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Australia: 'Inequitable' Distinction Between Casinos and Sports Books

14 December 2000

When the Australian Senate voted last week to nearly destroy the country's online casino industry, it also gave carte blanche to online sports and race betting sites. The federal government was willing to let them off the hook in order to salvage its moratorium against Internet casinos.

"This legislation essentially represents a political compromise," lawyer Jamie Nettleton told RGT Online. "It creates a distinction between online gaming and online wagering and sports betting -- which is inappropriate.

"Previously the states had regulated on a common standard. Now there appears to be a distinction between the two which appears inequitable." Nettleton is a partner in a Sydney law firm, Coudert Brothers, and represents many gaming clients.

In a matter of days, the country that had been a leader in strict regulation of Internet casinos will be left with just one casino site, Lasseters.com. It escaped the moratorium because it began operations well before the May 19 retroactive cutoff date. But even Lasseters is prohibited from any expansion of products or technology until May 19, 2001.

Federal Hotels shuttered its gaming portal, SouthernCrossCasinos.com, Friday. Tatts.com, a site quietly opened in October by Tattersall's, had been selling lottery tickets online. Now the site has a notice saying that the moratorium has forced it to close. It asks customers to sign a petition, via email, to allow the site to function again.

Gocorp had been expected to continue operating its casino, AusVegasCasino.com. But Monday the company indicated it would close the site. Although it opened three days before the cutoff, AusVegas opened under another name and did not have paying customers immediately. That would apparently disqualify it.

The fines in the moratorium bill are so steep, up to $1.1 million a day for companies and $200,000 a day for top executives, that none of the four online casino operators wanted to risk being caught on the wrong side of the law.

Full Steam Ahead

But it's full steam ahead for the sports betting sites, as reflected in an announcement Tuesday by Canbet, an online site based in Canberra. Under a previously announced deal, Sky City - a New Zealand gaming and entertainment company - will buy a 33 percent stake in Canbet.

"The passage of this bill (the moratorium) removes a degree of uncertainty that has been hanging over the market and allows the company to progress with its existing growth strategy," said Richard Farmer, Canbet's chairman, according to the Australian Associated Press.

The only restriction that the moratorium bill imposes on sports books is a prohibition against new services that involve accepting wagers after an event has started, such as between periods of a game.

So Canbet and the other online bookmakers - MegaSports, Sports Odds, Davidson, Darwin All Sports, Centrebet, and the TABs (totalisator agency boards) in New South Wales, Queensland and Western Australia (Ozbet) -- are free to continue and expand their businesses. And, key to getting support in the Senate for the moratorium, the TABs in states that don't currently offer online wagering, such as Tasmania and Victoria, are permitted to add the service.

What's particularly galling to the online casino companies is that they, not the bookmakers, are the ones who were required to adopt stringent rules to help combat compulsive gambling. The casino sites, for example, required players to set a limit on the amount of their deposits, and honored a player's request to be excluded, whether for a set period of time or forever.

The race and sports books are also regulated by the states and territories, but do not have to follow such rules.

"They never had the credit limits or links to gambling services or the exclusion buttons that the casinos had to put up," Peter Bridge, chief executive of Lasseters Holdings, told RGT Online. "The casinos took the player protection issue very seriously.

"Sports bookmakers have never been that aware of problem gaming and didn't have any uniform policies on it. There's a bit of a double standard there. The casinos got together and worked with regulators on this. The others didn't do anything and got themselves exempted from the legislation, which is amazing."

A Good Job of Lobbying

The online sports books did a good job of lobbying, Bridge admitted. "They portrayed themselves as fun and sports loving people, not related to problem gambling."

"The Australian punter is very passionate," he added, and the online bookmakers scared the public by arguing that if the moratorium passed in its original form, people would lose their right to bet on football and horse races.

Even in the bricks-and-mortar world, Bridge said, bookmakers have a much longer tradition of respectable operation than casinos. Although Federal Hotels opened Australia's first land-based casino in 1973 in Tasmania, casino gaming didn't come to the major cities of Sydney, Brisbane and Melbourne until 1995.

In a statement after the moratorium was passed, Peter Coroneos, director of an Australian group called the Internet Industry Association, said the federal government's move may backfire, driving Australians to unregulated jurisdictions:

"In some countries, you only need to pay US$50,000 and you are given a license -- no probity checks, no anti-laundering audits and no requirement that you provide protections for your patrons. In other countries, you don't need a license at all.

"We cannot understand why any government would want to trade that for well-regulated operations within Australian borders, where they can be seen and closely controlled under State and Territory legislation?

"Our States and Territories have made significant progress over the last two months on a uniform, national player protection model that will apply to all forms of interactive gambling. They should have been permitted to finish a job that is 90% complete."

. . . "licensed Australian sites will not accept bets from anyone who cannot establish that they are of legal age, and families have access to filters that can prevent children accessing the sites at all. Understanding internet behaviour and the technology as we do, we find the supposed threat that triggered this action implausible.

"Whatever one's views on gambling, it is hard to avoid the conclusion that the internet has been punished for a problem which exists elsewhere, but which is simply too hard for the government to address."

Coroneos' statement was pointedly titled, "Senate Backs Wrong Horse in Gambling Stakes."

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