Australians debate review of interactive gambling act

The Australian federal government’s recommendations on how to improve the 11-year-old Interactive Gambling Act in order to halt illegal offshore operators and improve consumer protection is generating debate Downunder at present, including as it does 35 proposals that are open for consultation and debate.

The review appears to have concluded that the Act as currently constituted does not do enough to minimise harm from problem gambling and discourage Australians’ access to foreign online gambling services.

According to the government’s Review of the Interactive Gambling Act 2001 Interim Report, the Act is making only a very minor contribution in those areas and needs to be beefed up.

“The IGA may in fact be exacerbating the risk of harm because of the high level of usage by Australians of prohibited services which may not have the same protections that Australian licensed online gambling providers could be required to have,” the report reads, hinting at a domestic regulatory and licensing system for online poker.

The review report quotes estimates of up to 2,200 online gambling providers currently offering services to Australians who may be in contravention of the Act, and claims that Aussies are depositing as much as A$1 billion a year with overseas-based online gambling service providers.

It recommends that government encourages overseas providers to become licensed in Australia, compelled to comply with problem minimisation measures and limit services to lower risk gambling forms such as tournament poker.

Service providers who do not conform to the proposed measures would be prohibited under the Act and subject to enforcement and prevention measures that could include ISP blocking.

Under the recommendations, the Australian Communications and Media Authority (ACMA) would be responsible for administering these measures.

Should civil penalties and cease and desist notices prove ineffective for services in contravention of the updated Act, the ACMA would refer the service provider to the Australian Federal Police, which would be empowered to place the names of principals and directors of prohibited online gambling service providers onto a Movement Alert List, as well as refer these names to relevant state/territory authorities and the Australian Securities and Investments Commission.

However, the report acknowledges there is little that can be done about overseas-based operators who choose not to become licensees in Australia. It notes that the government must “recognise the limits of enforcement action against overseas-based companies, many of which operate out of countries which actively seek to attract online gambling firms and provide them with legal protection”.

The report recommends co-opting the Australian financial sector to effectively police offshore gambling through the creation of ‘safe-harbour’ allowances for financial institutions that choose to voluntarily block financial transactions between Australian consumers and unlicensed online gambling service providers.

It also suggests that the Department of Broadband, Communications and the Digital Economy (DBCDE) and Treasury should, “…continue to monitor developments overseas in the use of financial payment blocking to prohibited gambling sites and draw relevant developments to the attention of Australian financial industry bodies.”

The review follows the Productivity Commission’s 2010 Gambling report (see previous bulletins) which found online gaming and wagering had exhibited strong growth over the last 10 years and that the Australian ban on accessing online gaming was largely ineffective.

“While the risks associated with online gambling are likely to be overstated, the relatively high prevalence of problem gamblers is still a cause for concern,” the government report opines. “At the very least, it indicates that the internet is very attractive to this group and, though the evidence is weak, gambling online may exacerbate already hazardous behaviour.”

A key recommendation of the report is that the Australian government, in consultation with state and territory governments, should amend the Interactive Gambling Act to permit the supply of online poker card games.

Other proposals suggest that Aussie internet service providers could be required to collaborate with the government’s communications watchdog in warning consumers when they visit prohibited sites. If the review’s recommendations are accepted, ISPs could be required to direct Australian consumers to a warning web page when they attempt to access a prohibited gambling site.

The measure would sit alongside a recommendation that the Australian Communications and Media Authority maintain a list of prohibited sites not unlike the one it maintains for voluntary ISP-level blocking of child abuse sites.

However, the review acknowledges that requirements that internet firms be required to block sites “would be strongly opposed by ISPs and other key stakeholders”.

And it notes: “This approach places ISPs in a position where they would be enforcing prohibitions on gambling with overseas providers where there is no law that currently prevents Australian citizens from gambling on these sites.”

The education of Australian consumers may also be necessary; the review report notes that:

“Submissions to the review suggested that Australian consumers have a very limited understanding of which online gambling services are prohibited under the IGA and which are not.”

The report also acknowledges that filtering sites is unlikely to be effective in stopping determined gamblers.

The Australian Labor government’s controversial strategy to make internet providers block web sites, combined with offline censorship regimes has been the source of bitter debate and criticism for some time by internet freedom and commercial concerns.

The suggestion that the Australian financial institutions be inspanned to help disrupt private financial transactions between gamblers and offshore operators as is the case in the United States is also likely to fuel further debate.

The DBCDE has emphasised that the report’s recommendations will not be adopted until there has been further industry and community consultation on the recommendations.

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