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Friday, March 8, 2013

The Australian Regulatory Landscape for Online Gambling Operators in 20131 - Media, Telecoms, IT and Entertainment - Australia

The Australian Regulatory Landscape for Online Gambling Operators in 2013<SUP>1 </SUP> - Media, Telecoms, IT and Entertainment - Australia

Australia: The Australian Regulatory Landscape for Online Gambling Operators in 2013
Gambling Law & Regulation: March 2013

07 March 2013
Article by Jamie Nettleton 
In early 2013, Australian gambling law is in a state of flux, particularly given that, first, it is a Federal election year, and secondly, the Federal legislation which prohibits online gambling remains under review. Given these two factors, it is difficult to predict how or whether the law affecting online gambling will change in 2013.
The Interactive Gambling Act 2001 (Cth) (IGA), which prohibits the provision and advertisement of online gambling services (other than wagering and lotteries services, save to a limited extent) to Australian residents, remains the subject of a review by the Department of Broadband, Communications and Digital Economy (the Department) (which is responsible for overseeing the IGA). Whilst the Department published its Interim Report in May 2012, its final report has not been released.
Until the Department's review is completed, whether through the publication of a final report or otherwise, it will be difficult for the recommendations contained in the Interim Report to receive any serious consideration from Australian lawmakers. These recommendations include proposals that the IGA be amended to liberalise online tournament poker for a five year trial period and that online in-play bets be permitted (subject to a prohibition on microbets).
Social Media Gaming
This is one area on which we expect significant headlines this year. The legal position in Australia (which is recognised in the Interim Report) is that games which utilise virtual currency are not prohibited under the IGA because the IGA's definition of "gambling service" is not satisfied, on the basis that virtual currency is not able to be exchanged for real currency.
In early January 2013, anti-gambling politician, Senator Nick Xenophon, announced that he would introduce draft legislation for consideration by the Australian Parliament to amend the IGA to ensure that virtual currency games are prohibited. Senator Xenophon referred to Slotomania in his comments. Senator Xenophon's indicated that his concern is, broadly speaking, that Slotomania and games like it are similar to electronic gaming machines and therefore normalise gambling to their players, who may be children.
However, whilst this concern has been given extensive publicity, it remains to be seen whether any changes will be made to Australian law.
Sports Betting: New Entrants
Irrespective of whether changes are made in 2013 to the IGA to remove the prohibition on online in-play betting in relation to sports, it is likely that the sports betting market in Australia, which in 2012 saw the entry of bet365, will continue to grow.
It is likely that other established offshore operators are considering entry into the Australian market, either by seeking their own licence and introducing their brand to the Australian market, or by acquiring an existing operator. (The most recent change relates to the announcement of the proposed acquisition of Sportingbet (which also conducts business under the Centrebet brand) by William Hill.)
It is also possible that other gambling operators that operate in different gambling sectors may also be looking to enter the online wagering space.
Whilst the advantages of the Australian market are clear, and the most often-cited of these advantages are the regulated Australian market as well as a demographic famous for its love of sport and racing, existing and future competitors will be vying for market share and profitability in an increasingly crowded market. Also, difficulties will be faced due to the limited significant marketing opportunities that remain as a result of recent high-profile exclusive sporting sponsorships entered into by local wagering operators (see below).
Advertising/Live Odds
While there has been an increasing amount of media commentary (see "Sports and Sports Wagering" below) about the possible negative consequences of the reported increased advertising spend of Australian licensed wagering operators, few formal legislative measures have been enacted.
This concern was alluded to in a statement by the Prime Minister in January 2012 that, if the wagering sector did not self regulate to prohibit the promotion of live odds during sports coverage, the government would introduce legislation to this effect by June 2012. Wagering operators have since, as an industry, ceased promoting live odds during sports coverage.
There remains extensive media commentary which seeks further controls on the advertising undertaken by wagering operators. As a result, we anticipate that further controls on the manner in which wagering is advertised will be introduced in 2013, whether by way of industry agreement or governmental regulation. Unless the government takes further action in respect of advertising by wagering operators, and/or unless a recommendation in this respect is made by the Department in its final report, we expect that this issue will continue to be regulated at the industry level.
Sports and Sports Wagering
The recent sponsorship of Cricket Australia by bet365 (in place of Betfair), as well as the recent announcement of Tom Waterhouse's sponsorship of the NRL (in place of the TAB), appear to have, perhaps unsurprisingly, prompted considerable commentary during the Australian cricket season criticising the relationship between, broadly speaking, sport and wagering operators.
Not only does this criticism target the promotion of wagering operators' brands on the sports ground and the broadcast of live odds during breaks, but it also focuses on the promotion and availability of "exotic bets". Exotic bets include, for example, in a cricket match, a bet on the team that will win the toss. The argument often made is that, in general terms, promotion of the availability of these bet types will normalise gambling, and, in particular, children will grow up thinking that certain sports simply exist for the purpose of betting.
Given the steady growth of expenditure on sports wagering (whilst expenditure on race wagering is in decline), wagering operators will continue to invest in their relationship with sports. This will no doubt attract criticism expressing concern at the interdependence between sports and gambling. Given that it is an election year, it is likely that continued commentary on these issues, in some cases for perceived political gain, will continue. However, it is difficult to predict whether the government will intervene to introduce further restrictions.
2013 will give rise to substantial press coverage in Australia relating to online gambling, much of which will be negative. However, there is considerable doubt this will give rise to a significant legislative response.
The imminent Federal election will cause the Department's Interim Report and its recommendations to be the subject of public discussion, particularly at the political level. However, despite the Interim Report demonstrating clearly the ineffectiveness of Australia's regulatory position relating to online gaming, the proximity of the Federal election is likely to delay the consideration of the necessary legislative changes required to implement these recommendations.
The assistance of Jessica Azzi, Solicitor, of Addisons in the preparation of this article is noted and greatly appreciated.
1 First published in January 2013 issue of the World Online Gambling Law Report and reproduced with their permission.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
Specific Questions relating to this article should be addressed directly to the author.

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