactive gambling industry and was associated with the minimal use of
internet gaming services by Australians. It found that the IGA has proven
largely successful in meeting its policy objectives of minimising the potential
expansion of interactive gambling that may exacerbate problem gambling in
Australia. The review found no substantive evidence to support amendment or
repeal of the IGA on the basis that the legislative framework is ineffective in
preventing access to interactive gambling services.
The committee notes that the Department of Broadband, Communications and
the Digital Economy (DBCDE) is currently conducting a review into the IGA
...is intended to ensure that the prevalence of problem
gambling in the online environment and gambling addiction in the Australian
community is limited.
The committee agrees that it is time to review the rationale and effectiveness
of the IGA which has been in effect since 2001 and was last reviewed in 2004.
It is particularly relevant given the growth in online gambling and technology
developments in this area.
Limiting the provision of interactive gambling services
To limit the provision of interactive gambling services to Australians, the
IGA makes it an offence to intentionally provide a prohibited interactive
gambling service, as defined by the IGA, to customers in Australia.
This offence provision extends to offshore providers of interactive gambling
services to customers in Australia.
This means that any interactive gambling service provider, either within or
outside Australia, would be committing an offence if it had customers in
Australia. In addition, it is also an offence to provide an Australian-based
interactive gambling service to customers overseas in designated countries.
Limiting Australian-based services
being provided to customers overseas
Regarding Australian-based interactive gambling services being provided
to customers in overseas countries, the committee notes that currently there
are no countries designated under section 15A of the IGA where it is prohibited
for Australian gambling operators to provide interactive gambling services. In
order to be designated, a foreign government must:
- make a request to the minister for such a declaration, and
- have legislation that mirrors the provisions of section 15 of the
IGA, that is, that prohibits the provision of interactive gambling services.
interactive gambling services
Regarding the provision of a prohibited Australian-based interactive
gambling service to customers in Australia, the Productivity Commission (PC) concluded
that 'the IGA has clearly prevented any Australian-based company from providing
online gaming to Australian residents' and indicated that the real effect of
the IGA had been to prevent companies located in Australia from providing
online gaming services to Australians.
In its IGA review discussion paper, DBCDE confirmed:
It appears that the most significant effect of the IGA has
been to prevent companies located in Australia from selling online gaming
services to Australians.
Limiting overseas-based interactive
gambling services accessible to Australians
The IGA does not prevent Australians from accessing overseas interactive
gambling services. Indeed, submissions indicated that the IGA has the practical
effect of restricting customer choice to overseas websites for interactive
gambling services prohibited by the IGA. This may expose customers to
unscrupulous operators where they have little or no recourse if they experience
problems and lose their money.
Australians currently have easy access to overseas internet gambling
sites, subject to the effectiveness of the complaints regime and any subsequent
investigations. Dr Sally Gainsbury and Professor Alex Blaszczynski noted that
despite the restrictions of the IGA, Australians have access to over 2,000 online
gambling sites and in 2010 spent over $968 million.
Customers wishing to take advantage of bets that are prohibited from
being provided to Australian customers online are able to access overseas
websites to place those bets. Betchoice highlighted that the prohibition of 'in-play'
betting only forces customers to look outside Australia where operators may not
have the same standards of probity and which are out of reach of Australian
In 2010, the PC concluded that one of the key effects of the IGA had
been to drive consumers to use overseas sites, 'some with poor harm
minimisation features and unscrupulous business practices'.
It indicated that 'the legislation attempts to dissuade people from gambling
online by making it more dangerous'. The PC argued that this deterrent would
have the greatest effect on responsible gamblers who would be likely to avoid
online gambling altogether. It proposed that the prohibitions would have the
least effect on problem gamblers 'whose behaviour means they may not respond
appropriately to the riskier online gaming environment the IGA facilitates'.
The PC also argued:
Whilst the IGA also nominally prohibits the provision of
gaming services by overseas companies, it has no meaningful way of enforcing
this and the legislation appears to have been largely ignored. In effect,
therefore, the IGA has ensured that domestic consumption of online gaming
services will be exclusively provided by offshore companies.
Regarding the effect of the IGA, the PC expressed the view that 'it
would be surprising if the ban had no effect, for no other reason than it
limits advertising of online gaming and means that Australians cannot gamble
with providers that they recognise to be safe brands for venue-based gambling
The PC pointed out that while the IGA and the ban on advertising in particular
may have reduced demand for online gaming below what it otherwise would have
been, it is not clear that the effect has been large. It added:
Australian consumption of online gaming has grown and will
continue to do so, making the prohibition less effective over time.
