The Asian market has always been of interest to the gambling sector. The exponential development of online gambling has made this form of entertainment more accessible and many operators, today more than ever before, are researching and reviewing the best manner in which to offer their services to the Asian market.
Operators are accustomed to being licensed and regulated, and this is the operators' desired modus operandi due to the reputational benefits that a regulated operation provides. However, it is difficult for an operator to find a licensing jurisdiction in Asia which administers the high regulatory standards that they are accustomed to in other regulated markets. This requires operators to consider their risk appetite on whether to commence operations in Asia and, if so, how best to do so with limited and acceptable risk.
The regulatory environment relating to online gambling throughout Asia varies. There are jurisdictions which consider online gambling to be illegal, other jurisdictions which license it, and others which do not actively take enforcement action against operators that make their services available in their jurisdiction.
Many operators have sought a licence in jurisdictions such as Curacao, Belize, Panama, Philippines, and used those licensed operations to target the Asian market. This solution has worked relatively well for operators and provides the operator the comfort of being licensed and having a seal of approval.
This, however, does not come without possible reputational risk in view of the evolving online gambling environment, with regulators in leading first world jurisdictions wary of regulatory jurisdictions that are perceived to be lax in their licensing and compliance requirements. As a result, other licensed operations within the group of companies could possibly be jeopardised if the Asia facing version of the operation is reviewed by regulators in the US and/or Europe and perceived to be based in a less reputable jurisdiction.
The main challenge that the Asian gambling environment presents is that a different gambling culture exists when compared to that which the European and US markets are accustomed to.
Solutions which the Australian regulatory environment could provide:
Licensing of Online Gambling Services:
Australia has a prohibitionist online gambling regulatory regime at the Federal level set out in the Interactive Gambling Act 2001 (Cth) (the 'IGA'). The IGA provides for a general ban on the offering of online gambling to persons located in Australia unless the relevant activity is licensed in a state or territory in Australia. (This is only possible for betting and lotteries.)
An operator may, however, be licensed in Australia to offer online gambling services which are solely provided to persons located outside of Australia. There are few limitations on which types of gambling services may be offered in this manner.
An operator who wishes to offer sports-betting services, casino games, lotteries, or any other type of game to Asian jurisdictions may consider applying for an online gambling licence in a state or territory in Australia. The Northern Territory is the jurisdiction in Australia where most leading Australian online operators are licensed.
Ancillary services are fundamental for all gambling operations, and this is no different for an operator providing services to Asia. Ancillary service providers provide knowledge, experience, the relevant contacts, and expertise in their respective area of services. Connecting with and using the right ancillary service providers is necessary for the growth of the business, minimising strategic and operational errors, and allows the gambling operator to focus on the core purpose of the business.
It is generally not necessary to hold a licence to conduct services ancillary to gambling in Australia; however, it is advisable and good business practice for each operator to conduct a detailed review of the services to be offered from Australia to verify that they comply with the laws of the state or territory where the business is conducted.
Benefits of Operating from Australia:
Australia provides an attractive environment for gambling service providers and for ancillary service providers. The benefits of setting up operations in Australia to provide services to the Asian market include:
- the availability of staff and expertise required to provide the services;
- an English speaking jurisdiction with a large Asian community;
- Australia's geographical proximity to Asia for better management and efficiency of operations;
- a favourable regulatory regime for operations targeted outside of Australia;
- a jurisdiction that is well regulated;
- clear financial and tax requirements; and
- legal certainty.
Operating from Australia to target the Asian market is a viable option which operators should consider when evaluating the best structure on how to operate in the attractive Asian market.