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Australian Government Will Try to Ban Interactive Gambling

27 March 2001

Australia's federal government today announced its plans for Internet gambling after the current moratorium expires in May: It will seek to ban Australians from gambling online, whether over the Internet, interactive television or mobile phone.

Unlike the moratorium, the new proposal would apply to sports books as well as casinos. But, also unlike the moratorium, it would permit Australian companies to offer online gambling, so long as the services are only offered to foreigners.

The government said the proposed law would not apply to "long established forms of interactive gambling such as telephone betting." Neither would it apply to handicapping contests or Internet stock trading.

Over the objections of most states and territories, the federal government persuaded Parliament in December to enact a 12-month moratorium. The moratorium, which is retroactive to May 19, 2000, prohibits new online casinos. It forced three of Australia's four online casinos to shut down immediately, and cost other potential operators – who had been licensed by states but had not yet launched their sites – millions of dollars in development expenses.

The federal government spent much of last year trying to get the moratorium, which it said would provide time for a federal agency, the National Office for the Information Economy (NOIE), to study the feasibility and effects of a permanent ban. Sports book operators lobbied against the moratorium, and the government excluded them in order to gain more support in the Australian Senate.

Prime Minister John Howard's government has always favored a ban, and the industry has been anxiously waiting to see what the government would propose for the end of the moratorium on May 19. In an effort to dilute support for a ban, the Australian Casino Association has backed efforts to make regulations of online gambling stronger and more consistent from state to state, and has offered to pay 1 percent of revenue from Internet gambling to community groups that research problem gambling and counsel problem gamblers.

Senator Richard Alston, Howard's Minister for Communications and Information Technology, announced the government's plans today. He said the government "will shortly introduce legislation to prohibit Australian gambling service providers from providing online and interactive gambling and wagering services to people located in Australia."

Time is tight for the government to get its legislation approved. After next week, Parliament does not meet again until May 22, three days beyond the expiration of the moratorium.

Alston's statement says the proposed law would require operators to determine if their customers are located in Australia, and if they are, to prevent their access to the gambling sites. Presumably, this would also apply to foreigners who are visiting Australia.

"Importantly the regime will not place any obligation on Internet Service Providers to filter or block prohibited interactive gambling sites," Alston says. The question, then, of how offshore operators would be prevented from taking bets from Australians is a bit fuzzy.

Alston says ISPs would be required to make user-based filters available to their customers. Based on complaints, the government would identify "the finite number of overseas gambling sites which will then be passed on to filter manufacturers." No one besides Alston has said that the number of Internet gambling sites is finite.

But apparently customers of the ISPs would not be required to install the filters. So even if the filters work, Australians could still access offshore gambling sites by simply not installing the filters.

Along with Alston's statement, the government today released the NOIE report, which concludes that "it is feasible in a strict technical sense for the Commonwealth to pursue a ban on interactive gambling." The report examines four methods of filtering Internet content, and says none would be 100 percent effective in blocking Australians' access to online gambling sites.

The report does not recommend a method. It says the government will need at least six months to study filtering technology, and another six months to implement "an optimal solution."

The report also says that "a ban via financial controls is not feasible." But it adds that the government has the legal authority to enforce a ban, and concludes that "the growth of interactive gambling has the potential for negative social consequences in Australia because of increased accessibility of gambling services."

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