The PC concluded that the ban would be less effective over time as
customers become accustomed to gambling over the internet and 'as overseas
sites develop reputations for probity (if not safety)'.
Deficiencies of the IGA raised with the committee
Questions about enforcement
The IGA is supported by a complaints-based system, as described in the
previous chapter, which is intended to limit and discourage access to overseas
gambling sites. However, submissions drew attention to what is seen as a lack
of enforcement, particularly around access to overseas sites.
Dr Gainsbury and Professor Blaszczynski noted that little appears to be
done to prevent overseas sites from allowing Australians to play or to stop the
sites from directly marketing to Australians.
They detailed their concerns:
One particular deficiency of the IGA is the degree of
compliance enforcement. Despite a policy of prohibition, Australians can easily
access offshore Internet gambling sites, spend large amounts of money and be
exposed to unfair player practices. This is of significant concern as
Australians have little recourse if they lose their money or experience unscrupulous
treatment. However, little appears to be done to prevent these sites from allowing
Australians to play or to stop the sites from directly marketing to
They pointed to the absence of prosecutions for breaches of the IGA as
evidence for the inadequacy of regulatory restrictions and compliance.
The NSW Government also expressed concern over the adequacy of enforcement:
With no prosecutions having been conducted under the Act to
date, the Act's ability to effectively prevent Australians from accessing
overseas online gaming sites would appear to be minimal.
The NSW Government emphasised that its concern about the lack of
effectiveness of the IGA is compounded by the potential for growth in the
online gambling industry and reports of increased participation by Australian
consumers on overseas gambling sites.
The Victorian InterChurch Gambling Taskforce was also of the view that little
effort has been made to enforce the IGA. The Taskforce noted that in FY2008-2009,
ACMA investigated only 11 complaints relating to prohibited internet
gambling content. In three cases, ACMA notified providers of internet filter
software to add these sites to the blocked list.
The committee notes that the enforcement process is subject to the
referral of complaints. DCBDE emphasised that the system is reactive rather
than proactive and the agencies involved can only respond to complaints
One point to make in reference to that is that their [AFP]
starting point is going to be the number of sites about which they have
received referrals from ourselves, the ACMA, or someone else. There is no
guarantee that, for example, there have been complaints about all 2,000 sites.
Their starting point is the number of complaints that have come through to
DCBDE advised that from July 2010 to June 2011, ACMA completed
48 investigations. 38 involved overseas-hosted prohibited internet
gambling content and the URLs were referred to the Australian Federal Police (AFP).
Seven did not provide access to prohibited internet gambling content and were not
referred to the AFP. Three investigations were terminated due to lack of
information. Also during this period ACMA referred one Australian hosted site
to the AFP.
ACMA took the committee through the method of investigating complaints
concerning overseas providers and clarified that the IGA does not provide ACMA
with a direct relationship to overseas regulators:
The ACMA delegate would make the finding about whether the
site contained prohibited content. It would then refer the matter to the AFP,
because that is what the act requires. From there, the AFP would then make
notifications to overseas law enforcement agencies—for instance, the law
enforcement agency responsible for matters dealing with Gibraltar—and then it
would be up to that overseas law enforcement agency to communicate with a licensing
ACMA advised that following a finding by the ACMA that there is
prohibited content available to Australian residents, the first action is to
notify the AFP which will notify overseas enforcement agencies. The second
action is for ACMA to advise the family friendly filters. Australian residents
who utilise those filters will then have those services blocked.
ACMA stressed that following through on the investigation of a
prohibited service lies with the appropriate law enforcement authority.
The AFP assesses referrals from the ACMA and the Department
against its case Categorisation Prioritisation Model. Elements considered
- incident type and the impact of the matter on Australian society;
- the importance of the matter to both the client and the AFP in
terms of the roles assigned to them by Government and Ministerial direction;
- the resources required by the AFP to undertake the matter.
It added that further pursuing DCBDE and ACMA referrals is up to the
...I do not think we are in a position to comment on how the
AFP makes judgments about which ones to pursue and which ones not to, other
than the fact that they have a prioritisation system, which they could no doubt
explain to you. That is theirs to determine and takes into account all the
matters they have got before them.
