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Chair's additional comments
Interactive Gambling Act
Although I support the vast majority of the report, there is one issue
where I take a different view from the committee majority. This is how to
address the deficiencies in the Interactive Gambling Act 2001 (IGA),
particularly the lack of ability to stop Australians accessing potentially
dangerous overseas websites to play casino-type games. The committee heard how
the IGA has been particularly effective in preventing the provision of
interactive gambling services by Australian-based providers. So currently,
Australians wishing to access interactive gambling services that are prohibited
by the IGA must do so via overseas websites as domestic providers are
prohibited from providing such gambling services.
Although under the IGA overseas websites are prohibited from targeting Australians,
the ability to enforce this appears limited. The mechanism relies on complaints
to the Department of Broadband, Communications and the Digital Economy which
refers investigations to the Australian Federal Police (AFP). The AFP in turn
has to rely on overseas enforcement agencies. Where the gambling service is
being provided legally in the overseas country, the ability for enforcement
action to be taken is problematic and limited.
The evidence of the lack of ability to enforce the IGA in relation to interactive
gambling service providers overseas is the over 2,000 overseas gambling
websites that Australians can easily access. Despite the IGA prohibiting
overseas websites from targeting Australians, the committee heard about websites
such as Casino.com, which obviously targets Australians with the display of the
Australian flag in the background and lists of Australian winners. Clearly this
enforcement mechanism is not working.
Although there is an element of risk in accessing overseas websites,
this will be a greater deterrent for some people more than others. As the
Productivity Commission (PC) points out, this is more likely to deter responsible
players than problem gamblers.
...in essence, the legislation attempts to dissuade people
from gambling online by making it more dangerous. This will have the biggest
deterrent effect on responsible gamblers who are more likely to react by
avoiding online gaming altogether, thereby forfeiting the unique benefits of
the medium. The IGA will be least effective on problem gamblers whose behaviour
means they may not respond appropriately to the riskier online gaming
environment the IGA facilitates.
The current arrangements leave problem gamblers who prefer to gamble
online with casino-type games with minimal protection and at risk of
exploitation. As the PC noted, 'the extent of harm minimisation features varies
greatly from website to website, and generally falls short of best practice'.
This was confirmed in evidence to the committee from Dr Sally Gainsbury:
It is also a very diverse form of gambling. There are
multiple operators and multiple sites that range from those that appear one moment
and disappear shortly thereafter to well-established operators who are
regulated in jurisdictions that do have quite stringent requirements...
In addition, the current situation leaves Australians on their own
should they experience any difficulties in the online environment. The
committee heard the personal story of an individual who lost a large sum of money
through his use of Casino.com through unauthorised transactions and of his
difficulty in addressing the situation through the regulator in Gibraltar where
the company is licensed.
I think we have to recognise the reality. Australians already gamble on
overseas websites. They wish to do so and will continue to do so. Currently the
sites they can access vary greatly in terms of reliability, harm minimisation
and consumer protection measures and probity. Some are highly regulated and
enforced and others are not and it can be very difficult for an individual to
know the difference.
My overriding concern is putting in place appropriate harm minimisation
and consumer protection measures for individuals who wish to gamble online. As
we cannot ensure the quality of overseas online gambling websites, I agree with
the recommendation of the PC to allow online poker to be offered by
Australian-based providers. These providers could then operate under
legislation and regulations that ensure high standards for harm minimisation
and consumer protection.
The view of the Productivity Commission
The PC told the committee that in its view, Australia currently has the
worst possible model:
If you introduce managed liberalisation, you have the ability
to have registered Australian operators. So you can do whatever you like with
that particular group and regulate that particular group in the way that you
believe is desirable. At the moment, we do not have that capacity, so
effectively everyone else is outside, subject to various regulations or no
regulation at all. So you are right: the sites that the person is looking at at
the moment are a mixture of regulated and unregulated sites over which we as a
nation have almost no control. That is the danger we have at the moment. The
question is whether you go to a model that says, 'In addition to those sites we
have Australian regulated [sites], and they work together' or, alternatively,
your hybrid model where you introduce the Australian regulated sites and try to
extinguish or prohibit these other sites by some means. But we actually have
the worst of all at the moment. The person is sitting there, exactly like you have
indicated, spending fairly substantial sums of money, but there is no way we
can influence that.
