Harm minimisation mechanisms

2.1        Online sports betting is a rapidly growing business in Australia. While betting on horseracing has a long history, the sports betting industry is relatively new. It was launched following a 2008 High Court decision that allowed licensed sports betting agencies to advertise and provide services throughout the country.[1] The prolific growth in the use of smart phones with internet access has contributed significantly to this growth. Although sports betting is legal in all states and territories, interactive gambling licenses are only available in the Northern Territory.^[2]

2.2        This chapter provides an outline of the prevalence of online sports betting and its impact as well as the regulation of this activity.

Prevalence of online sports betting

2.3        The Review of Illegal Offshore Wagering (O'Farrell review) provided information on the growth in online betting in Australia. It was reported that the total amount spent on all forms of interactive gambling was $2.4 billion in 2014, which includes both onshore and illegal offshore gambling activities.[3] The prevalence of interactive gambling appears to be growing with one study estimating that the rate was eight per cent in 2010–11, while in 2013 a report suggested that the rate of interactive gambling was 21 per cent of the population.[4]

2.4        The overall expenditure on wagering in Australia in 2013–14, including on racing, sporting and other events, was $3.4 billion.[5] Just under half of all wagering expenditure was conducted online ($1.4 billion) and is growing at a rate of 15 per cent per annum. The O'Farrell review found that the number of active online wagering accounts in Australia had grown four-fold during the period 2004 to 2014 from 200,000 to 800,000. Many people have more than one account.[6]

2.5        A recent report estimated that 13 per cent of Australian adults currently gamble on sport.[7] This rate of gambling on sport is reflected in the annual turnover of sports betting: in 2013–14, only six years after the commencement of the industry in Australia, the annual turnover for sports betting was $5.74 billion, generating approximately $100 million in annual taxation revenue.[8]

2.6        It is difficult to precisely quantify the prevalence of online sports betting in Australia as there is no national measure available. This situation is compounded by the fact that a significant number of Australians gamble using overseas websites.

2.7        The Centre for Gambling Education and Research has investigated the demographic profile of online gamblers and found that they are more likely to be male and to have higher incomes in comparison with non-online gamblers.[9] The expanding capabilities and sophistication of smart phones has contributed to the development of online sports betting, with convenience the major factor. Research indicates that 50 per cent of all sports betting takes place online or on smartphones.

2.8        The phenomenon was discussed by the Australian Psychological Society (APS) which stated:

The past decade has seen a burgeoning of more sophisticated ways to gamble, including access to 24-hour gambling through the internet, mobile phone technology and interactive television platforms. Participation in sports betting has increased exponentially over this time period, and this is in part due to the growth in online gambling. With such rapid changes in technology, it is important that legislation reflects these changes and takes account of how these sites operate.[10]

Prevalence of problem and moderate risk gambling

2.9        The Productivity Commission reported on the prevalence of problem and moderate risk gambling in Australia in its 2010 report. It stated that problem and moderate risk gambling was 0.7 per cent and 1.7 per cent, respectively.[11]

2.10      A study conducted in 2014, involving 15,006 gamblers, found that problem gambling rates were three times higher among internet than non-internet gamblers, a finding that was attributed to the interactive nature of internet gambling.[12]

2.11      Similarly, the O'Farrell review found that the rate of problem gambling is higher among interactive gamblers compared to non-interactive gamblers.[13] It noted that 2.7 per cent of interactive gamblers were found to be problem gamblers compared to 0.9 per cent of all gamblers. The O'Farrell review cited a recent study which found that 41 per cent of interactive gamblers were at risk of problem gambling compared with less than 20 per cent of non-interactive gamblers.[14]

2.12      The Productivity Commission noted that the prevalence of gambling (and problem gambling) increases in proportion to the availability of gambling opportunities.[15] Technology advances, in association with the availability of gambling at all hours of the day and night, particularly where it is accompanied with advertising, may have the effect of normalising the activity, causing increased participation and a lower perception of potential harm. This is believed to have a greater effect on younger people who are more susceptible to the influence of advertising.[16]