Australian Federal Police process
The AFP advised the committee that:
In the previous two years (since 2009), the AFP received 15
referrals concerning allegations of offences committed contrary to the Act. In
isolation, when compared to other criminal activity, these referrals were
categorised as low priority for investigation and consequently not
The AFP provided the following flow chart to illustrate the referral
Challenges of enforcement
The AFP expanded on their submission at a hearing. Although the evidence
was taken in-camera, in general terms the committee heard of the complexity of
the online environment and the difficulties in pursuing investigations of and
obtaining evidence from providers which are located and licensed in
jurisdictions where their activities are legal. As can be seen
from the diagram above, the AFP is reliant on assistance from foreign law
enforcement which the committee notes again can be challenging if the activity
is lawful in that country.
Dr Gainsbury and Professor Blaszczynski argued that legal action should
be taken against unregulated sites that allow Australians to play and pointed
to the recent legal action in the US where, despite the difficulties of taking
legal action in this area, several large online poker sites were prosecuted and
forced to stop providing services to US residents.
Online gambling has been illegal in the United States since 2006. In
April 2011, the websites for PokerStars, Full Tilt Poker and Absolute Poker
were seized by the Federal Bureau of Investigation (FBI). The US websites have
been shut down and the founders were charged with bank fraud,
money laundering and breaches of US gambling laws.
The committee notes that the Australian Crime Commission has identified
online gambling as a money laundering risk and also as a risk for revenue and
The committee notes these recent prosecutions overseas point to an increased
willingness by authorities to take action regarding illegal activities overseas
despite the complexity of the online environment.
DCBDE confirmed that 'while the IGA applies to providers in other
countries, there is limited practical scope for Australian law enforcement
agencies to pursue, with any prospect of success, foreign based providers'.
Its discussion paper highlighted the difficulties of enforcement:
The relatively limited range of enforcement options available
under the IGA, and the need for the AFP to consider referrals against its own
internal case prioritisation framework, may have contributed to the apparent
lack of successful enforcement activity under the IGA. Alternative enforcement
options such as civil penalty provisions might offer more scope in this regard.
DCBDE emphasised that another technical challenge is that internet gambling
sites can move and relaunch very quickly.
When asked about the issue of enforcement, DCBDE confirmed that the
review of the IGA would include the mechanisms of enforcement:
I think the example you give is one of the challenges
associated with enforcing this particular act in this space. The challenge is
partly related to the jurisdictional difficulties when you are operating in the
online environment and, as such, that is one of the [things the] review will
need to have a good look at—just how the enforcement arrangements do work and
whether there are ways that that could be improved.
The example referred to in the quote above
was the website Casino.com which lists 'Australian winners' and displays the
Australian flag in the background. Senator Xenophon suggested that the
appearance of the site could give customers the sense that they are dealing
with an Australian company. The committee was advised that the site is hosted
in Singapore but licensed through a licence entity that is located in
Gibraltar. ACMA clarified that, as far as the IGA is concerned, the issue is
one of accessibility
not whether or to what degree a site references Australia. In relation to the IGA
review, DCBDE responded that:
The general issue that the review needs to look at is the
more general point about, in a sense, the ability to offer services globally in
the online environment, irrespective of where you are located or the customer
is located. Also, there is then the question of how and what is the right way
of regulating that and dealing with that, including what is the right way of
enforcing it. The point is that just because there is, apparently, a
particularly strong link to Australia or a reference to Australia that will not
make a great deal of difference in how easy it is to enforce upon the overseas
based providers. So I think the review will be looking more at how you deal
with the overseas and jurisdictional challenges rather than at the Australian
specific component of an overseas site.
Regarding the targeting of Australians by overseas websites, ACMA explained:
There is at least one instance which is expressly
contemplated as relevant in the Interactive Gambling Act. That is in connection
with a potential defence available under section 15, which sets out the offence
of providing an interactive gambling service to customers in Australia.
Subsection 3, in short, indicates that it is a defence if the person who is
providing the service could not with reasonable diligence have ascertained that
the service had an Australian customer link. Clearly, that would not be a
potential defence available in that situation. Otherwise, my understanding is
that factors like that might have been regarded as aggravating factors or
relevant factors at a sentencing stage, if the matter had been prosecuted.
There have been no prosecutions to date, so there is not a
body of jurisprudence to which I can refer you but, based on my understanding of
how these things work in other spheres, that would be a relevant matter for a
judge to consider.
Capacity for illegal activities and
The committee noted above that the Australian Crime Commission has
identified online gambling as a money laundering risk and also as a risk for
revenue and taxation fraud.
Dr Gainsbury and Professor Blaszczynski listed a number of activities
associated with internet gambling that need to be addressed by any regulatory
framework. These include: the capacity for cross-jurisdictional shifting of
monies for illegal or terrorist purposes, laundering money, loss of taxable
revenue to overseas countries, possibilities of exploiting/cheating players,
lack of procedures for the resolution of disputes, lack of clarity over
boundaries of legal responsibility, and harm to local residents.
