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Kevin Smith

The IGA Review - Beyond Betting Exchange Policy

21 July 2004

The P2P debate has stolen headlines in Australia since the federal government published its review of the Interactive Gambling Act of 2001, but the 108-page document covers a wide range of important issues.

Perhaps second to the betting exchange situation in significance is the decision not to implement measures pertaining to financial transactions--measures some bookmakers and TABs hoped would be adopted. Taking a page from Internet gambling opponents in the U.S. Congress, the thought was that if credit cards or other instruments of banking could be monitored, or even blocked from being used for online gambling transactions, Internet gambling could effectively be kept in check. But banking and credit card industry groups in Australia urged the Department of Communications, Information Technology and the Arts (DCITA) through written submissions not to turn financial institutions into policing mechanisms.

The DCITA ultimately sided with banking interests by choosing not to move forward with the measures outlined in Section 69A of the 2001 Act, which set up a framework for implemented banking-related restrictions.

The department states in its review: "To achieve the purpose of s.69A, new regulatory mechanisms and additional information requirements in the card associations' financial transaction authorization request process would be required. There would be significant efficiency costs, processing delays and others that would ultimately be borne by all Australian credit cardholders. . . . In view of these costs, and the low use of illegal interactive gambling services by Australians, a case has not been made to use the financial payments to regulate the provisions of interactive gambling services."

The review also covered problem gambling, one of the main reasons for passing the IGA in 2001. The concern at the time was that the expansion of interactive gambling would translate to more cases of problem gambling. Based on research conducted by Allen Consulting Group (ACG), the DCITA determined that there were no problem gambling-related concerns necessitating further restrictions. Specifically related to betting exchanges, ACG found that not only has problem gambling been kept in check in Australia, but that exchanges "do not appear to pose any greater risk of exacerbating problem gambling than traditional Internet wagering services permitted under the current legislative framework."

Additionally, the option of using geolocation technology as a tracking device to deal with problem gambling was discussed prior to the passage of the Act. The DCITA found that great advancements have been made in this area since 2001, but that there are still too many "drawbacks that limit their capacity to accurately determine the location of online users."

While the government's choosing to leave betting exchange policy up to the states and to abstain from creating banking-related enforcement mechanisms bodes well for the interactive gambling industry, it did go against the industry's wishes in keeping the ban on in-game betting.

Many operators submitting reports to the DCITA recommended the ban be lifted, thus allowing operators to accept wagers on sporting events in progress. In-game betting is particularly popular among bettors who wager via mobile devices and those wagering via digital TV, although Internet sites have profited from offering the option as well.

The decision to stand pat came down to social issues.

"The government was concerned that continuous wagering by interactive means demonstrated the repetitive, addictive qualities of gaming and was therefore associated with a higher likelihood of gambling problems," the report states. "It also expressed concern that the domestic context of gambling on the Internet or through interactive digital television would potentially normalize aberrant gambling behavior and exacerbate the social harm associated with problem gambling."

Click here to view the DCITA's review.

The IGA Review - Beyond Betting Exchange Policy is republished from
Kevin Smith
Kevin Smith