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Australia's Interactive Gambling Moratorium Ends This Week

16 May 2001

Jamie Nettleton is a partner in Coudert Brothers, a law firm in Sydney that issued the following statement this week.

SYDNEY, Australia – (Press Release) -- The Federal Government's moratorium on Internet gambling ends this Friday (18th May, 2001) with no clear indication of what comes next, deterring would-be investors.

The Australian Interactive Gambling Moratorium Act ("Moratorium Act") has delivered few benefits while it has diminished Australia's reputation as an attractive location for investment in online initiatives according to a local Internet expert.

Jamie Nettleton, a partner in the international law firm Coudert Brothers, claims that the Moratorium Act, and the Interactive Gambling Bill, have demonstrated that Australia has an interventionist regime and indicates to the e-commerce sector that no certainty can be given that such intervention will not occur in the future.

Mr Nettleton said that the moratorium had allowed other jurisdictions to portray themselves as an attractive destination for investment in setting up e-gambling operations utilising Australian expertise and know-how. "Australia had a significant lead on the rest of the world in the development of Internet gambling regulation but this lead has now been lost," said Mr Nettleton, who is also the chair of the sports and gaming committee of the International Bar Association.

He said that, not only had the moratorium failed to deliver any protection for Australia's problem gamblers, it had also led to many investment opportunities for the country being withdrawn, perhaps permanently.

According to Mr Nettleton, the principal objective of the gambling moratorium was to enable the National Office of the Information Economy (NOIE) to finalise its report on the feasibility and consequences of banning interactive gambling. This report was released in March and confirmed, to a substantial degree, the findings of the Productivity Commission and the Netbets Inquiry.

In short, NOIE concluded that a number of methods existed which could be implemented to impose a ban on interactive gambling, but none of these were 100% effective and each of them would impact on the costs of accessing the Internet and/or detrimentally affect the efficiencies associated with the Internet.

Notwithstanding this conclusion, the Government had effectively ignored these findings by including in the Interactive Gambling Bill measures which would impose sanctions on ISPs which do not implement procedures to limit access to overseas interactive gambling content. It is clearly recognised in the Explanatory Memorandum that these measures will not prevent such content being available to Australian residents.

Other aspects of the Interactive Gambling Bill, which is to be the subject of a report of the Senate Environment, Communications, Information Technology and the Arts Legislation Committee due to be released by 23 May, worthy of mention are:

  • It does not and cannot achieve its objective of protecting problem gamblers or preventing them being targeted by overseas sites. Indeed, the Bill removes from Australian gamblers the option of participating in Australian sites which would be the subject of a regulatory regime generally recognised worldwide as being "best practice" and means that, if so inclined, those players only have the option to participate in an overseas site.

  • It covers all areas of gambling. It prohibits certain forms of gambling which have been generally available for a considerable time. (For example, it covers Internet wagering services which have been available from TABs and bookmakers for some time.)

  • It inadvertently extends the prohibitions beyond services recognised traditionally as gambling services to cover game shows (e.g. competitions relating to "Survivor" or "Big Brother")and the use of computer networks on the Internet used to achieve efficiencies by TABs and in the distribution of lottery and pools tickets.

  • It is driving Australian entrepreneurs offshore. (Among the services provided by these entrepreneurs are software development services, e-cash and Internet solutions which could give Australian business considerable benefits in the e-commerce area.)
  • According to Mr Nettleton "In summary, a year has passed since the moratorium was first announced by the Government. Little benefit has been achieved from the moratorium and it seems that the adverse consequences and uncertainty arising from the Moratorium Act are likely to continue pending the outcome of Parliament's consideration of the Interactive Gambling Bill."

    Additional Information:

    Jamie Nettleton can be reached at Coudert Brothers in Sydney, 02 9930 7569/0412 599 538.

    [Editor's Note] Additional comments on the Interactive Gambling Bill 2001, as presented to the Australian Senate's Environment, Communications, Information Technology and the Arts Committee on May 4, can be read (PDF format) by accessing the Senate Committee Web site.

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