Internet Gambling Ban in Australia may shift growth

Internet Gambling Ban in Australia may shift growth

A 12-month moratorium banning new Internet gambling sites from launching in Australia could shift the growth of the industry to Europe and North America, industry observers say.

Internet gambling has been flourishing in Australia since various Aussie states legalized it and adopted regulatory standards in the past three years.

“The Australian moratorium has (caused) a high level of uncertainty for a number of businesses that were looking to make Australia their home base,” said Tony Cabot, an Internet gambling lawyer for the law firm Lionel Sawyer & Collins.

As a result, Cabot said Internet businesses have been looking to move to Quebec, New Zealand and Great Britain.

The Kahnawake Mohawk tribe near Montreal established an Internet gambling regulatory system in 1998, making it the only place in Canada where Internet gambling is legal.

“That’s an interesting region because of its proximity to a metropolis (Montreal), and it offers good bandwidth,” Cabot said.

As the industry grows and competition intensifies, many companies are looking to ditch their tax-free havens, like Costa Rica, for regulated jurisdictions, industry observers say.

“If regulation brings credibility, they will move to these regions, especially in the face of increased competition,” Cabot said.

Great Britain and New Zealand are two regions that are likely to get Internet gambling transplants if they regulate their local businesses, because these jurisdictions already have mature, highly respected land-based gaming industries, Cabot said.

Lawmakers in the two countries are considering whether to legalize Internet gambling within their nations’ borders.

Australia’s Internet gambling industry was shaken in December when the federal government passed a retroactive ban preventing new Internet gambling sites from being launched between May 19, 2000, and this May.
During the moratorium, the Australian federal government intends to look at the effects of an indefinite ban and ways to block Internet gambling sites from reaching Web users in Australia.

More than 80 percent of adult Australians bet, spending twice as much on legalized gambling as Americans or Europeans, and losing an average of 3 percent of their disposable household income on games of chance last year, according to a recent New York Times article.

The article also states that some religious groups support the ban on Internet gambling.

Not all Australian officials are happy about the federal moratorium.

“The moratorium is shortsighted and appears to be more about the Australian federal government’s attempt to grab headlines rather than ensuring player protection,” Queensland Treasurer David Hamill said in an e-mailed statement.

He said the Queensland government already has implemented the toughest Internet gambling laws, establishing itself as the “most reputable” place to gamble online.

“(The ban) will force Australian Internet gamblers to use offshore and unregulated gaming sites … putting more players at risk of problem gambling behaviors,” Hamill said.

Many of those guidelines address the fairness of the games, security of financial transactions, under age gamblers and addictive gambling habits.

Many of those standards have been copied by other regions throughout the world.

Last year, South Africa established a federal Internet gambling regulatory board, but its remote location could hamper the industry’s potential for growth in that country.

Staffing a customer support center or finding computer technicians in such a remote country could be difficult, Cabot said.

If New Zealand legalizes Internet gambling, Cabot said, the Australian moratorium could help feed the growth of the Kiwi-island nation.

“It wouldn’t be too hard for Australian business to jump to New Zealand,” Cabot said.

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