The Victorian InterChurch Gambling Taskforce expressed its concern that
many overseas gambling providers are located in secrecy jurisdictions commonly
known as tax havens:
For example, Pokerstars is located in the Isle of Man, ranked
24th in the Financial Secrecy Index (FSI). Daniel Meisel, who was subject to an
indictment for engaging in an illegal online gambling business in the US, set
up the operation in Costa Rica, ranked 34th on the FSI. A number of these
secrecy jurisdictions allow for arrangements where the beneficial owners of the
online gambling provider many be kept secret, undermining the ability to ensure
probity standards. Further, the tax arrangements in these secrecy jurisdictions
will allow providers in these jurisdictions a financial advantage over a
provider based in Australia, and actively encourage tax avoidance.
The Taskforce argued that the significant numbers of providers located
in secrecy jurisdictions 'provides even stronger reason for the Commonwealth
Government to do all it can to resist the access of these gambling providers to
the Australian community'. It added:
We would urge the Commonwealth Government reject any
temptation to respond by allowing Australian online gambling providers to be
set up with low taxes, which seek to target gamblers in other countries with
the aim of extracting profit from those places. In effect Australia would then
be seeking to export gambling problems and harms to other parts of the world,
while seeking the profits to be brought onshore to Australia.
Ambiguities and inconsistencies
Submitters suggested the lack of enforcement of the IGA to date may be in
part due to ambiguities in the Act being exploited. The Victorian InterChurch
Gambling Taskforce said that after making a complaint to ACMA about a site,
they were advised that:
...although the website provides links to other sites that
offer internet gambling services, the access to games were not provided directly
by the site itself. ACMA stated th[at] it was not possible to deposit money on
the website and therefore the website is not a gambling service as defined
under section 4 of the IGA, and as such it is not [a] prohibited internet
gambling service as defined under section 6 of the IGA.
The Taskforce concluded that people wishing to market an online casino appear
to only have to set up a website to which the online casino is linked to be
able to legally do so.
In response to whether the website detailed above, which did not
directly provide internet gambling services, would be looked at by the review
of the IGA, DCBDE stated:
I think the review is looking at a pretty broad suite of
aspects of the act to the extent it will look at the questions around the
provision of prohibited services as well as the advertising of prohibited
services and how best those should be treated in the future. As you would
appreciate, the terms of reference are not going to, in a sense, specify
instance by instance the sorts of things considered, but the review is intended
to cover the act and, broadly, what it does.
The DCBDE discussion paper admitted that the structure and complexity of
the legislation 'may have caused difficulties in the interpretation and
application of certain provisions in the IGA, especially those relating to the
advertising of prohibited interactive gambling services'. Advertising and the
IGA is discussed in chapter nine
Regulation is difficult to
In addition to the ambiguities and inconsistencies for providers
interpreting the legislation, Dr Gainsbury and Professor Blaszczynski referred
to preliminary research which indicates a high level of confusion among
Australians regarding internet gambling regulation which has led to:
...a disparity in that sites that abide by the regulatory
requirements compete unfairly with offshore sites that offer better odds, more
products and have fewer personal identification requirements.
They advocated that further efforts be made to educate Australians about
the differences between regulated and unregulated sites and the dangers of
playing on unregulated sites.
Dr Gainsbury pointed out that:
There are a number of sites which are branded to Australian
poker players which, people are unlikely to be aware, are not acting in a legal
manner in providing those services.
The Coalition of Major Professional and Participation Sports (COMPPS)
also mentioned that the current legislation is 'inadequate, fragmented and
Wesley Mission submitted that an appropriate range of sanctions and
warnings should apply based on a public health approach and it is important for
consumers who choose to gamble online to understand the following:
they are participating in an activity that is prohibited in Australia;
there are numerous alternative forms of gambling that are legal in Australia
that are government regulated and provide some level of consumer protection;
there are serious risks of harm attached to online gambling;
the government is unable to control offshore gambling operations, and cannot
offer any consumer protections or redress for consumers who get into trouble;
help for problem gambling is available in Australia.
Options to strengthen the IGA
The main enforcement mechanism for the IGA relies on the investigation
of complaints about services hosted outside Australia, which is reactive rather
than proactive. However, it was pointed out to the committee this mechanism has
not resulted in any prosecutions. To address the deficiencies highlighted to
the committee, particularly access to overseas sites, a number of suggestions
were provided to strengthen the IGA. These are discussed below.