The PC recommended 'managed liberalisation' of online gaming, starting
with online poker. 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; and
- 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.
Mr Gary Banks, Chairman, Productivity Commission, explained why the PC took
...we thought that there would be merit in introducing such a
managed liberalisation approach with a precautionary element in that particular
area, subject to the sorts of protections and harm minimisation arrangements
that we thought would need to be best practice regardless.
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, but if it found there were significant problems, consideration
would then be given as to whether it should continue to be permitted.
Dr Ralph Lattimore, Assistant Commissioner, Productivity Commission, explained
what is meant by contingent liberalisation:
So not only would the evaluation look at the experiences
associated with liberalised online poker but if it found that there were significant
problems it would be possible to turn it back. We explicitly say that you would
examine whether it should continue to be permitted. There is quite a
contingency attached to liberalisation here which is quite different from any
other liberalisation measures where you say, 'Let's liberalise something'—you
do not suggest that it is possible that you may in the future reregulate it.
Why treat online poker differently?
iBus media highlighted the increased popularity of poker both online and
at land-based venues:
It is clear that poker is a popular form of entertainment and
that there is great consumer demand for poker services. There can be no doubt
that increasing numbers of Australians are playing poker online despite the prohibition
on online poker services contained in the Interactive Gambling Act 2001(the
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 you are playing 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;
- the ground rules that apply, with players competing for a pot of
money to which they contribute, limit losses.
Mr Banks explained:
...It is a game of skill, you have a bunch of people, you put
money in the pot—you are kind of locked into that site for some period of time
unless you are so brilliant you can have two screens going with two tournaments
operating simultaneously. That is why we felt it was pretty safe territory
really. The character of it and the relationships with the machine and other
people is quite different. It is more like a real game than other forms of
gambling which are described as gaming.
Dr Gainsbury agreed that poker has an element of skill:
Poker is somewhat different to some of the other forms of
gambling in that there is an element of skill involved. That is not to say that
all poker players are skilled or that you cannot have problem gamblers using
poker and spending excessive amounts. That is certainly also the case.
Increased harm minimisation and
The recommendations of the PC received support. Professor Alex Blaszczynski
explained why he agreed with the PC recommendation:
My view would be to support the Productivity Commission's
recommendations from the perspective that there is evidence that Australians
already gamble on overseas sites, which then exposes them to risk of
exploitation et cetera. My view is that it is a sensible approach to regulate
it and ensure that the Australian community are aware that they can gamble
through legitimate, well-regulated, well-policed and well-monitored sites. From
that perspective one has a control over the responsible gambling measures as
well as protecting the Australian community from exploitation.
Dr Gainsbury also supported this view on the basis of consumer
If people already are playing there should be an option for
them to play on a site where they can be protected, both in terms of ensuring
that they do have somewhere to go if they experience any cheating or fraud, and
that any site that is regulated should be required to have quite stringent
responsible gambling features in place.
Expanding on the responsible gambling features that could be put in
place, Dr Gainsbury continued:
There is some evidence that these can be implemented on
internet sites in some cases even more effectively than those in land-based
venues, because you can track players consistently and look at individual
Betfair expressed its view that:
By permitting Australian based operators to offer online
poker and gaming, we are of the view that Australians will migrate towards
Australian companies because of better customer service, security of engaging
with an Australian based company and superior product offerings. An important
additional benefit of a regulated environment is that responsible gambling
initiatives could be enforced on Australian based operators, as well as a
requirement for licence fees and taxes to be paid.
