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Glenn Barry

Interactive Gambling In Australia

28 June 1997

As reported here in IGN, the State Governments of Australia have taken a fairly forward thinking view on the issue of "Interactive Home Gambling". Gambling is an issue for the states in Australia. The Australian Federal Government Law simply says that all gambling is illegal unless the states allow gambling by an act of Parliament.

The State Gaming Ministers have asked the Federal government not to include gaming issues in any new Federal telecommunications content regulations. This includes blocking the entry of foreign gaming. All State Governments in Australia have legislation to control gambling within their State borders and there are cooperative agreements between some states to allow various forms of gambling (such as Powerball and Soccer Football Pools) to operate nationally.

This was fine in the days before online technology reached into consumers' homes with things like Cable TV and the Internet. Gambling operated mostly within state borders and where cross-border gambling was allowed (as with racing, Powerball and Soccer Pools), the governments and the gaming operations reached agreement on revenue-sharing. It was all kept in the family, so to speak. The Internet (as just one example) has changed all of that by allowing the "at home" gambler to surf the world to play lotteries, cybercasinos and bet on sports that are not covered by local gaming outlets.

Some might say that it is unusual for a collection of State Governments to be so forward thinking; but, in the case of Interactive Home Gambling, this has proven to be true in Australia . At a meeting of the State Ministers for Gaming in the South Australian City of Adelaide in May 1996 a decision was made to create a 'special working group of State gaming officials' to study the implication of new technology for "at home" gaming and the effect it might have on "State" run or authorised gambling as well as the revenue implications for State Treasuries.

This resulted in the issuing on May 23, 1997, for public and industry comment, a draft policy paper titled "Draft Regulatory Control Model For Interactive Home Gambling".

The paper concentrates on "new technology" and has left the racing side of this out of the discussion for the moment. ("existing interactive products such as telephone betting with TAB's and bookmaking are excluded from the draft Model").

The major thrust of the report is the impact of new telecommunications forms such as Satellite, Cable TV, the Internet, even over the telephone lotteries may have on State gaming revenue. The report concludes that "Interactive gaming has already emerged and will continue to grow as an industry."

"The reality is that developing technologies will see increasingly more people having free access to interstate and overseas interactive gaming products in a way that States under existing regulations will have little or no control."

A lot of the concern about the threat to revenue has come from "a report commissioned by the Federal Broadband Services Expert Group" who "listed interactive home gambling as the second most important source of revenue generation for broadband service provision to the home." The report "placed home gambling ahead of Pay TV and video on demand." I hope these guys know more about "broadbands" than it appears they do about gambling. There are a lot of demands on gambling revenue and the profit margins for the home delivery of gaming might be slimmer than they might like to think.

Australians are fairly relaxed about gambling, some might say a little too relaxed. There are some concerns that, for the moment, things have gone a little bit too far, too fast. In recent times, a number of new Casino operations have started up and new lottery and sports betting products introduced. Whilst the general public mood is not anti-gambling (or anti-Internet/interactive gambling), it is cool to the idea of the introduction of much more "new" gambling in any form, at least for a while. Even the Prime Minister of Australia says that his personal view is "there is enough gambling"

That goes for the industry as well as the "concerned citizens" groups. The industry concern is the cannibalizing of revenue. Many feel there should be clear signs of growth before too much more is introduced. We have seen, in recent time, the collapse of the (Queenland, Australia) Reef Casino Company when revenue projections fell well short of targets...much of which was blamed on new casinos in other states. They are also concerned that "new' gambling may impact the market from "nearby" offshore sites. If a real threat to revenue is perceived now or even the long term (10 to 15 years out, one official told IGN), then there is no doubt we will see the Australian States adopt a coordinated approach.

It is rumored that some Australian "businessmen" may be planning cyber operations in nearby Pacific Island states that would target the Australian market. The impact of offshore gambling from sites further afield, such as the Caribbean cybercasinos is also a concern. Then there is the recent news that the New Zealand Government is actively considering the introduction of nambling. The New Zealand TAB (OTB) has told IGN that they intend to have both racing and sports betting on-line later in 1997.

We have already seen the "soft" introduction of online racing and sports betting in Australia with the NSW TAB (OTB) and online Bookmaking with the likes of Centrebet. Many Australian Lotteries can be bought online from authorized agents and a number of smaller charitable Art Unions are also selling online.

Are the Australian moves a breakthrough? Well, in a way, yes. Internet gambling, Australia-wide and internationally has already come, albeit in a small way, and largely to service an existing clientele. The future is not blocked by anybody resembling a Hubert H. Humphrey, Senator Kyl or Jay Nixon (Not to forget that good looking dude California Senator Timmy Leslie.

The press release issued on behalf of all State Gaming Ministers with the discussion paper on May 23rd 1997 quotes the Victorian Minister of Gaming Mr. Hallam as saying " The Ministers [of Gaming] have not taken any formal position on any part of the reports discussion points."

"Rather, States and Territories were asked to finalize their positions on the report by September 30th , 1997 following a period of community and industry consultation."

"The report is only one set of options" Mr. Hallam said. "Before we take these proposals any further, all states and territories will be seeking feedback from the public and industry representatives".

There are some very powerful and competitive gaming interests in Australia. If there is a threat from without, they will combine to defeat the intruders. After that, things get a little tricky. All states have revenue flows to protect. The two major states are fiercely competitive in economic matters . It is unlikely that a "free market" approach will be adopted. Clear revenue-sharing agreements will be needed. The likely approach will be that the state of origin of any bet will get the lion's share of any tax. This "revenue sharing issue" is a major thrust of the report.

It seems more likely there will be some form of "creep" into Internet/Interactive gambling by existing operators with licenses rather than the "new" players. If "new " players do come, then that is most likely to be in the smaller states without a large population to draw a substantial revenue flow We have already seen this in the example of The Northern Territory licensing "online Bookies."

Insiders say that if the concern about State revenue is strong and the momentum is there, then we could even see legislation pass before 1997 is out. IGN sources say that new legislation does not have to be implemented in all states at the same time. It is possible the larger states, NSW and Victoria may move first and the smaller states follow with complimentary legislation at a later stage. It may be the smaller, revenue-challenged states, which will move faster. In some cases, they already have.

So them's the facts, Namblers. Australia "already has" "legal" interactive internet nambling and accepts that it is part of the future of gambling. They are looking for ways to make it work within the existing social, economic and political structure. They are concerned about the possible impact of offshore nambling on State gaming revenues. They are not rushing to legislate, nor are they rushing to ban it or waste their time and the public's money launching prosecutions against offshore operators as we see in the US. Overall, a reasoned and well thought out approach. Miles ahead of the NAAG report on the same issue.

Let's see what happens, come September.

Government Authorities (and NAAG's) Interested in getting an 'official copy' of the report "Draft Regulatory Control Model For Interactive Home Gambling" (The copy on-line at IGN is the full report) or other information on a Government to Government basis should contact: M/s Christine Sheppard, Media Relations Manager. The Victorian Casino and Gaming Authority. 35 Spring Street Melbourne 3000. Australia. Fax: +(613) 9651 3777; Phone: +(613) 9651 3434.

Interactive Gambling In Australia is republished from
Glenn Barry
Glenn Barry