The legalisation of gambling has always been a touchy topic in any country in the world. It has only gotten more complex as the Internet Age heralded online casinos. Few jurisdictions better represent the legal dichotomy between traditional gambling and online gambling than Australia does.
The country’s laws - more specifically, the Interactive Gambling Act of 2001 (IGA) - paint a stark divide between the legality of certain forms of gambling and the unequivocal ban of others. The IGA has shaped how Australians engage with online casinos.
We take a closer look at Australian gambling laws relevant to online casinos, explain why online casinos are banned, evaluate the ban’s socioeconomic impact and explore the loopholes for circumvention that remain.
Background on Australian Gambling Laws
Over decades, Australia had built an international reputation for embracing and legalising gambling in its various forms including sports betting, lotteries and traditional brick-and-mortar casinos. What seemed to be a fairly stable national and state-level regulatory environment was however upended with the rise of online casinos.
This new breed of gambling services was no longer tied down to a particular location – anyone anywhere could access the site and play as long as they had an internet connection. It created a lacuna that the Australian government had to address and act on. And to its credit, it was one of the first countries that moved to create a legal framework governing online casinos.
The Interactive Gambling Act of 2001 set out to define online gaming, set out the limits, identify prohibited activities and protect vulnerable users from harm. Specifically, the Act banned the provision of interactive gambling products (including online casinos) to the country’s residents. Online sports betting and lotteries however remained legal.
For operators that would be granted an operating licence, it set out elaborate conditions. Further, the law sought to block foreign-based casinos from marketing their services to Australia-based players.
Reasons for the Ban
The ban on online casinos in Australia was necessitated by a number of key concerns.
Protection of Public Health
Perhaps of greatest importance was the need to safeguard public health. Gambling comes with a real risk of compulsively spending an unhealthy amount of time and money on gameplay. Such gambling addiction does not only degrade the affected individual’s finances, mental wellbeing and overall quality of life.
The social and economic impact reverberates across the person’s family, social circle, community and workplace. Further, gambling addiction exerts a financial strain on the public health system and could increase crime rates. While the risk of addiction is present in all forms of gambling, it is considerably higher with online gambling due to the greater accessibility and anonymity the internet provides.
Prevention of Fraud
Online casinos operate across borders. This can make it difficult for regulators, law enforcement and international policing agencies to monitor and track down persons using online gambling as a front for international fraud. Bad actors can steal from customers, rig games or facilitate money laundering. By banning online casinos in Australia, the government hoped to:
Underage Gambling
The accessibility and anonymity of online gambling raised another key concern – underage gambling. Rules around children’s access to computers, smartphones and the internet are not the same across different households. Where minors have access to the internet (with or without their guardian’s consent and supervision), online gambling could lure them to addiction and the resulting harm.
While many online casinos have measures in place to verify the age of users, it’s not a foolproof process. Further, unregulated online casinos are often lax on monitoring and enforcing age limits.
Revenue Concerns
As a business, online gambling naturally provides an opportunity for the collection of tax, licence fees and other forms of government revenue. However, online casinos present a unique and formidable challenge in this regard. Weighing the difficulty in reliably quantifying casino revenue, a ban on online casinos targeting the Australian market seemed like the logical thing to do.
It must be said though that the government does not explicitly provide this as a reason for the ban but it is hard not to see this as a factor in the policy’s development.
Impact of the Ban
On Gamblers
The ban may have been designed to protect Australians from the risks of gambling addiction and fraud. However, it has not necessarily had the desired effect. As the Australian government cannot police the internet or fully restrict the websites any person may choose to visit, many gamblers have ventured into unregulated offshore online casinos. This curtails consumer protection and fraud prevention thus inadvertently increasing the risk of player harm.
On the Industry
For existing and prospective casino entrepreneurs, the ban effectively took online casinos off the table as a new revenue stream. International casino operators that were targeting the Australian market had to re-evaluate the viability of their project in the context of the restrictions.
Legal and Financial Ramifications
The ban has automatically imposed legal and financial costs – from legal fees to compliance expenses to the loss of potential revenue. Some businesses opted to move offshore or switch to a different line of business entirely.
Loopholes and Challenges
Laws and regulations have never guaranteed compliance and online casinos are no exception. Significant loopholes and enforcement challenges persist.
Existing Loopholes
Enforcement Challenges
Conclusion
The ban on online casinos in Australia is well-intentioned. All around the world, online gambling poses a danger to public health, minors’ wellbeing, financial security and anti-money laundering efforts.
Still, there is a need to strike a balance between citizen protection and the autonomy of personal choice. As the consumption prohibitions have repeatedly shown, bans may sometimes force good citizens into the underground world where dangers lurk beyond the safety or regulatory protection. Further, enforcement loopholes in the current legal framework remain a challenge.
All this points to a likelihood Australia’s gambling laws will be reviewed and adjusted to address and accommodate market needs, challenges and advancements. The future lies in an equilibrium of leveraging technology for age verification, closer international cooperation and ceding greater autonomy to players.