Introduction
The Australian Communications & Media Authority (the ACMA) has published a letter expressing its view that a "free" online game available on Facebook which offers games such as blackjack and roulette is not in breach of the Interactive Gambling Act 2001 (Cth) (the Act).3 The ACMA is the Federal agency responsible for the initial investigation of complaints relating to possible contraventions of the Act.
This is the first time that there has been any official guidance given in Australia on the legality of virtual games. The ACMA's letter provides guidance to the suppliers of similar games, as well as the platforms (such as Facebook) used to distribute these games, that the supply of such games to Australian residents is not prohibited by the Act.
Background
In October of this year, the ACMA was contacted by Senator Nick Xenophon (an Australian politician who is frequently involved in discussions of gambling regulation and who generally takes an activist stance in the protection of problem gamblers) expressing concern about the legality of the "free" online game DoubleDown Casino, which is available on Facebook and other social media sites. DoubleDown Casino provides "free" casino-style games such as blackjack and roulette (the DoubleDown Games).
DoubleDown Games are free to play and users are issued with virtual currency to play the game. Virtual currency can be used to activate game features. Users are able to purchase additional virtual currency using "real world money" to enhance their playing experience in some way. This may include the purchase of credits to extend playing time.
The Act prohibits the supply of interactive gambling services to persons resident in Australia. For a virtual game, such as a DoubleDown Game, to constitute a gambling service (which is one of the key element of an "interactive gambling service" in the Act), it must:
- be a game of chance or of mixed chance and skill; and
- involve consideration; and
- be played for money or anything else of value.
Senator Xenophon's Complaint
Senator Xenophon's complaint related to the facility provided by DoubleDown Games to allow users to exchange real money for virtual currency. Accordingly, he suggested that the DoubleDown slogan, "just for fun – not real gambling", was misleading, and that the DoubleDown Games constituted a breach of the Act.
The ACMA's response
In its response, the ACMA informed Senator Xenophon of its view that the DoubleDown Games are not in breach of the Act because they do not constitute gambling. Accordingly, the ACMA will not refer the DoubleDown Games to the Australian Federal Police (the AFP).4
Addisons' Comment
It is possible that DoubleDown Games may satisfy each of the first and second requirements of a "gambling service" as set out above. However, the ACMA has confirmed that the DoubleDown Games does not meet the third requirement. This view is taken on the basis that it is not possible to win "money or anything else of value" through playing the DoubleDown Games and there is "no facility to convert or cash out the 'virtual' currency accumulated during game play into 'real' currency". If an operator were to allow "virtual currency" to be exchanged for "real currency", it is very likely a different view would be taken.
In a report released in September 2011, entitled Cheating at Gambling5 (which considered various matters relating to gambling including the treatment of gambling and whether match-fixing should be criminalised), the New South Wales Law Reform Commission (the NSWLRC) discussed whether similar types of games available through Facebook constitute gambling. The NSWLRC came to the view that the virtual currency which could be won using such games was akin to the free balls that are released when a certain score is reached in a pinball machine game. It concluded, like the ACMA, that these free balls are not a thing of value. The NSWLRC, did however, express a concern that such games encourage young people to use illegal online gambling.
Conclusion
While this conclusion is not binding on the ACMA and does not constitute a legal precedent, it suggests that the ACMA will not refer similar matters to the AFP for further investigation. When considered with the NSWLRC's view, it would appear that the provision of DoubleDown Games and similar virtual games do not constitute gambling for the purposes of the Act.
However, there remains a concern, as expressed by the NSWLRC, that the widespread availability of these games on social media, such as Facebook encourages minors to gamble (many such sites allow any user 13 years or older to register). Accordingly, there remains a risk that a stronger stance from Australian regulators will be taken in relation to the availability of virtual games if the Australian community becomes sufficiently concerned.
Footnotes
3 Correspondence available under the heading "Additional Information Received": http://www.aph.gov.au/Senate/committee/gamblingreform_ctte/interactive_online_gambling_advertising/submissions.htm
4 Although the ACMA is responsible for conducting initial investigations into complaints regarding breaches of the Act, it has no enforcementpowers of its own in respect of interactive gambling services. It must instead refer matters it deems a breach to the AFP.
5 http://www.lawlink.nsw.gov.au/lawlink/lrc/ll_lrc.nsf/vwFiles/R130.pdf/$file/R130.pdf see page 49.
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