Government Research Backs Online Gaming Liberalisation

In a draft report on gambling released today by the Australian government's independent research and advisory body, the Productivity Commission, findings show that the country's ban on online gaming is not working, calling instead on the government to initiate a managed liberalisation of online gambling with tight regulation of licensed sites to ensure integrity and consumer protection.

The provision of online gaming to Australian residents has been prohibited by the Australian government through the Internet Gambling Act, excluding wagering on races and sports betting, but the Commission believes that Australians are increasingly gambling abroad on sites with minimal government oversight.

According to the Commission, "online gaming such as casino and poker poses several risks to recreational gamblers as it may increase problem gambling through its high level of accessibility, while the current prohibition means that Australians can only use offshore sites, some of which have poor harm minimisation features and unscrupulous business practices".

The report states that the current prohibition on the provision of gaming services has failed to prevent considerable growth in the consumption of online gaming by Australians and is likely to discourage the recreational gamblers who would have benefited most from online gaming.

In addition, the prohibition is least likely to discourage problem gamblers, for whom the regulation of the industry could have offered better protection and support.

The draft reports states that regulated access, rather than prohibition, would significantly reduce these risks by requiring sophisticated harm minimisation and probity measures to be provided to online gamblers. It would also increase competition in gambling, providing Australian businesses with greater commercial opportunities while yielding additional tax revenues to governments.

The Commission considers that the IGA does not represent the "best regulatory option available to government, and does not deliver the best result for Australian consumers", and states that a properly regulated online gaming industry would deliver a net benefit to the Australian community.

"A managed liberalisation of online gaming would better protect Australians from the risks of online problem gambling," said the Commission, "whilst still allowing recreational gamblers the freedom to choose an enjoyable medium." It would also resolve the apparent paradox that the government allows Australian based firms to sell a product overseas that it deems too dangerous for Australian themselves to consume.

The Commission said however that managed liberalisation is not without risk, with ongoing evaluation of the effectiveness of harm minimisation measures required and regulatory oversight of the online gaming sector a priority.

The report recommends that the Australian government repeal the Interactive Gambling Act, and in consultation with state and territory governments, initiate a process for the managed liberalisation of online gaming, in line with similarly liberalised countries such as the UK.

The regime would mandate strict probity standards, as for online wagering and venue-based gambling, with a number of harm minimisation measures such as information on problem gambling and links to problem gambling resources, the ability to pre-commit to a certain level of gambling expenditure, and the ability to self-exclude.

The report also calls on the government to assess the feasibility and cost effectiveness of nationwide self-exclusion and pre-commitment options for equivalent online providers, and the capacity for extending self-exclusion through the payments system or through software solutions selected by problem gamblers.

The Commission is to hold public hearings on its draft report in late November/December, with a final report scheduled for submission to Government by February 26th 2010.