One option to strengthen the IGA would be not to allow financial
transactions with gambling providers. Many submitters pointed to US legislation
where this is the case. The Victorian InterChurch Gambling Taskforce suggested
requiring Australian financial institutions to block the payment of credit card
transactions with known internet gaming and casino sites. This would 'curtail
Australians doing business with such sites and reduce the incentive for
off-shore based providers to market to Australian customers'. It noted that in
the US, this legislation prohibiting financial transactions related to internet
gambling has resulted in several large internet gambling providers removing
access for US customers to their services.
The Australian Racing Board (ARB) also supported the introduction of
financial transactions controls and suggested:
Section 69A of the IGA provides the Minister with the
capacity to develop regulations relating to financial agreements involving
illegal interactive gambling services. The regulations may provide:
- that an agreement has no effect to the extent to which it provides
for the payment of money for the supply of an illegal interactive gambling
- that civil proceedings do not lie against a person to recover
money alleged to have been won from, or paid in connection with, an illegal
To date no such regulations exist.
The ARB submitted that the IGA should be amended to adopt the approach
taken in the US. It highlighted that the US uses the Unlawful Internet
Gambling Enforcement Act 2006 (the UIGEA) to control interactive gambling
through financial regulation. The Act:
...restricts US banks and credit card companies from
processing transactions for any internet gambling sites. The UIGEA also makes
it illegal for internet gambling providers to accept money transfers from
potential US online gamblers.
This approach was also supported by other submitters.
The US approach is discussed in greater detail in chapter five where approaches
taken by overseas jurisdictions to prohibit online gambling are outlined.
The Interactive Gambling and Broadcasting Amendment (Online Transactions
and Other Measures) Bill 2011 is also being considered by the committee. It
contemplates including provisions in the IGA to allow consumers to cancel
financial transactions to international gambling websites provided the
transactions have not been completed. The bill's provisions relating to
financial transactions are discussed separately in chapter 15.
Blocking online gambling websites by internet service providers (ISPs)
is an option used in some overseas jurisdictions which received support from
submitters. The Victorian InterChurch Gambling Taskforce noted:
The main enforcement mechanism has been for the Australian
Communications and Media Authority (ACMA) to investigate complaints about interactive
gambling services hosted outside Australia. Sites that host content prohibited
by the Act are placed on a “black list” maintained by approved vendors of
internet filter software. The installation and use of internet filters is
voluntary so this measure is only effective in cases where users install and
regularly update their software. ACMA has no power to compel internet service
providers to block content.
The Australian Racing Board supported the need for ISP blocking:
France moved in 2010 to legislate in respect of online
gambling. Importantly its legislative framework makes provision for ISPs to
block access to illegal gambling sites.
The IGA should be amended to require the regulator to block
the ISPs of online firms who do not comply with the required form minimisation
responsibilities, probity measures and funding obligations or breach
restrictions on advertising...
ISP blocking was also supported by other submitters.
DCBDE mentioned ISP blocking in its IGA review discussion paper, which stated:
Such measures are currently utilised to support prohibition
in China and Thailand, and to support regulated access in France, Italy, and
Denmark (to be introduced in 2011).
In France, courts can direct ISPs to block unlicensed online
gambling operators and fine those that do not comply. French ISPs have [publicly]
noted their dissatisfaction with these laws. In Italy, ISPs are required to
block unlicensed gambling websites. ISPs can be fined if they fail to block
unlicensed sites. In Thailand, ISPs are required to block all gambling
websites. Failure to block the list of gambling websites can lead to
termination of an ISP’s operating licence.
J.G. Phillips and Professor Blaszczynski advised that to restrict access
to sections of the community such as minors, filters could be used but they are
unlikely to be 100 per cent successful.
In its 2010 report, the Productivity Commission (PC) acknowledged that
strengthening the IGA would require 'a technological barrier aimed at impeding
access to off-shore gaming websites'. It noted that:
...the Australian Government is currently developing a
technology to filter the internet, at the provider level, in order to block
websites known to contain illegal material. Online gaming does not appear to be
targeted in the scheme, but it is included in a supplementary voluntary scheme
that the Government is encouraging internet service providers to offer on a
The PC further noted that blocking websites 'may reduce, but would not
eliminate, online gaming by Australians' as there are relatively
straightforward methods to circumvent this measure. It added that:
To meaningfully reduce online gaming, the internet filtering
system would need to be compl[e]mented with amendments to the IGA that made it
an offence for Australian citizens to access online gaming products. Further,
resources would need be allocated to the detection and prosecution of
Australian online gamblers who breach these provisions. Combined, these
measures would significantly curtail online gaming by Australians.
