Online Gambling: The State of Play
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2 Online Gambling: The State of Play EXECUTIVE SUMMARY Rapid expansion of internet technologies, combined with the increasing availability and accessibility of online or interactive gambling present some challenges for researchers, regulators and laws designed to protect people from problems associated with gambling. A product of its times, the Interactive Gambling Act 2001 is now undermined and significantly limited in its effectiveness for the regulation of potential problem gambling behaviours. To date, little research has been published with a specific focus on Australian contexts. Tensions around the configuration of legal online wagering or sports betting, prohibited online gaming and its accessibility through international providers via the internet are only beginning to be examined. Research into online gambling, both globally and in Australia, has also lagged behind the pace of the technologies and rapidly increasing of online gambling accessibility. This has resulted in significant gaps in both quantitative and qualitative data being produced. Although the Act forbids online gaming being provided to Australian gamblers, emergent research is starting to indicate both increased availability and accessibility to international providers and increased uptake by Australians. The Act sought to prohibit online gaming as this had traditionally been seen to involve greater risks for problem gambling behaviours because of the potentially continuous nature of play. However, due to the rapid increase in internet enabled technologies (mobile phones, tablets such as the ipad and other handheld devices), the once clear distinctions between online wagering and gaming are now less apparent. While the Act also prohibits betting on sporting events after they have started, convergence of internet with phone technologies is enabling this to occur (as betting on live events by phone is legal). As its name suggests, this discussion paper provides a State of Play on where online or interactive gambling currently sits in relation to the legislative and regulatory environment, what the implications are for existing and new gamblers (particularly sports bettors ), and for existing and potentially new problem gambling behaviours. It provides a brief summary of existing and emergent research and what this is beginning to reveal about these increasingly accessible gambling forms. It concludes by outlining a series of questions to be addressed through further, informed research into this rapidly expanding market for Victorian and more generally, for Australian, consumers. 1
3 INTRODUCTION The rapid expansion of internet technologies combined with the increasing availability and accessibility of online or interactive gambling, presents some challenges for researchers, regulators and laws designed to protect people from problems associated with gambling. Critical to this is an understanding of what online gambling actually is, or is becoming, in this rapidly changing environment. Of particular relevance is: how online gambling sits within the existing legislative framework; implications for existing and new gamblers (particularly sports bettors ); and, impacts on existing and new problem gambling behaviours. While data is emerging and more research is shifting its focus to this field, it is widely recognised that both researchers and regulators have faced significant challenges in keeping up with change. As its name suggests, this discussion paper provides a State of Play on where online or interactive gambling currently sits in relation to the legislative and regulatory environment. It provides: a definition of what since the introduction of the Interactive Gambling Act in 2001 has been generally identified as online and interactive gambling ; and, a brief summary of what existing and emergent research is starting to tell us about this increasingly accessible form. The paper concludes by outlining a series of questions that need to be addressed through further, informed research into this rapidly expanding market for Victorian and more generally, Australian consumers. ONLINE AND INTERACTIVE GAMBLING Most simply defined, online gambling is betting or wagering carried out through the use of digital technologies used to engage with a remote provider. Critical to the rapid rise of online gambling is what is known as convergence. This is the increasing proliferation of devices and technologies capable of interactivity via the internet. As laws meant to protect people from problems associated with gambling are substantially undermined by this rapid evolution of internet enabled technologies, online gambling also presents challenges for researchers and regulators. Interactive Gambling Act 2001 The legislation in Australia covering online gambling is the Interactive Gambling Act 2001 (IGA 2001). The technological world faced by legislators in the early 2000s was quite different to that of today. Services were accessed via the phone, wired or wireless systems carrying the Internet (and the and web systems made available through this); and via a connection carrying cable or pay TV. Legislators (and researchers for that matter) usually located the Internet via personal computer. 2
