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Australia, a Leader in Regulating and Licensing Internet Gaming, May Change Course

1 May 2000

Australia, which has been the poster boy for responsible, government regulated and licensed Internet gaming, seems on the verge of banning new licenses for online casinos and sports books.

Only one virtual casino, Lasseters Online, is licensed and operating in Australia. But 11 Internet race and sports books are licensed and operating in the country, some since 1996.

The move for a moratorium on new licenses - ostensibly for one year - is led by the federal government, despite opposition from all but two of the country's states and territories.

"We think there's too much gambling in this country already," Prime Minister John Howard told radio 3AW, according to a recent report in The Age (a Melbourne newspaper), "and it's far easier to stop something starting than trying to wind back something that's been there for years."

Australians bet far more per capita than citizens of other countries. A government commission last year estimated that A$11 billion was spent on gaming in 1998, about one-third of that coming from people with gambling problems.

But Peter Bridge, managing director of Lasseters Holdings, said a moratorium on Internet gaming will not do anything to alleviate social problems caused by gaming.

"The moratorium will do nothing to address the issue of problem gambling in Australia," Bridge told RGTonline.com last week. "The reality is, Australians will still be able to play on unregulated, international online gaming sites. All the moratorium will do is prevent the regulated sites from offering a safe alternative."

Jim Adams, a lawyer in Sydney who specializes in licensing, isn't so sure the federal government will act immediately to impose a moratorium. But "there is no doubt that they are serious in their resolve," he said.

"The issue seems to be, however, whether they would only force operators to move offshore," Adams added. "Canbet, from the Australian Capital Territory, has already indicated that if there is any attempt to interfere with their operation, they will simply take their activities offshore."

In Australia, as in the U.S. and Canada, gambling regulation is generally left to the states and territories. But when it comes to gambling on the Internet, Howard's government proposes to use federal power over telecommunications laws to enforce a ban.

"It's hard to say what will happen,'' said John Cargnello, chief executive of Technical Systems Testing, an Australian company that tests electronic gaming, both for traditional casinos and online ones. "You'd have to be a constitutional lawyer to predict."

The dispute has led to some interesting positions among the state and territorial governments. Victoria, for example, derives no taxes from Internet gaming, but opposes the moratorium.

New South Wales, on the other hand, is home to three online sports books and still supports the moratorium. That state also happens to have thousands of slot machines, an estimated 5 percent of the total world supply in land-based casinos.

The federal commission last year said that states and territories got a combined A$3.8 billion from gaming in the 1997-1998 fiscal year.

Howard's government has made it clear that it's interested in far more than a one-year ban.

The Prime Minister was quoted in The Age saying that "during that moratorium we wanted to investigate the feasibility of a permanent prohibition on the Internet."

While a moratorium would leave Lasseters as the country's only licensed online casino, Bridge said that would be no advantage, given the nature of the Internet.

"If the moratorium is introduced, it does not give us a monopoly,'' he said. "Internationally, we will still compete against the other 700 or so online gaming sites worldwide. We will still not be able to offer our service to Australians outside our license area in the Northern Territory.

"It gives us no advantage at all. It only disadvantages those Australian players who want the security of a regulated, trustworthy online casino."

Cargnello said a moratorium would be a step backward.

"Two years ago, Australia was the only Western country moving to legalize Internet gaming," he said. "Now they've lost their lead, while other countries moved ahead.

"A moratorium won't stop it. Governments around the world are recognizing that you can provide controlled and regulated Internet gaming to people, and it's better. Banning it is problematic."

Other Australian sites are in the pipeline. The states of Queensland and Tasmania have each approved a license for an online casino that is not yet operating.

An unusual site called Newsbet.com has a license application pending in Norfolk Island. It's offering wagers - for now not with real money - on events in the news, such as whether Bill and Hillary Clinton will get divorced or when Tony Blair's baby will be born.

And as is the case in Europe and the United States, Australian online operators can always move offshore. The tiny country of Vanuatu, in the South Pacific, reportedly has licensed several online sports books and two online casinos.

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