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Bill Filed to Prohibit Interactive Gambling by Australians

6 April 2001

The federal government of Australia has filed its bill to ban Australian providers of interactive gambling services from offering their services to customers in Australia. The bill was submitted Thursday and referred to a committee of the Senate, shortly before Parliament adjourned for an extended break.

Senator Richard Alston, the Minister for Communications and Information Technology, had announced on March 27 that such a bill would be introduced. Jamie Nettleton, a lawyer in Sydney who represents gaming clients, told RGT Online last night that the bill follows the outlines of Alston's March 27 announcement.

That means that it applies to betting at race and sports books as well as casino gambling. Australian companies would be permitted to offer interactive gambling to foreigners. Internet Service Providers would be required to take "reasonable steps" to prevent Australians from accessing Internet gambling sites that are based outside Australia.

The "Interactive Gambling Bill 2001" exempts telephone betting from its provisions. The bill is aimed at new technology – gambling via the Internet, mobile phone or interactive television.

Senate Vote Expected in June

The Senate committee's report on the bill is due May 23. That's four days after the current moratorium on new Internet gambling services expires. Nettleton believes that it will be early June before the Senate votes on the bill.

A major debate is expected. Several Senators voiced opposition when Alston announced the government's intentions on March 27. Nettleton said Sen. Bob Brown, a Green Party member from Tasmania, has indicated he will oppose the bill unless there is an exemption for interactive betting on horse races.

Brown's vote could be critical to the bill's chances. In October, he opposed the federal government's bill for a moratorium, which lost on a tie vote. In December, after the government had exempted race and sports betting, Brown supported the moratorium and it passed.

The 12-month moratorium was retroactive to May 19, 2000. The new bill is not retroactive. It would take effect 28 days after its approval, with additional time planned to implement a procedure for handling complaints about foreign interactive gambling sites that take bets from Australians.

Legally, a new online gaming site, if it's licensed by a state or territory, could start taking bets after May 19. But practically speaking, "No one's going to do it," Nettleton said, until Parliament accepts or rejects the new bill.

Last year, Australian operators of three online casinos lost millions of dollars in development expenses when they had to shut down after the moratorium was enacted. Another Australian company, eBet Limited of Sydney, quickly sold its Internet casino, which is licensed in Antigua. The company was smart enough to include an option to buy the site back at the same price it was sold for.

Unintended Consequence?

Perhaps unwittingly, the government's bill may cause problems for land-based casinos. Nettleton said the proposed law might prevent the Wide Area Networks that link slot machines in several casinos, often throughout a state, to enable a progressive jackpot that grows far larger than a progressive in just one casino. Because of the way in which the machines are linked, he said, they appear to fall under the scope of the bill, even though they are not used in interactive gambling by the player, as usually defined.

The same concern was raised by the Internet Industry Association in commentary posted on its Web site today. The organization opposes the bill.

Its executive director, Peter Coroneos, said in a recent statement that the proposed banning of online gambling sites in Australia "saw the government walk away from problem gamblers, leaving them to services and overseas services outside of Australian control. While creating the impression of tough government action, we get the bizarre situation where Australians are deprived of the superior protections developed in Australia for Australian sites under strict State and Territory laws.

"Offshore players would, on the other hand, have unrestricted access to safe Australian sites, even where online gambling is illegal in their own countries."

Nettleton said that if the bill does interfere with the linked slot machines among land-based casinos, the states and territories are likely to become "more confrontational'' in their opposition to the bill, which most of them oppose anyway.

Traditionally, gambling in Australia – as in the U.S. – is regulated by the states, not the federal government. "This will become a constitutional issue," Nettleton said.

The AUS Model is Released

The government of the Northern Territory, which is home to Australia's only online casino, Lasseters, and to the country's largest online sports book, Centrebet, has denounced the federal bill and yesterday released the AUS Model for public comment. In a press release, Tim Baldwin, the Racing and Gaming Minister of the Northern Territory, said:

"The Federal Government says it is concerned about problem gamblers but the current Australian regulatory scheme controlling Internet gaming is already recognized as the best in the world, offering unprecedented player protection features. State and Territory regulators have improved those controls, and developed new features to promote responsible gaming."

The AUS Model is the first major revision of the "Draft Regulatory Control Model for New Forms of Interactive Home Gambling," which was developed in 1997. This revision, prepared by a "national working party" of regulators from all Australian states and territories and representatives from Norfolk Island and New Zealand, focuses on "player protection, operator probity and system integrity."

For additional information:

The text of the AUS Model can be accessed at www.nt.gov.au/dib/licensing/doc/2The%20Aus%20Model.shtml.

Jamie Nettleton, a lawyer at Coudert Brothers, can be reached at Jamie.Nettleton@sydney.coudert.com.

The comments of the Internet Industry Association are available at www.iia.net.au.

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