While acknowledging that it is an unusual position for a consumer
organisation to take, Ms Penny Wilson from the Responsible Gambling Advocacy
Centre said it favoured regulation:
We have noted that it is an unusual position for a consumer
organisation, to say that whilst it is more regulation it is opening up a
market, but we feel that then at least some of the inadequacies of what is
being offered by online gambling could be addressed. For instance, you can have
compulsory pop-ups, or you can make it a requirement of the regulations that
access to self-limiting mechanisms such as limits on the amount of money or
time spent is available from the first screen, not buried somewhere in the back
of the website or not available at all. It gives you some scope for that, but
we do acknowledge that that is an unusual position...
Professor Blaszczynski told the committee that in his view the sensible
approach would be to offer Australian-based highly regulated sites:
...with appropriate auditing and monitoring of regulated
sites, you can ensure that the players are not playing against robots or
software and that the game itself is fair. You can ensure that underage
gambling is prevented or restricted. You have got the checks and balances in
place. Again, it is a balance between opening up the Australian community to
unfettered gambling opportunities and recognising the reality that there is an
increase in legalised gambling online that comes from a variety of
international sources, some of which are regulated and highly policed while
others are the fly-by-nighters. My view essentially is that, if there is the
opportunity for online gambling, then I think the sensible approach basically
is to ensure that there are highly regulated and safe sites. The example there
is the online lottery and online sports betting within Australia. That has
quite a high degree of community acceptability simply because they know it is
regulated. There are avenues for complaints and complaints are dealt with
sensitively and sensibly.
...Given the liberalisation of gambling overseas—in Canada,
Ontario and Quebec have introduced online gambling, and in Europe there are the
examples of Gibraltar, Alderney and so forth—I think the reality is that
internet gambling is with us and it is going to increase, particularly with the
advent of mobile phones, iPads and other mobile devices that allow people to
stream in videos et cetera. My view, essentially, is that we are not going to
prevent online gambling under the current circumstances, and therefore it is a
matter not of introducing new forms of gambling but of putting in steps to
ensure that the Australian community is protected.
iBus media submitted that the experience in overseas jurisdictions shows
that online poker can be regulated effectively:
...and the most appropriate regulatory outcome is for a local
licensing regime (incorporating effective harm minimisation measures) to be
developed. Indeed, effective harm minimisation measures are easily and widely
utilised by online poker operators, both voluntarily and as a requirement of
Dr Ralph Lattimore, Assistant Commissioner, PC, elaborated on necessary
We raised a number of them already, and many of them are a
current feature of the existing online sites that are legal in Australia. In
some respects it was online gambling sites in Australia that led the way in
harm minimisation back before the IGA came into play. But strict probity
standards go without saying. That probably applies currently across all
gambling forms that are legal in Australia. Prominently displayed information,
account activity, information on problem gambling, links to problem gambling
support, automated warnings if your behaviour looks like it is running into
risky areas—all of these are very easily achieved in an online environment
because each transaction is recorded. I believe Betfair gave evidence to you
and cited a case of someone who wanted their account to go up to $70,000. They
immediately queried that strange aspect of behaviour given past account
behaviour by that person. That is the sort of thing you can do in an online
environment. Clearly the precommitment and self-exclusion arrangements we
discussed earlier. We envision all of those as a feature of the online
environment, whereas some of these features remain controversial in the
Mr Robert Fitzgerald, Commissioner, PC, added:
...One of the things that we said both in the 1999 report and
in the 2010 report in relation to interactive gambling is that you can build a
whole range of consumer protection mechanisms into those systems including—as
in the 2010 report—precommitment, which can be mandatory if that is the
approach that you take. So that certainly can be built in. The difficulty with
that is that people can move easily to another site. The danger is that they
can move from a mandatory precommitment on an Australian regulated site to
another site that does not have precommitment. So it would probably be a little
less effective but...if they value a trustworthy Australian regulated site they
are more likely to maintain gambling on that site. We would see absolute
precommitment on these internet sites being not only available but part of the
design features that you would have if you were in fact to allow Australian
sites and regulate them.
