A Cautionary Tale

A study conducted by GambleAware, of interactive gambling in Australia for 2019-20, found that in NSW the prevalence of online gambling more than doubled, from 7.8 per cent to 17.8 per cent, since 2010-11. According to Australian gambling statistics, about half of the money spent on activities such as gaming machines is now spent online, roughly $1.5 billion. 

While some jurisdictions have legalised and licensed online-for-money casinos and gaming, most still prohibit such activities, including Australia. Most online providers are illegal actors, often failing to honour bets. Countries that impose bans on online gaming struggle to restrict access to foreign entities which can be accessed before regulators block the website or via a virtual private network (VPN) with no penalty to the player.

Few countries have such comprehensive and open regulation as Malta, where about 10 per cent of the world’s online gaming operators are based. Since 2002, online gaming has been legal and licensed by the Malta Gaming Authority. There are no limits on the number of online casino providers that can operate in the country. Licensed operators in Malta pay a five per cent gaming tax applied to gross gaming revenues generated from Maltese players, and local players must pay a five per cent tax on their gambling winnings. 

Online gambling became fully legalised    in the UK in 2005, with regulations now well-tested. In late December 2022, an inquiry was announced into the UK Government’s approach to regulating gambling, responding to calls for greater protections for vulnerable people, including children, from gambling-related harm. If similar online gambling laws are developed domestically, Australian regulators may look to the UK regime. 

In the United States, there is no federal regulatory body responsible for gambling, with regulation falling to various state statutory bodies. Restrictions on online and interstate gambling activities are in place in some states. A reinterpretation of legislation in 2011 was the catalyst for the growth of online gaming in the US. 

While rapidly expanding, only New Jersey, Delaware, Michigan, West Virginia, Pennsylvania and Connecticut currently have express laws enacted for online gaming, with other states considering legalising the industry. In New Jersey, liberalisation has resulted in approximately $80 million per month in gambling taxes.

Australian Landscape

Since 2017, the Australian Communications and Media Authority (ACMA) has worked with internet service providers (ISPs) to block illegal gambling on more than 610 websites in Australia. Since ACMA started site blocking, nearly half the sites listed have pulled out of the Australian market. A full list of blocked sites is available here. The blocking regime is limited by illegal providers who utilise site addresses with slight variants (e.g. thepokies.net and thepokies10.net) or change their IP addresses. Regardless, the evidence shows that ISP blocking is an effective disruptor and reduces access to illegal sites.

Australians who are impacted by illegal gambling websites that fail to pay out winnings or return funds to players are not protected by any consumer rights, meaning there is no legal recourse for financial losses. 

The House of Representatives Standing Committee on Social Policy and Legal Affairs (Committee) is currently running an inquiry into online gambling and its impacts on those experiencing gambling harm. The Committee has held a number of public hearings and received more than 130 written submissions, including from Clubs Australia, which can be found here. 

The Committee is considering a range of issues, including the current regulatory and licensing regimes and the effectiveness of protections against illegal online casino-style gambling.

What Next…

While we await the Committee’s findings, it is important that land-based gaming can weather the imminent and growing presence of online competitors. Australians already spend millions of dollars on online gaming. Overseas experiences have shown that while players spend millions in the online market, it can impose only a small percentage of losses on land-based revenues. Clubs must proactively lead the way in gaming harm reduction across Australia to remain the safest
place to gamble.  

Legalised Jurisdictions

As illustrated in the world map above, there are a number of countries that have legalised online casinos and gaming. These include Sweden, Italy, Spain, Malta, Ireland, Japan, Costa Rica, El Salvador, Trinidad and Tobago, and Honduras. Notably, the United Kingdom and a small number of states in America have also legalised online gambling. In some countries, such as Australia, online casinos and gaming are illegal, and regulators consider any foreign operator offering those gambling activities as illegal.