However, the PC submitted that such measures could be seen as a
'draconian response to a practice that is widely accepted in a physical
setting'. It concluded that:
The magnitude of these costs is such that the level of harm
associated with online gaming would need to be very high, and unavoidable
through alternative regulatory responses, in order for a net benefit to arise
from bolstering the IGA.
The DBCDE IGA review discussion paper also mentioned that some countries
impose criminal sanctions on the provision of interactive gambling services:
A number of countries (including Australia) impose criminal
sanctions for the provision of certain online gambling services, and in some
countries (for example, China) it is illegal for their citizens to access such
services. However, due to jurisdictional issues and difficulties monitoring
online gambling offences and gathering evidence, such laws are often difficult
DBCDE also advised that licensing agreements can be used to regulate
Countries also use licensing frameworks to regulate access to
online gambling services. In some instances, only domestic services are
licensed and able to offer services to citizens, while other countries allow
overseas-based services to offer licensed services.
As outlined in chapter five, there appears to be a movement towards
attempting to put in place international agreements around probity and consumer
protection standards. Wesley Mission suggested that Australia could seek to
work with European nations that allow online gambling to develop international
standards on probity and consumer protection:
In the longer term, the Australian government should work
with the international community to see if a relatively safe international
online gambling framework can be established. In our opinion, Australia should
not open the door to offshore online gambling until there are means to control
the activities of offshore online gambling providers. By legalising online
gaming in Australia we lose the ability to argue against consumers also
gambling with unregulated offshore casinos.
Gaming Technologies Association agreed and stated that 'appropriate
operation [of online gambling] through legislation and regulation requires
transnational thinking and international cooperation'.
Dr Gainsbury and Professor Blaszczynski also supported work with
overseas jurisdictions to achieve greater consistency:
Australian approaches to responsible Internet gambling ought
to take into consideration, and where appropriate, adopt or introduce relevant
policies and procedures that are consistent with those implemented in other
international jurisdictions. Given the Internet is a global phenomenon, a
uniform set of guidelines informing policy decision makers across international
boundaries must be pursued to maximize regulatory control and monitoring.
DBCDE also mentioned this work as an option:
Some countries that regulate access to online gambling are
exploring the possibility of entering into agreements to assist with this
regulation. For example, the respective regulators in France and Italy have
signed a memorandum of understanding to formalise information sharing and
discuss common issues. The regulators will seek to work together on regulatory
issues, the control of legal operators and illegal sites, as well as fraud and
However, it noted:
The increasing number of countries permitting regulated
access to licensed online gambling providers continues to diminish the
prospects of international cooperation between countries that prohibit online
gambling to enforce their laws at a global level. Agreements between countries
that allow regulated access may be more viable.
The committee notes that the PC concluded that 'the whole reason we have
a problem with the IGA is that there is no such international arrangement in
place'. It recommended that, because this is a global issue, the government
should investigate the cost-effectiveness of an international agreement.
Other approaches to regulation
The view of the Productivity
Somewhere between prohibition and liberalisation is the view put forward
by the PC which recommended 'managed liberalisation' of online gaming, starting
with online poker games. It argued that the effects of this change should then
be evaluated before further liberalisation is considered.
It emphasised that managed liberalisation should be subject to a
regulatory regime that mandates:
- strict probity standards;
- high standards of harm minimisation, including:
- prominently displayed information on account activity, as well as
information on problem gambling and links to problem gambling support;
- automated warnings of potentially harmful patterns of play;
- the ability to pre-commit to a certain level of gambling
expenditure, with default settings applied to new accounts, and the ability for
gamblers to set no limit on their spending as one of the system options (with
periodic checking that this remains their preference); and
- the ability to self-exclude.
The PC recommended that the government should monitor the effectiveness
of these harm minimisation measures, as well as the performance of the
regulator overseeing the national regulatory regime. In addition, the
government should also evaluate whether: the provision of online poker card
games should continue to be permitted and whether liberalisation should be
extended to other online gaming forms.
The PC emphasised to the committee that it recommended contingent
liberalisation where an evaluation would look at the operation of liberalised
online poker; however, if it found there were significant problems, then
consideration would be given as to whether it should continue to be permitted.