The committee heard that currently people can gamble online from home
under the influence of alcohol or drugs and any harm minimisation measures to
assist them would depend on which website is accessed. Professor Blaszczynski
told the committee that online gambling algorithms could be used to monitor
gambling behaviour and identify changes or dangerous gambling behaviour:
...So if a person is on some occasions completely inebriated
and gambling excessively in episodes of binges, that pattern of behaviour would
be identified more readily than if the person is slightly inebriated and
regularly going to a land based venue, slipping under the radar but
nevertheless exhibiting impaired control over their judgement over a longer
period. When we talk about gambling, apart from the lotteries with Australia,
any form of gambling could potentially be seen as incurring some degrees of
problems. The question is: what level of harm are we prepared to accept in
terms of the government liberalising gambling legislation within Australia?
The opportunity to identify risky gambling behaviour was also emphasised
by Dr Gainsbury:
If there is a prohibition policy, something needs to change
because it is not working at the moment. You can go online and gamble. If that
is not going to be enforced, perhaps legalisation and regulation would create a
safer playing environment for people. If someone wants to gamble in a
problematic way, they probably will be able to in some way, shape or form, but
there at least will be some options and there will be efforts made to protect
people from developing problems and to look after those who appear to have
Currently Australians have over 2,000 overseas-based interactive
gambling websites at their fingertips. However, there are no consistently
mandated requirements in the form of harm minimisation measures to protect players
and particularly vulnerable individuals. I believe that allowing
Australian-based interactive gambling service providers to offer online poker presents
the opportunity to identify and put in place appropriate harm minimisation and
customer protections measures as the starting point for developing regulation.
Would this attract new gamblers?
When asked whether this liberalisation of online poker would attract new
gamblers, Mr Banks responded:
As to whether there would be more people attracted to online
poker card games, I suspect there would be. Would that be a harmful activity
per se? That did not appear to us to be the case relative to other forms of
gambling and, in particular, gaming—poker machines as opposed to poker card
That is happening currently. I suppose what you are saying is
that things could be worse and that the people who are encouraged into this
activity through its domestic liberalisation would also be the sorts of people
who were almost indifferent to whether they were doing it domestically or
internationally. We were arguing that the people who might enter into it would
feel more secure in an Australian environment and that is why they had not
actually been doing it before on those international sites. There is a degree
of speculation and that is why, on balance, as Ralph said, we had a very
precautionary approach and a contingent approach where, subject to review, it
could be stopped. But I agree; there are judgments that need to [be] brought to
bear on those things.
Professor Blaszczynski expressed his view that:
...what we are essentially arguing here is not so much that
we are introducing a new form of gambling, because internet gambling currently
exists. We are really looking at imposing a proper regulatory system to protect
the Australian community.
Dr Gainsbury suggested that this model should be supplemented with
education to increase awareness of regulated and unregulated sites and the
potential risks and harms:
If people are playing online then having a regulated site
would offer player protections, but I would want to look at a more balanced
model and also at increasing awareness of the difference between regulated and
unregulated sites, putting consumer protections on the sites and advertising at
a community level that poker play can result in harm as well.
While FamilyVoice Australia did not agree that online poker should be
allowed on Australian-hosted sites, it did advise that should this occur, it
should be accompanied by restrictive advertising rules that limit the times and
the nature of the advertising. There should also be a requirement to provide
accurate information about potential losses.
Regardless of the model used, the PC spoke about the need to address the
regulation of advertising:
Going back to your advertising question, one of the things
that we were talking about earlier in the day was, if you were to introduce,
for example, managed liberalisation of poker game playing, what would you allow
in relation to advertising there? You might take the approach of, 'We'll allow
it, but we won't allow advertising.' You might also take the approach of, 'What
we would do is we'd allow advertising that this is a registered, regulated site
so that people are encouraged to go there.' Even in that area, whether you
would allow advertising is one question and the nature of the advertising is
another. From my point of view you would want to look at the risks that you are
trying to deal with, relative to a game.