2.13      Other features of online gambling that increase the risk of problem gambling, as compared with traditional gambling activities conducted in person, include:

• Solitary play—increased potential to dissociate and lose track of time/money gambled;
• Play under the influence of Drugs & Alcohol—Responsible Service of Alcohol laws do not apply in the home;
• Accessibility & Convenience—no time travel required, may lead to greater frequency of play;
• Anonymity—may reduce social anxiety and inhibitions, problem gamblers may gamble in secret and in private;
• Electronic payments—may have a lower psychological value than cash, resulting in greater amounts wagered; and
• Credit Card gambling—accounts are funded by credit card deposits; gamblers bet with money they don't have.[17]

2.14      Mission Australia provided anecdotal evidence that access to credit and inducements frequently exacerbate problem gambling particularly for young adult males. Many do not fully appreciate the consequences of their actions until it becomes too late: 'It's like it is not real money until I get my credit card statement'.[18]

2.15      The APS also cited work by Gainsbury et al (2016) which suggested that 'the mode of accessing internet gambling may be related to subsequent harms. They found that gamblers who prefer to gamble online using computers had lower rates of gambling problems as compared to those using mobile and supplementary devices'.^[19]

Addressing online problem gambling

2.16      The APS highlighted that the impact of problem gambling can be far broader than the individual gambler:

Gambling is also an activity that can cause considerable harm to individuals, families and communities. Gambling is a significant public health concern associated not only with financial losses but depression, self-harm and anxiety. Moreover, it is estimated that for every one person with a gambling problem, five to ten other people are affected by it.[20]

2.17      Financial Counselling Australia (FCA) discussed the risk of harm associated with online sports betting in a recent report, emphasising how quickly large amounts of money can be lost:

Sports betting in Australia is widely advertised, easily accessible, growing exponentially and is highly profitable...Betting on the pokies is relatively small fry in comparison–you can't put $250,000 into slot machines in one sitting, but you can do that with sports betting with the click of a mouse.[21]

2.18      According to the APS, regulation is required by government to address problem online gambling. The APS went on to argue that it is not sufficient to simply allow members of the community to make their own choice, arguing that 'governments need to exercise their social responsibility to protect the public from gambling products that cause harm'.[22]

2.19      The APS emphasised that 'there is an urgent need to look at the impact of gambling on society as a whole, and what can be done to reduce the potential for gambling‑related harm'.[23] However, the APS went on to comment that there are also risks with regulation including that problem gamblers still have the option of playing offshore to bypass the restraining influence of Australian harm minimisation features. The APS concluded that 'while regulatory measures hold face validity, we caution rushing to implement measures until further research is available to inform policies that truly minimise harm'.[24]

Regulation of online sports betting

2.20      Online gambling in Australia is regulated by the Interactive Gambling Act 2001 (IGA), which reflects the Commonwealth's responsibility for regulating the provision of telecommunications in Australia. However, gambling more broadly is the responsibility of state and territory governments. As a consequence, it is important to note that states and territories are responsible for regulating and licensing the legal onshore gambling operators.

2.21      The IGA aims to minimise the scope for online problem gambling in the Australian community by regulating the provision of online gambling services to Australians.[25] The APS commented that under the IGA, while internet gambling in the form of gambling on interactive gambling sites such as online casinos, is not legal in Australia, the use of the internet as a vehicle to place bets on approved forms of gambling, such as sporting events is allowed.[26] According to APS, this is particularly problematic with the 'burgeoning of more sophisticated ways to gamble, including access to 24-hour gambling through the internet, mobile phone technology and interactive television platforms'.[27]

Measures currently proposed by the government

2.22      As outlined in Chapter 1 of this report, on 10 November 2016, the government introduced the Interactive Gambling Amendment Bill 2016.[28] The committee's inquiry report on the government's bill provided a summary of the provisions of the bill:

