Experts warn against short-term fixes in Australia online review

Following months of controversy over “in-play” bets and growing offshore wagering, the Australian government has said it will launch a review of the country’s online gambling act.

The terms of reference for the review have not been finalized, but it is expected to look at live-sports betting, the regulation of offshore gambling operations and the regulatory changes required as a result of technological advancements within the industry.

At present, the Interactive Gambling Act 2001 prohibits the provision and advertising of online gambling to Australian residents and prohibits “in-play” betting for live sporting and racing events online.

Regulation of gambling in Australia primarily rests with State and Territory governments, but with many critics labelling Australia's 2001 Interactive Gambling Act outdated, the review aims to develop a “national approach to gambling policy ... in a cohesive and consultative way.”

Part of the pressure for the review has come from the country’s racing industry on concern over future funding for the sport, due to revenue lost to illegal offshore gambling.

The review was welcomed by the industry, however, one international expert stressed the need for a long-term view to ensure any new legislation stays up to date with technology and the ever-changing habits of customers.

Edward Beesley, a former Ladbrokes commercial development manager and now founder of TSoK consultancy, an international strategy consultant in Australia, hopes the review is more “wide ranging” and looks forward to what might happen in the next two decades within the sector.

“They need to not just look at now, but look ahead across the whole industry and try and predict the trends for the next 15 to 20 years,” he said.

England-born Beesley points to the rapid developments in the last two decades in his home country and around the world as an example, with the emphasis shifting from retail to online, and from horse racing to sports betting and gaming machines.

“The landscape changed so quickly in that time – and it will continue to evolve with the rise of new technologies and gaming options,” he said. “For a start, you would expect that betting on horse racing will decline, betting on greyhound racing will decline as a younger generation comes through with other interests.”

Beesley pointed to the growth of e-Sports as a betting product as an example of a type of pastime perhaps not covered sufficiently by existing legislation.

“That's the “in” product at the moment, all of a sudden we have a group of 18-25 year olds, that are interested in computer games and not interested in horse racing, as they might have been in the past,” he said.

According figures figures compiled by the Queensland government for the 2013/2014 year, wagering on horse racing in Australia fell 2.4 percent, while sports betting surged 29 percent, making it by far the fastest growing area of the industry.

The review will be led by former New South Wales Premier Barry O'Farrell and will consult representatives from the racing industry, professional sports, wagering organisations, state and territory governments and members of the public, with submissions being taken over the coming weeks and the review to report back on December 18.

Australia's peak horse racing body “Racing Australia” welcomed news of the review, with its chairman Peter McGauran also noting the transformation of the gaming industry needs to be taken into account. “The thoroughbred racing industry strongly supports the government's action in the face of a rapidly changing and evolving online landscape,” McGauran said in a press release. McGauran said racing not only suffers revenue loss due to offshore wagering but that it is a threat to the sport's integrity.

“If left unchecked, racing authorities believe that the integrity of of Australian racing and sports is at considerable risk,” McGauran continued, calling for accountability and transparency from outlaw operators.

“Racing regulators must have access to all betting transaction information for integrity assurance purposes, wherever that betting takes place. Racing stewards and investigators must be able to follow an audit trail to ensure integrity. Moreover, the responsible gambling policies of governments, including those of protecting minors, matter nothing to illegal offshore bookmakers.”

Racing Australia assesses the economic benefit of the racing industry to national economy to be more than A$5 billion ($3.5 billion) and 132,000 jobs.

Racing Australia will make a submission to the inquiry with key objectives not only around revenue and integrity, but protections against problem gambling and guards against “the proliferation of online gambling,” including online casinos and poker.

Tabcorp also warned of the risks of driving punters offshore.

“The rise of unlicensed offshore betting on Australian racing and sport needs to be addressed.  Unlicensed offshore operators are not regulated to Australian standards and that poses risks to consumers and the integrity of sport and racing. It also means revenue that would otherwise be returned to the Australian racing industry and governments is instead going to unlicensed offshore operators,” it said in a statement.

There are around 30 operators running legal gambling sites in Australia, but the government claims almost 60 percent of the A$1.6 billion gambling industry is going offshore.

Some authorized onshore companies have recently found themselves in hot water for trying to push the boundaries when it comes to the ban on online “in play” betting and capture some of the market’s potential.

British operators William Hill, Ladbrokes and Bet365 sparked controversy by releasing betting systems that allow live bets to be placed without a phone call by merely checking if the punter’s computer microphone is on. Ladbrokes has since withdrawn its service.

The Australian Wagering Council says: “Permitting online inplay betting will ensure that Australian operators compete on a level playing field with more than 2300 offshore illegal operators who already offer this product to Australian customers.”

Beesley's view on the 2001 act and specifically in-play betting laws was that Australia is being left behind. He said it was clear that punters are simply circumventing the current limitations by using Virtual Private Networks (VPNs) to bet with offshore operators on in-play options. 

"You don't need to be a computer wiz kid to bet via a VPN," he said, adding that the option to bet live is still available.  "You can still bet live, if you go into a TAB or speak over the phone. That is where the European bookmakers have pushed the boundaries and re-defined what making a phone call is."

The minister who announced the review, Scott Morrison, refused to state whether legislation would be changed before the next Australian federal election, which must happen before mid-January 2017, saying he would not “pre-judge” the review.