I agree with both these ideas. Educating consumers will be essential to increase
awareness of the dangers of overseas sites. It is also the case that gambling
is not without risk even in a well regulated environment and people need to be
aware of the potential risks and harms as well as the tools and resources to
assist them. In addition, restricting advertising not only for overseas but
domestic providers is necessary to avoid repeating the situation we now have
with the proliferation of sports betting advertising.
Would Australians prefer Australian-based sites?
The committee heard that many Australian gamblers are likely to prefer
using Australian-based websites and a safer domestic market (see discussion in
chapter three). The PC considered that while the evidence is not clear that
Australians, particularly young Australians, would choose to use a better
regulated Australian site over an overseas site, at least some would. It added
that education could play a part in steering people towards better regulated
Dr Gainsbury also indicated that evidence shows at least some people
would move to a domestic site but the sites would have to be competitive:
I would certainly say that it is a very competitive market
and liberalising and regulating some sites in Australia will not necessarily
reduce the number of offshore competitors. Evidence from other jurisdictions
that have liberalised and implemented their own sites suggests that they do
capture, in some cases, a minority. Sweden, for example, has only 30 per cent
of the poker market on its state-based site. So sites have to be competitive,
which is going to have implications for how much you can tax sites so they can
offer attractive rates to players and the various advertising rights that they
have. So certainly the regulatory model would have to ensure that any
liberalised and legalised site would be competitive in an international market.
Absolutely, if it is going to be a model where there is a liberalisation, there
will have to be efforts to reduce the attractiveness of competitor sites. That
might be by restricting advertising or providing incentives for sites. So there
would have to be a dual approach to protect the licensees.
What about overseas sites?
As long as unregulated overseas sites are available and present an
attractive alternative, individuals will still be able to gamble in a manner
that could cause significant harm. I favour a hybrid approach where, following
the recommendations of the PC, we liberalise the Australian online poker
market, appropriately regulate it and put in place safeguards. However, in
addition, we implement measures to encourage people to use these well regulated
This dual approach was supported by Professor Blaszczynski:
I would support your perspective on that...What we are
attempting to do here, basically, is firstly to recognise that internet
gambling is currently available to the Australian community. Regulating sites
will assist in preventing, but clearly not eliminating, all the problems.
Making it difficult for Australians to gamble on unregulated sites is, I think,
one of the key initiatives that I would strongly support.
The PC thought the approach had merit:
If you believe there is any scope at all for addressing overseas
sites then you can do that in a hybrid model as well. The question is the
capacity to do that. There are ways around internet filtering but, of course,
if it is present and there are available domestic sites then incentives to get
around it are reduced.
However, Dr Lattimore of the PC cautioned the committee about an issue
to be aware of:
However, perhaps one of the bigger problems is that if there
were an overseas site that offered identical services to an Australian site and
you barred it because of its overseas location then you would probably be in
breach of WTO rules.
...Antigua took the US to court on the basis that they were
offering a form of gambling that was also offered in the United States. There
were two hearings in relation to that matter and Antigua won.
...The key issue would be whether it was legitimate to have a
standard harm minimisation. If there were the potential for you to say that an
overseas site did not meet those harm minimisation guidelines then it might not
breach the WTO rules. But in this instance it did, so it would have to be a
consideration in blocking overseas sites.
I favour using payment controls to encourage individuals to use domestic
sites and steer away from unregulated overseas providers. I realise this is not
a perfect solution. The most determined individuals would work on circumventing
such controls. But they would provide a barrier for most people most of the
time, helping to protect them particularly from impulsive gambling episodes. Even
for those who find a way around such a mechanism it would mean they are making
a much more conscious decision to use those overseas websites. Dr Gainsbury
agreed it would not be a perfect solution:
...people can generally find a way around any sort of
blocking measures. They have to have the technological know-how, so the
majority of people might not be able to, but a minority will.
