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Australian Report Says Banning Internet Gambling is Feasible, But Costly and Not Foolproof

13 March 2001

A report by a federal agency in Australia says that banning Internet gambling is technically feasible, but would never be foolproof, would cost millions of dollars and would take a year to design and implement.

The report, by the National Office for the Information Economy, was commissioned by the federal government, which wants to ban Internet gambling. Against the wishes of most Australian states and territories, Prime Minister John Howard's government got Parliament to approve a 12-month moratorium on new online casinos while the NOIE studied the feasibility of a permanent ban.

The moratorium became law in December, retroactive to May 19, 2000. It forced three of Australia's four Internet casinos to close. It did not apply to online sports betting.

The NOIE report, which some believe was completed late last year, still has not been released to the public. It's under review by the federal government, which may use it to persuade Parliament to approve a permanent ban when the moratorium expires.

The Australian reported in today's edition that it had obtained a draft of the report. The newspaper said the report concludes that various forms of filtering could be used to block Australians from accessing Internet gambling sites. But "determined users" could probably get around the filters, the report warns.

Peter Coroneos, executive director of an Australian trade group called the Internet Industry Association, told The Australian that requiring filters would greatly increase costs for Internet Service Providers, which would lead to increased charges for Australians to access the Internet.

"This could in turn adversely effect Australia's role as a leading nation in the uptake of e-commerce," Coroneos said.

The NOIE report, according to The Australian, says that other means of keeping Australians from gambling sites, such as legal sanctions or forbidding use of credit cards, would not work.

The report says it would take the government up to six months to design an effective ban on online gaming and another six months to implement a ban. It also questions the wisdom of excluding sports betting from such a ban.

The Australian Casino Association has been leading the lobbying effort to prevent the ban from becoming a moratorium. It has supported efforts to strengthen the "National Model" for regulating online gaming, and to make the regulations more consistent from state to state.

The Association has also sweetened the pot by offering to pay 1 percent of the revenue from Internet gaming to community funds in each of the licensing states and territories. This money would be used to fund research on problem gambling and to help support groups that counsel problem gamblers.

The online gaming industry argues that most of the business for Australia's Internet casinos came from international customers, not from Australians. It says that compulsive gambling problems in Australia are caused by the country's thousands of real-world slot machines, not by online gambling.

Jamie Nettleton, a lawyer at Coudert Bros. in Sydney who represents many gaming clients, told RGT Online that there are three options for the federal government after May 19: (1) extend the moratorium, if the government needs more time to prepare for a ban, (2) enact a permanent ban, or (3) permit states and territories to once again license online sites, but this time with more stringent and more consistent regulations.

If the government wants to pass new legislation before the moratorium expires May 19, time is tight. Parliament meets the last week of March and the first week of April, and then not again until May 22.

If the moratorium becomes a ban, it would mean a serious setback for the online gaming industry worldwide, Nettleton believes.

"What everyone's really looking for is a home that's reputable," he said. "If a country like Australia -- which has been looking at it very closely -- turns its back completely and says, 'We can ban it,' then countries which are in the wings like the United Kingdom will be very reluctant to take a different approach. (In the U.S.,) I've no doubt it would give ammunition to the likes of (Senator Jon) Kyl."

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