Why treat online poker differently
The PC outlined why it believed that online poker could be liberalised:
- it has a different character to poker machines;
- it is seen as a game of skill;
- there is no evidence that players experience the trance-like
states that occur when playing EGMs;
- there is a social dimension in that one plays against other
people so it is very interactive;
- other games can be played much more quickly and the stakeholder
for other games is the casino; and
- the ground rules that apply, with players competing for a pot of
money to which they contribute, limits losses.
However, research questioning the relative safety of online poker is also
A key example of this is the argument that online poker games
appear to involve the lowest risks and, consequently, should be liberalised as
a 'relatively safe gambling product'...The argument used to support this argument...contains
several limitations. The parameters of legal poker playing are still unclear and
differ between jurisdictions (Grohman, 2006; Kelly, Dhar, & Verbiest,
2007). Despite the element of skill involved, poker is still considered a game
of chance, hence a gambling activity. Although in the long run, skill might
predominate over chance, for each individual session or over a short period of
time (months to a year), the outcome of poker is determined by chance (Grohman,
2006). A skilled player may know that his poker-hand has an 85% chance of
beating his opponents hand, but 15% of the time, the player will lose the hand
and the money staked.
Dr Gainsbury advised:
...when played on the Internet, poker can be both rapid and
continuous, with multiple games played simultaneously, immediate shuffles and
dealing and large stakes possible. The assertion that online poker players do
not experience dissociation is contrary to results from a study examining
potential predictors for excessive online poker playing (Hopley & Nicki,
However, iBus Media, the world's largest poker media company,
unsurprisingly agreed with the PC recommendations and stated that:
Online poker can be clearly distinguished from other forms of
interactive gambling and wagering activities. Online poker is a game of skill,
which is conducted peer-to-peer in a social setting.
It therefore argued that online poker should be excluded from the IGA
and noted that section 10 of the IGA allows the Minister for Broadband,
Communications and the Digital Economy to exclude any service from the
provisions of the IGA at his discretion.
Mr Bill Barton, a regular poker player, agreed. While supporting any
moves to increase the effectiveness of Australia's legislation, he submitted
that online poker should be excluded and should be able to operate and be
regulated in Australia. To support his argument, he noted that online poker 'is
an activity quite distinct to other forms of online gambling and gaming'. He
Lastly, Australia sees itself as a modern country that
provides relative freedoms to its residents. It is interesting that a person in
a country like Russia, a country that we would proclaim generally restricts
personal freedoms, can play online poker without fear of their government
restricting these activities. We must protect our weakest links (problem
gamblers and families of those problem gamblers), there is no doubt that this
is our Governments policy and the stance of the majority of Australians.
However we can do that through education, licensing, regulation, and better
directed and funded support programs not removing personal freedoms from people
that undertake those activities sensibly and responsibly.
Committee majority view
The committee majority notes that currently the IGA does not distinguish
online poker from other online casino-type games. It also notes that the
question of whether poker is a game of skill has been the subject of various
Given its lack of expertise in this particular area and the fact that the
committee did not take detailed evidence on this point, the committee majority
continues to support a cautious approach to regulation and does not support
online poker being excluded from the IGA.
This section will detail the areas regarding the IGA that the committee
as a whole agreed. The committee agrees that the IGA should be retained. It agrees
that as far as preventing Australians from accessing Australian-based prohibited
interactive gambling services, there is no doubt that the IGA has been
In relation to Australians being able to access overseas-based
prohibited gambling services, the committee acknowledges the limitations of the
current complaints-based scheme to effectively regulate Australian consumers'
overseas internet gambling activities. This is due in large part to the current
lack of ability to enforce the IGA. The lack of any prosecutions since the IGA
came into effect is concerning and provides little in the way of a deterrent.
The committee emphasises that this is not due to a lack of willingness or
effort on the part of the AFP, but is in large part due to the reliance on
foreign assistance often in countries where the activity is legal. This does
not point to a deficiency in the legislation but reflects the complexities of
the online environment. However, the recent action taken by the US in this area
shows that despite the complexities of the online environment, enforcement action
is possible. The committee notes recent reporting that the AFP has now joined
forces with the FBI to investigate untaxed and unregulated online casino sites.
The committee is pleased to note AFP advice that the ACMA, DBCDE and the
AFP have 'agreed to develop a stringent regulatory regime with a view to
deterring those engaging in this unregulated industry'.
The committee supports this work which is occurring separately to the review of
the IGA and 'recognises the difficulties we all face with enforcement of the
existing act and the need to work together as best we can to make it as
effective as possible'.
