Why Australia Made a Huge Mistake Banning Online Casinos

Last year, the global gambling industry generated $465 billion in revenue, and this year it is expected to hit $515 billion. By 2025, that number will rise to $675 billion. The industry is immense and generates around 3.5 times the revenue of the movie industry.

 

Like movies, gambling has rapidly shifted towards online platforms over the past few years, and that rate of change increased dramatically during the unprecedented events of 2020. After all, with casinos and betting shops forced to either close their doors or to operate under drastically restricted conditions, cyberspace became the obvious choice for placing a wager.

Australia’s love affair with gambling

Australia represents one of the most mature and established gambling markets in the world. The nation holds some of the highest-profile horse races, including the legendary Melbourne Cup, and it has an active and vibrant poker scene. On top of that slot machines and video poker games, or pokies as they are affectionately known, are an established pastime.

Market research suggests that the average Australian adult spends almost $1,200 per year on gambling of one form or another. Of course, not every Australian adult gambles, so the average per gambler is actually significantly higher. That’s way more per capita than any other nation. The Republic of Ireland comes in second at $600 per adult, and in the US, the number is about $400.

It’s important to keep in mind that Australians see gambling as a form of entertainment. Yes, there are professional gamblers out there for whom it is a livelihood, but these are in a small minority. For the average Australian, it is about the fun of the game, or in the case of sports betting, to show support for your team by backing them with a few dollars. If things work out well and end in a win, it is a welcome bonus, but any financial gain is almost incidental to the experience itself.

A regulatory blunder

The nation’s legislative framework for the regulation of gambling activities is similarly mature and well-established. Regulation comes at both federal and state-level and has always been quite liberal, especially when compared with nations like the US. Americans have traditionally had an uncomfortable relationship with the whole concept of gambling, and it is one that many US states are struggling to come to terms with to this day.

It came as something of a surprise, therefore, when Australia passed the Interactive Gambling Act (IGA) into law in 2001. The law prohibits the provision of web-based gambling services to Australian citizens, and its enforcement is the responsibility of the Australian Communications and Media Authority (ACMA).

The law flies in the face of Australia’s traditionally relaxed attitude to gambling. Games of chance such as blackjack and pokies are nothing new in Australia. The idea of banning them makes no rational sense considering the proliferation of gambling across all walks of Australian life. What is the difference between playing blackjack at Crown Casino or playing blackjack online? Of course, 20 years is a long time and in 2001, the internet was a very different place from what it is today.

In the world of 2021, the Act seems out of place, and the ACMA’s attempts to enforce it are an almost farcical exercise in futility. The problem is that while the Act prohibits the provision of online gambling platforms, it has nothing to say about their use. In other words, Australians are not breaking any rules by seeking out online casinos and sports betting sites that are based offshore, and they can place bets to their heart’s content. It is only the provider that will be in breach of the rules and will face action by the ACMA.

Therein lies another problem, however. The IGA has created a toxic environment in which reputable online betting providers with solid financial controls and systems in place to protect customers are careful to avoid Australian customers, as businesses like these play by the rules. On the other hand, disreputable platforms that operate from undisclosed locations and might or might not be licensed in obscure jurisdictions like Curacao see the Australian market as a golden opportunity.

Everyone’s a loser

Over the past 18 months alone, the ACMA has asked Australian internet service providers to block almost 300 online betting sites. Yet more arrive every day – if it wasn’t so frustrating it would be funny. With a properly regulated online casino market, the problem would evaporate overnight. The big-name global providers would welcome the opportunity to serve this lucrative market and would provide reliable options where gamblers, their money, and their personal data have all the protection that today’s industry expects.

The shady platforms and their shady operators would no longer be a thorn in the ACMA’s side, as Australian gamblers would cease to have any reason to give them a second look. But on top of all that, legalized online gambling would generate immense sums in tax revenue. That sort of opportunity is something that no government can afford to ignore, especially in these difficult economic times.

While online casinos remain off-limits, Australian gamblers will remain at risk from unregulated and unlicensed providers, Australia will miss out on millions in tax revenue, and the ACMA will continue to chase its tail trying to enforce a regulation that is no longer fit for purpose. Change is certain to come – and it cannot happen too soon.


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