Australia: Regulated Online Gambling Industry Versus Legislative Prohibition: Is A Regulated Approach The Best Way To Protect Australian Consumers Of Online Gambling Services?

The online gambling industry is an alluring idea for many. The opportunity to chance their hand 24 hours a day without leaving their own home presents a potential minefield for those who cannot resist the temptation. This article considers whether a regulated approach to online gambling is the best method of protecting Australian consumers.

Australia's Legislative Framework

Regulation of the gambling industry in Australia has traditionally been the responsibility of the States who rely on the revenue generated from such activities.1 However, in 2001 the Commonwealth undertook a more active role in the regulation through the introduction of the Interactive Gambling Act 2001 (Cth) (the Act).

The Act provides the federal framework for the regulation of the online gambling industry in Australia. Broadly, the Act was designed to impede the continued expansion of gambling in Australia whilst minimising the impact of problem gambling for families and communities and boosting consumer protection.2 There are two major functions of the Act:

  1. The Act makes it an offence to provide interactive gambling services to a person who is physically present in Australia.3
  2. The Act creates an industry-based complaints system which allows Australian consumers to make complaints about online gambling services which originate off-shore.

The Act, however, does not affect the operation of online sports betting services,4 such as Sportsbet and Betfair, as these are considered to involve an element of skill rather than being a game of pure chance.

A number of States have also legislated with respect to online gambling. However, the regulatory approach taken by the States is effectively curtailed by the federal scheme which operates 'over the top' of the State schemes.

While the Commonwealth has enacted a "blocking" scheme, the State legislative schemes are "enabling" due to their attempt to control online gambling activities through regulation of the industry.5 For example, Queensland's Interactive Gambling (Player Protection) Act 1998 (Qld) attempts to regulate the industry and protect online gambling participants by providing for a licensing and audit scheme for authorised providers (requiring player registration) and allowing for special orders to ban problem gamblers. Similarly, the Northern Territory's Gaming Control (Internet Gaming) Regulations 1998 (NT) sets out detailed licensing requirements and player protection measures in order to control the industry within the Northern Territory.

Therefore, the present situation is that an online gambling service provider may operate in Australia, but may not provide their services to Australian consumers. Australian consumers wanting to engage in online gambling have no option but to wager in an off-shore operation.

Regulated System

There is support for a properly regulated online gambling industry in Australia. Most importantly, the major argument in favour of regulation is that a harm-minimisation approach is the best strategy for an industry that is rapidly expanding. A regulated approach offers the socially-desirable ability to monitor users of the online gambling services.

Andrew Essa, in his article 'The Prohibition of Online-Casinos in Australia: Is It Working?'6 argues that while prohibition successfully prevents Australian-based providers from operating within Australia, Australian consumers inevitably have access to overseas-based sites (which have not been the subject of the IGA complaints scheme) due to the inherent nature of the Internet to allow users to circumvent domestic prohibitions. This creates a myriad of new difficulties as problem gamblers who are being pushed off-shore are difficult to track and monitor.

Tales of devastating woe caused by excessive gambling are often reported as current affairs. The Senate Committee Netbets Report7 argues that cohesive regulation offers the ability to implement harm minimisation policies which could significantly reduce the potential for a consumer to 'slip through the cracks'. The Netbets Report describes a number of such policies, including:

  • identification of problem gamblers;
  • exclusions of certain players;
  • time limits on gambling and the continuity of gambling activities;
  • warnings about the risks of gambling and advertising about responsible gambling;
  • links to problem gambling information; and
  • player information tracking system e.g. amounts of money being spent by a particular player.

The Netbets Report recommended that the Federal and State governments develop a strict, uniform regulatory system with an emphasis on consumer protection through harm-minimisation policies. The argument is that through implementing policies such as these, problem gamblers would be identified and intervention would become possible before the situation became dire. Undoubtedly, the impact of such intervention is a desirable outcome for the greater Australian community both socially and financially.

Supporters of a regulatory approach argue that regulation would encourage users of online gambling services to use legitimate online operations, rather than certain off-shore sites which have typically been considered less responsible in their approach to gaming. Dr Richard Woolley, a research fellow at the Centre for Industry Innovation Studies at the University of Western Sydney, believes that if the industry were to be regulated there would be a reduction in money being channelled to organised crime or illegal markets.

An example of a successfully regulated operation is Lasseters online casino which operates out of the Northern Territory (the only jurisdication in Australia that grants licences to online casinos). Lasseters was the first company in the world to launch a fully regulated online gambling service in 1999. Operating under the tightly regulated Northern Territory legislative scheme, Lasseters employs strategies such as restricting access by minors and providing a referral service to gambling advice and support groups. Additionally, players have the option to exclude themselves from the site either permanently or temporarily to encourage self-prohibition. Players may only bet with funds available in their playing account and all transactions are recorded and tracked. Additionally, players can set periodic betting limits to discourage impulse gambling.

What Is Happening Overseas?

Interestingly, the United Kingdom and the United States of America have taken opposite approaches to this issue. In the USA, online gambling has been curbed by the introduction of the Internet Gambling Enforcement Act 2006. Whilst this Act does not expressly outlaw online gambling, it makes the taking or making of payments from online gambling sites by US banks and credit card companies an offence, thereby reducing the ability of online gambling sites to operate. The UK, however, has recently adopted a regulated system of online gambling. In other parts of the world, Germany banned online gambling totally on 1 January 2008.


Where does this leave us in considering the online gambling industry in Australia?

Any Australian who has access to the Internet has the ability to gamble on off-shore sites, and it is this fact that gives weight to the argument that a regulation approach be adopted. Regulation of the industry through a harm-minimisation approach would enable in-depth tracking of problem gamblers which would minimise social and financial burdens on the community.

Since its commencement in 2001, the Act has had very few significant amendments and there is no major system changes apparent in the near future. However, given the highly variable nature of the Internet due to ever-increasing technological advances and its exponentially growing usage rate, it is not unthinkable that reform of this decidedly controversial industry would be considered.


1. Dr Kim Jackson, Parliamentary Report.

2. Dr Kim Jackson, Parliamentary Report.

3. Interactive Gambling Act 2001 (Cth) s15.

4. Interactive Gambling Act 2001 (Cth) s8A.

5. Chalmers, R. 2002. 'Regulating the Net in Australia: Firing Blanks or Silver Bullets?' Murdoch University Electronic Journal of Law 9(3).

6. Essa, A. 2004. 'The Prohibition of Online-Casinos in Australia: Is It Working?' Queensland University of Technology Law & Justice Journal 6.

7. Senate Committee Report: 'Netbets: A Review of Online Gambling in Australia' (2000).

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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