1. clarify that it is illegal for overseas gambling companies to offer gambling products to Australians unless the person or company holds a licence issued by a state or territory;
2. introduce a new civil penalty and infringement notice regime to be administered by the ACMA;
3. prohibit 'click-to-call' in-play betting services, which are 'services where a customer can place a bet during a sporting event without speaking to a human operator' (that is, a service that enables a voice call to be made online using a recorded or synthetic voice)—the bill would require that dealings with customers to be wholly by way of spoken conversations between individuals (or an equivalent for a customer with a disability);
4. amend the complaint handling process by providing that the ACMA is responsible for all stages of the complaint handling process, with the current mandatory requirements for the ACMA to refer matters to an Australian police force to be removed;
5. enable the minister to determine by legislative instrument that, for the purposes of the IGA, a specific thing is, or is not, a 'sporting event';
6. require the ACMA to maintain a register of eligible regulated interactive gambling services 'to raise awareness among Australian customers of interactive gambling services that should be avoided, as evidenced by their non-inclusion on the register';
7. introduce measures relating to illegal offshore gambling activity that would allow the ACMA to disclose information obtained through the exercise of its powers under Parts 3, 4 and 5 of the IGA to the Department of Immigration and Border Protection and foreign regulators; and
8. remove the requirement for a report to be prepared and tabled in Parliament each calendar year on contraventions of Part 7A of the IGA—the EM advised that 'this information will be included in the ACMA's annual report, which is also tabled in Parliament'.[29]

2.23      The committee notes that on 25 November 2016, the Minister for Human Services, the Hon Alan Tudge MP, announced that agreement had been reached between Australian, state and territory governments to establish a strong National Consumer Protection Framework for online wagering.[30] In-principle agreement was given to key aspects of the Government's response to the O'Farrell review including:

• a national self-exclusion register for online wagering;
• a voluntary pre-commitment scheme for online wagering; and
• prohibition of lines of credit being offered by wagering providers.[31]

2.24      The Department of Social Services is responsible for developing the national framework for online wagering in consultation with states and territories. It explained that a range of options are being considered, including:

• a National Framework legislated and regulated by the states;
• a National Framework legislated by the Commonwealth and administered by the states; and
• a National Framework, legislated and regulated by the Commonwealth.[32]

2.25      The Department of Social Services stated that:

The Commonwealth Government is moving quickly to implement its response in conjunction with state and territory governments and in consultation with key stakeholders. It is our expectation that a final decision will be made on this matter later this year. [33]

2.26      The Department of Social Services commented that it also intends to conduct a public consultation process in April 2017, followed by further discussions at the official level to agree on the final details of the framework.[34] The framework will then need to be agreed on by all Commonwealth ministers and state and territory governments.[35] The final stage will be the implementation of the framework which, according to the Department, will be largely dependent on the regulatory model—'whether it has to be passed through Commonwealth legislation, whether it has to be passed through state and territory legislation, whether it has to be included in licensing agreement'.[36]

2.27      The Department of Communications and the Arts also provided information on the proposal to allow the ACMA to notify international regulators and operators about the provisions of the IGA. The Department of Communications and the Arts commented that it is hoped that 'ACMA will get assistance with any evidence and also help raise awareness amongst a number of these international jurisdictions that provide services into Australia'. The Department of Communications and the Arts went on to note:

You normally find that most of them come out about five or six jurisdictions. These include Malta, Gibraltar, even Great Britain and a couple of other jurisdictions as well. The ACMA will be given the power to liaise with these international regulators and to seek assistance on evidence and also to the awareness amongst their operators about the provisions. If the bill is passed, we would be looking to that as a catalyst to start off an advertising campaign overseas and to promote that these new measures and the gambling laws of Australia have changed and the enforcement has increased. We would be looking to get that word out there.[37]

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