On Wednesday 10 June 2020, Andrew Wilkie, MP, tabled a Private Members Bill in the Australian Federal Parliament proposing amendments to the Interactive Gambling Act 2001 (Cth) (IGA). The proposed amendments seek to ban online social casino games.

The bill is entitled the Interactive Gambling Amendment (Banning Social Casinos and Other Measures) Bill 2020 (the Bill). An Explanatory Memorandum was also issued with the Bill to clarify its purpose. The Explanatory Memorandum explains that there has been an increase in online gambling in Australia during COVID-191 as well as an increase in persons playing online social casinos. The Explanatory Memorandum states that online social games are particularly problematic because they are attractive to new gamblers and children.

Below we highlight the main elements of the Bill:

  • It proposes to prohibit a social casino service. This is defined as a service where:
    • a game is played for virtual currency; and
    • the game is a game of chance or of mixed chance and skill; and
    • a customer of the service gives or agrees to give consideration to play; and
    • a game is played on an interactive platform;
  • In order to commit the offence of providing a prohibited social casino service, a person needs to intentionally provide such a service to persons located in Australia. This is no different to other forms of gambling service prohibited by the IGA;
  • An offender would be liable to a civil penalty of 7,500 penalty units (equivalent to AU$1.575 million) per day the offence is committed. This amount is multiplied by 5 for corporations. These are the same as the penalties set out in the IGA for providing a prohibited or an unlicensed online gambling service;
  • The prohibitions will be extraterritorial in effect;
  • Further enforcement powers are granted to the Australian Communications and Media Authority (ACMA), namely:
    • the ACMA may apply to the Federal Court for an injunction that requires internet service providers to take steps to disable access to an online location (by blocking domain names, URLs, and IP addresses) that contravenes, or facilitates a contravention of the existing prohibitions under the IGA and the proposed prohibition on providing a social casino service;
    • the injunction may be granted against search engine providers not to provide search results for domain names, URLs, and IP addresses specified in the injunction or agreed with the ACMA; and
  • The Bill proposes that regulations may be made to provide for the unenforceability of agreements relating to illegal social casino services.

The proposed ACMA powers have already been implemented by the ACMA under the powers granted in the Telecommunications Act 1997 (Cth). The ACMA has in practice used this measure to block illegal gambling websites since November 20192.

A similar bill that was presented by then Senator Nick Xenophon (the Xenophon Bill3) was considered by the Federal Parliament in 2013. Following the Joint Select Committee on Gambling Reform’s (the Committee) recommendation, the Xenophon Bill was ultimately not passed. The Committee determined that:

  • the Xenophon Bill sought to amend the definition of ‘anything else of value’ to ensure that virtual currencies are captured by the prohibition. This would have resulted in many social games being prohibited;
  • the Xenophon Bill cast a wide net and would ultimately prohibit “freemium” style social games that allow (but do not require) in-game purchases, while failing to prohibit casino-style games that involve gambling with virtual currency but do not have a real currency “buy in” element; and
  • the nature of social gaming platforms, coupled with the fact that at the time that many other jurisdictions did not have similar prohibitions, meant that the Xenophon Bill would be unable to be practically enforced.

We cannot say conclusively what the outcome of the Bill will be. However, the Federal Parliament currently has many pressing matters to attend to. Also, based on the outcome of the Xenophon Bill, Parliament will probably not have the time required to give the Bill the consideration it requires to progress.

This outcome would be consistent with the Federal Government’s response of 6 March 2019 to the recommendations made by the Senate Committee in its report entitled “Gaming micro-transactions for chance-based items”. In its response, the Federal Government noted the recommendation of the Senate Committee Report, that a comprehensive review be conducted of loot boxes in video games. The Federal Government considered that research on gambling-related harms caused by video games is in its infancy and that it would be challenging to develop a regulatory approach to this issue in the absence of further research and evidence. Accordingly, the Federal Government considered that a review of loot boxes and video games was not warranted4.