Despite the limitations, the committee believes these do not mean that
the IGA is ineffective. As acknowledged by the PC, it has been successful in
limiting the provision of interactive gambling services to Australians and has
reduced demand for these services below what it would have been without the Act
in place. The committee believes that this is mainly due to the restrictions on
advertising. The IGA is particularly effective in ensuring these services are
not offered by Australian-based providers. However, given the challenges of the
online environment it is less effective at limiting services from overseas
A number of areas were pointed out to the committee which, if addressed,
would improve the effectiveness of the IGA. The committee supports the review
of the IGA addressing the inconsistencies and ambiguities identified in the Act
that can be exploited by providers. The review should take into account the
apparently narrow construct of the IGA to ensure that the legislation is able
to effectively deal with the development of technical and other measures aimed
at avoidance. This would include websites which are clearly providing a link to
facilitate prohibited interactive gambling services.
7.87 The committee recommends that the Interactive Gambling Act 2001 (IGA)
be amended to address the inconsistencies and ambiguities identified to the
committee regarding prohibited interactive gambling services and any others
that are identified through the review being conducted by the Department of
Broadband, Communications and the Digital Economy. Specifically the IGA should be
amended to capture methods of avoidance such as websites which provide links to
facilitate access to prohibited interactive gambling services.
In addition, given the apparently high level of confusion in the
community regarding online gambling regulation, the committee would support an
education campaign aimed at consumers. This should occur after the review of
the IGA has been completed and should provide clarification, education and highlight
the risks of harm involved with online gambling, particularly if accessing
overseas unregulated websites.
7.89 The committee recommends that following the review of the Interactive
Gambling Act 2001 by the Department of Broadband, Communications and the
Digital Economy, an education campaign be developed for consumers to provide
clarification of online gambling regulation and highlight the risks of harm.
The committee is left with the following options in relation to the IGA.
The first is to strengthen the IGA to ensure it can be adequately and
appropriately enforced for overseas as well as domestic providers of
interactive gambling services. The other option is to liberalise and regulate
currently prohibited interactive gambling services with appropriate safeguards
which would allow Australian-based providers into the market. Another option
would be a combination of these.
At this point in its consideration of this issue, the committee diverged
in its views. The committee majority view is outlined below. Additional
comments by the Chair, Coalition committee members and Senator Xenophon follow
Committee majority view
The committee majority agrees that while there are limitations to its
effectiveness, the IGA should be retained. The committee majority recognises
that the IGA is intended to deter or limit users from accessing prohibited
interactive gambling services. It has been particularly effective in preventing
Australians from accessing Australian-based prohibited interactive gambling
services. In relation to preventing Australians from accessing overseas-based
prohibited interactive gambling services, the committee majority acknowledges
its limitations. However, the committee majority believes that these
shortcomings do not mean the IGA is ineffective. While it is difficult to
measure, the PC has acknowledged that the IGA has reduced demand for these
services below what it would have been without the Act in place. The PC also
acknowledged that the shortcomings of the IGA do not indicate a policy failure.
The committee heard about a number of areas in the IGA that could be amended
to make it more effective. The committee majority agrees that the current
review of the IGA is the most appropriate vehicle to address these identified
inconsistencies and ambiguities. The committee also heard about areas requiring
additional safeguards, such as advertising and inducements (addressed in a
following chapter) and the need for more consumer education in this area. The
committee majority agrees that providing information to consumers who choose to
gamble online is important and supports the need for an education campaign. It
also supports the work being under taken by the AFP and DBCDE to make the
enforcement mechanism more effective.
Customers have become increasingly familiar and comfortable with online
transactions over the past 10 years. However, there will be some customers who
remain cautious about using overseas gambling websites. There are overseas
providers developing a good reputation and working to maintain it but there are
still unscrupulous operators, so the use of an overseas gambling website is not
without risk. While the committee majority acknowledges that the deterrent
factor of the IGA has been reduced, it is not nullified. Also difficult to
measure is the effect of the message that the IGA sends to the community that online
gaming is not an activity currently sanctioned by the government.
In summary, the committee majority supports retaining the IGA and making
changes to address issues identified to the committee and others that arise
during the review of the IGA by DCBDE to improve its effectiveness. The
committee heard about various measures to strengthen the IGA in relation to
deterring customers from using overseas websites to access prohibited
interactive gambling services. The committee received most evidence on
financial transactions controls, such as those contained in the bill before the
committee. However, the banking industry detailed practical, legal and
technical difficulties and the committee majority is not convinced of this
approach, as outlined in chapter 15. It looks forward to the further
examination of such options by the IGA review being conducted by DCBDE.
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