Australian Government announces review of Australian gambling laws targeting illegal online offshore operators

The Review

Australia is to conduct a review of its laws to ensure they are effective in protecting Australians from illegal offshore wagering and to investigate methods of putting in place more effective enforcement measures.  This Review was announced today by the Hon. Scott Morrison, the Federal Minister for Social Services.

Illegal offshore wagering refers to wagering services offered to Australians by operators located outside Australia.  These operators do not comply with relevant Australian laws in many respects, meaning that these operators, unlike Australian licensed operators, do not:

  • contribute product fees to Australian racing and sporting bodies; and
  • monitor and report suspicious betting activities.

Also, the Minister noted that illegal offshore wagering leaves Australian customers without protection in respect of payouts on their winnings.  He indicated that the purpose of the Review is to consider the impact of these operations on Australian customers, and what can be done to protect individuals vulnerable to problem gambling.

As part of his announcement, the Minister indicated that offshore wagering is a $1 billion annual illegal business in Australia and that a number of wagering operators “are now moving offshore leading to operators being able to avoid paying the product and other fees that assist with funding racing and sports facilities, integrity measures, prize money and participant payments and other operational costs.” 

Terms of Reference

The Terms of Reference for the Review are:

  1. the economic impacts of illegal offshore wagering and associated financial transactions on legitimate Australian wagering businesses, including size of the illegal industry, growth, organisation and interrelationships with other criminal industries and networks; and  
  2. international regulatory regimes or other measures that could be applied in the Australian context; and  
  3. what other technological and legislative options are available to mitigate the costs of illegal offshore wagering; and  
  4. the efficacy of approaches to protect the consumer – including warnings, information resources, public information campaigns and any other measures, regulatory or otherwise, that could mitigate the risk of negative social impacts on consumers.

Conduct of the Review

The Review will be conducted by the former Premier of New South Wales, the Hon. Barry O’Farrell, who will consult with representatives from the racing industry, professional sports and wagering organisations, state and territory governments and community groups. The Review will also call for submissions from the public.

The Review will provide a final report to the Minister of Social Services and the Minister of Communications for their consideration by 18 December 2015.

Commentary

Interestingly, the Terms of Reference make very limited reference to Australia’s Federal legislation dealing with online gambling, the Interactive Gambling Act 2001 (Cth) (IGA), despite repeated recommendations by various inquiries that the IGA be amended.  This has included recommendations that the prohibition on online in play sports betting be repealed and that the prohibition on online gaming be liberalised.

Of particular note is the focus of the Review on offshore wagering operators.  Although the Media Release of the Minister makes reference to the ability of Mr O’Farrell to expand the scope of the Review to “look at everything he needs to with no preconceived notions”, there is no specific reference in the Terms of Reference to any review of the prohibitions in the IGA.

The limited scope of the Review has been criticised by Senator Nick Xenophon, who has called for the Review to be extended to cover the activities of legal Australian sites.  We anticipate that, despite the limited nature of the Terms of Reference, submissions will be made by interested parties much more generally including in connection with the laws relating to online gambling in Australia.

These submissions are likely to include comments on the relevance and effectiveness of the provisions of the IGA and whether amendments are required.

We would anticipate that the recommendations of the Review of the IGA conducted in 2013 by the Department of Broadband, Communications and Digital Economy (now the Department of Communications) will be reviewed further.  This was a fulsome review which resulted in various recommendations being made, none of which have been implemented.

In view of the range of issues likely to be covered by the Review, and the expectation that a draft and final Report will be provided following consultation with stakeholders and public hearings, we consider the December 18 timeframe to be ambitious.

However, a Review of these issues is welcome, taking into account the lack of effectiveness of Australia’s laws in this area, and their inconsistency with corresponding laws in other countries.