On 30 October 2014, the Australian Federal Minister for Social Services, Kevin Andrews, and the Premier of Victoria, Denis Napthine, who is also the Minister for Racing in that state, announced that a new national working group would be set up to address the “increasing impact of illegal offshore wagering on Australian racing and sports”.1

This group, to be called the Illegal Offshore Wagering Working Group (Working Group), will include representatives from the racing industry, professional sports and wagering organisations.

This announcement followed comments made by the Chairman of Tabcorp, Paula Dwyer, that Tabcorp had been in talks with the Australian Government relating to the blocking of offshore, unregulated bookmakers.2

Current regulatory framework

Online wagering is regulated in Australia under both federal and state/territory law.

At the federal level, the Interactive Gambling Act 2001 (Cth) (IGA) prohibits the provision of an online gambling service to Australian residents; however, online wagering (save for in-play betting on sports events) and lotteries are exempt from this prohibition. In other words, the provision of an online wagering service to Australian residents is permitted under the IGA; provided that the operator does not offer in-play betting on sports events (In-play Prohibition). This position does not affect Australian state and territory laws that apply to online gambling and which contain additional prohibitions.

Under the laws of each Australian state/territory, the provision of wagering services is permitted only when conducted by an operator licensed by the gambling regulator of an Australian state/territory. For example, corporate bookmakers such as bet365, Sportsbet (a subsidiary of Paddy Power) and the William Hill Australia brands (Sportingbet, Centrebet and Tom Waterhouse) are all licensed by the Northern Territory Racing Commission. Similarly, the totalisator in each Australian state/territory is licensed by the gambling regulator of that Australian state/territory.

Unfair playing field

Understandably, Australian licensed operators raise frequently concerns that betting operators licensed outside Australia do not comply with Australian law and, therefore, do not incur the costs involved in compliance. For example:

  • Offshore operators typically do not comply with the In-play Prohibition.
  • Offshore operators do not pay a product fee to any Australian racing or sporting body in return for offering markets on that body’s events.
  • Offshore operators do not comply with various integrity obligations (that apply to Australian licensed betting operators), for example, the obligation to monitor and report suspicious betting activity to the relevant racing or sporting body or to AUSTRAC.

On the other hand, as a result of the In-play Prohibition, Australian licensed operators cannot compete with offshore operators to the extent that they allow customers to place online in-play bets on sports events. While the IGA purports to apply extra-territorially, there has been no effective enforcement of the In-play Prohibition against offshore operators.

Additionally, Australian licensed operators have onerous obligations in respect of both product fees and sports/racing integrity.

ISP blocking

While it is too early to predict the recommendations of the Working Group, it is clear that they will consider, as one possible enforcement option, the introduction of legislative provisions directed at blocking offshore operators from providing services to Australian residents. This will require legal obligations to be imposed on Australian ISPs requiring ISPs to block access to the websites of offshore operators by Australians.

This is an issue that has been considered by a number of jurisdictions as a measure to limit offshore illegal online gambling – to our knowledge, few countries (France being one exception) have retained statutory provisions to this effect.

What about in-play?

It is also too early to predict whether the Working Group will consider any possible amendment to the IGA to allow the provision of online in-play betting on sport events.

We anticipate that the Working Party will receive submissions that one effective way to counter the activities of offshore operators who provide in-play betting services will be to allow Australian licensed operators to provide those services.

This would be on the basis that the In-play Prohibition has not eliminated the demand of Australian customers for online in-play betting on sports events. Rather, Australian customers choose to place their bets with offshore operators.

It remains to be seen whether Australian licensed online betting operators, who are required to operate in full compliance with Australian law, will be given the opportunity to provide in-play services legally in a manner which meets the demand of Australian customers for online in-play betting on sports events.

What’s next?

It is likely that the composition of the Working Group will be finalised by the end of 2014.

While details have not yet been made public, the Working Group will be calling for public submissions.

The Working Group will provide its final report including recommendations to the Federal Government in 2015.