She stressed that such a model would need to include restricted
advertising for unlicensed sites and increasing education for consumers:
I think one effort that might be encouraged is restricting
advertising rights for unlicensed sites and also having a dual campaign of
actually educating players about the difference between unregulated and
regulated sites, because I really think that in Australia people actually do
not know that, for example, poker sites are illegal and they do not know the
risks that are involved. So a mixed approach of enforcing prohibition and
encouraging and educating consumers about the importance of playing on a
regulated site is important.
I agree with this approach.
Payment controls are discussed in detail in chapter 15. The Interactive
Gambling and Broadcasting Amendment (Online Transactions and Other Measures)
Bill 2011 suggested one form of financial transaction control, involving
consumers being able to suspend or cancel incomplete transactions to overseas
gambling websites. However, during the hearing a more straightforward process
In essence, this would involve the government maintaining a 'blacklist'
of merchant numbers belonging to overseas gambling providers and providing the
list to financial institutions to enable them to block transactions to those
numbers. The Australian Bankers' Association (ABA) gave evidence on this model
at a public hearing:
Mr Munchenberg:...if we the industry were to be
provided with blacklisted merchant identifiers then we could block payments to
those merchant identifier numbers. So, if someone sets up a gambling website in
wherever, has a merchant number which, for argument's sake, is 1234 and the
Australian government decide that they do not want Australians transacting with
that merchant and proscribe 1234, we can block payments to 1234. If that online
gambling site then became aware that those payments were being blocked and got
a new merchant number, 1235, then we would not be able to block payments to
that until such time as the Australian government identified that that had
happened and sent it back to us. As I understand it, that would only relate to
direct payments: credit card payments and possibly direct debit and EFT
CHAIR: So it could be done if you were provided with
the information; it is possible.
Mr Munchenberg:...I think we probably already do that
in other areas such as terrorism, organised crime and anti-money-laundering
areas. It would potentially provide an improvement but it would fall well short
of preventing Australians from gambling online through overseas based entities.
Like the ABA, I acknowledge that such an approach could never completely
prevent or prohibit the use of overseas sites by Australians, but I believe
that such controls would dissuade the majority of gamblers. In having to
investigate methods to circumvent these controls, a person would be making a
much more conscious decision to gamble in a riskier environment overseas and
the additional time this would take may give a person time to think and
reconsider his or her actions.
The government should investigate in detail the merits and
practicalities of a system of financial controls along the lines suggested by
the ABA. In order to achieve this, I suggest that it be included in the current
Review of the Interactive Gambling Act (IGA) being undertaken by the Department
of Broadband, Communications and the Digital Economy. This work should include
close consultation with the industry.
1.50 I recommend that as part of the current review of the Interactive Gambling
Act 2001 being undertaken by the Department of Broadband, Communications
and the Digital Economy, the government further investigate the method of payment
controls which involves maintaining a 'blacklist' of merchant numbers of
overseas gambling providers and supplying them to financial institutions.
In summary, I believe that while the IGA has been effective in limiting
the provision of interactive gambling websites by Australian providers, the
reality is that Australians continue to gamble on unregulated overseas
websites. This exposes Australian consumers to risks. A better, safer
alternative would be to allow a well regulated domestic market to operate and
provide services to Australians.
I support the recommendation of the Productivity Commission to allow
'managed liberalisation' of online poker websites. An Australian domestic
industry should be developed carefully with effective harm minimisation
measures for online play as well as robust consumer protection measures.
In the model I support, if Australian providers were to be permitted to
provide certain forms of online interactive gambling services, I believe that
financial transaction barriers on overseas sites should also be put in place.
Measures to block payments to overseas websites would be likely to steer most people
towards the safer, well-regulated domestic sites. I recognise that such
measures are not likely to achieve a total prohibition on Australians' access
to overseas gambling websites, but would be likely to dissuade all but the most
Andrew Wilkie MP
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