22 Dec 2011

Final report on interactive and online gambling released

by Tony Rein, Zoe Taylor

The three reviews of interactive and online gambling diverge markedly on amending the Interactive Gambling Act

The growth of online gambling continues to have a significant impact on the successful regulation of the provision of gambling services to Australian customers. The primary piece of legislation governing interactive gambling, the Interactive Gambling Act 2001 (IGA), is facing review.

This review is part of a three-tier review process including:

  • the Productivity Commission Inquiry Report on Gambling (released in June 2010);
  • the Parliamentary Joint Select Committee on Gambling Reform report (released 8 December 2011); and
  • the Department of Broadband, Communication and Digital Economy review of the Interactive Gambling Act 2001which is currently underway and expected to be released in the first half of 2012. This Department Review is expected to take into consideration any relevant findings of the Joint Select Committee Report and the Productivity Commission Inquiry Report.

Recommendations of the Joint Select Committee Report:

The Joint Select Committee Report made 20 recommendations in total, chief amongst these is a strengthening of the current prohibitive model adopted by the IGA reflected in the following recommendations:

  • There should be no liberalization of the current prohibitions against the provision and advertisement of online interactive gambling services;
  • An additional prohibition on gambling inducements should be incorporated to bolster the effectiveness of the IGA;
  • The prohibition on "in-play" betting services should be maintained. However, "in-play" betting should be the subject of appropriate research commissioned by the current Department Review;
  • A total ban of the promotion of live odds both at venues and during the broadcast of a sporting event should be introduced;
  • The Broadcasting Services Act 1992 be amended to prohibit gambling advertisements during times when children are likely to be watching;
  • Certain ambiguities regarding the interpretation and application of the IGA should be clarified, particularly in relation to the broadcast of prohibited material that is "accidental or incidental" to the broadcast of another matter;
  • New gambling opportunities fuelled by the convergence of digital technologies, particularly those which appear to target young people (eg. Facebook and mobile gaming), should be researched by the current Department Review;
  • The COAG Select Council on Gambling Reform, in consultation with the COAG Legislative and Governance Forum on Consumer Affairs should develop nationally consistent consumer protection standards for tighter controls on the practice of credit betting with a view to developing a national regulatory approach; and
  • A national mandatory code of conduct for advertising by wagering providers should be developed.

Report on the Interactive Gambling and Broadcasting Amendment (Online Transactions and Other Measures) Bill

The Joint Select Committee also considered the Interactive Gambling and Broadcasting Amendment (Online Transactions and Other Measures) Bill 2011, which was introduced in the Senate on 20 June 2011 by Senator Xenophon to amend the IGA and the Broadcasting Services Act 1992.

The Joint Select Committee recommended that the Bill should not be passed.

Of particular concern to the Joint Select Committee was that the Bill includes provisions to allow consumers to cancel regulated financial transactions to international gambling websites provided the transactions have not been completed.

The Joint Select Committee ultimately agreed that allowing customers to suspend or cancel their transactions presents a number of problems, including:

  • the moral hazard created by allowing gamblers to bet large amounts of money online, knowing that if they lose they can request a reversal of the transaction. This may well lead to greater risk-taking and more reckless gambling behaviour;
  • the difficulty in gaining cooperation from international financial intermediaries such as PayPal to comply with such a system; and
  • electronic transactions involving multiple parties are conducted in a matter of seconds, making a request to suspend or cancel them difficult.

Looking forward

The Department Review Discussion Paper, the Productivity Commission Report and the Joint Select Committee Report diverge markedly on the topic of amending the IGA to better ensure that the prevalence of problem gambling in the online environment is limited.

Importantly, and irrespective of divergent views, there seems to be little doubt that far greater research is required into the connection between problem gambling and the provision of gambling services by unlicensed providers. Indeed the Joint Select Committee recommends that, as a part of the review of the IGA national research into online gambling, should be commissioned.

Next steps

The Department Review has now closed its formal submission process. The Department is expected to provide a report of its findings to the Minister for Broadband, Communications and the Digital Economy during the first half of 2012.

Clayton Utz will closely monitor developments.

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Clayton Utz communications are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this communication. Persons listed may not be admitted in all States and Territories.