4 Personal computers, the phone and digital television were seen as three different mediums potentially available for interactive gambling. As the decade progressed distinctions between these separate mechanisms and the convergence in their capacities for interaction over the Internet has greatly blurred at the boundaries. The Act initially grouped together all types of what it determined as interactive gambling services. This included betting or wagering on sports and other events, and online gaming including virtual casino games. Interactive or online gambling was seen as that which took place remotely from the user. Online wagering and online gaming Using federal powers over phone and Internet systems, the IGA (2001) prohibited online gambling services being offered to individuals located in Australia. The legislation made certain exemptions for wagering using internet, phone and via digital television. This effectively made a distinction between interactive gambling activities and created two types of what is now seen as online gambling: online wagering or sports betting, and online gaming. Fig.1 The definition constructed by the Interactive Gaming Act 2001 Source: The Allen Consulting Group, Review of current and future trends in interactive gambling activity and regulation Literature review Report to the Australian Government Department of Families, Housing, Community Services and Indigenous Affairs, June 2009 p.vi Online wagering is betting on sporting events like horse racing, greyhounds and games such as football and cricket. This form of interactive gambling has generally come to be known as sports betting and has expanded to include other events like federal and state elections, and even wagering on the next chief commissioner of Victoria s police force. 3
5 Online gaming covers virtual casino games such as roulette, blackjack, poker (including games against other players and machines), and virtual gaming or poker machines. While neither term is fully accurate, these distinctions between sports betting and online gaming have become useful terms commonly used in debates and to describe broader categories of online or interactive gambling. Interactive Gambling Act 2001: Constrained by its time The rationale for permitting online wagering while prohibiting online gaming is that the latter has traditionally involved greater risks for problem gambling behaviours. This is seen to have been associated with the potentially continuous nature of play for online gaming. Due to convergence or the rapid increase in internet enabled technologies (mobile phones, tablets such as the ipad and other handheld devices), together with the expansion of online wagering or sports betting services, clear distinctions between online wagering and gaming are now dissolving. Perhaps the most significant unintended consequence of the Interactive Gambling Act 2001 is that while it sought to prohibit betting after sporting events had started, phone based wagering is permitted. Combined with the convergence of internet and mobile phone technologies, this aspect makes the Act a product of, and somewhat constrained by, its time or particularly, the technological era in which it was produced. The swift convergence of digital technology and the arrival of internet interactive phones make this form of live betting easily accessible to Australian consumers. A combination of: up to date odds, marketing offers delivered over the internet and at sporting events, an explosion of advertising particularly during games, and lucrative team sponsorships, work to create an attractive market of existing gamblers and new sports bettors. A further impediment to the Act is that while it forbids online gaming services being offered to individuals located in Australia, it does not prohibit Australians from gambling online in any of the forms available. That is, an Australian can legally play online casino games offered by an in an everexpanding offshore market. Under the Act, individual online gamblers are not considered at fault. The Act s effectiveness therefore, has become somewhat limited to only preventing Australian operating companies providing online gaming to Australians. There has been recent evidence of overseas online gaming providers increasingly targeting consumers in Australia (Productivity Commission 2010: Gambling). While this report estimates between only 0.1 and 1 per cent of Australians use online gaming, these statistics do indicate significant growth over the last five years and suggest a continuing trend. Research such as that undertaken through the Southern Cross University Centre for Gambling Education and Research, indicates rapid growth in an international market accessible to Australian 4
6 consumers (Gainsbury, forthcoming). According to this research, as at March 2011, 92 per cent of the English language sites (of a total of 2,319 sites offering Internet gambling), accepted online play from Australian gamblers, despite this being illegal under the Act. ONLINE GAMBLING RESEARCH: SOME INFORMATION BUT MUCH WORK TO BE DONE Research into online gambling both globally and in Australia has struggled to maintain pace with the technologies and rapid expansion of online gambling accessibility. In particular this has resulted in significant gaps in both quantitative and qualitative data. Factors associated with this include: the relatively fast paced evolution of online gambling tends to make data quickly redundant; only small cohorts of those reporting that they gamble are appearing in survey samples; research typologies with the capacity to map or negotiate this relatively green field are still emerging; and, gamblers using the internet to bet on sports may not immediately self identify or may elude existing classifications or categorisations for online gambling. To date, little research has been published with a specific focus on Australian contexts and tensions around the configuration of legal online wagering or sports betting, and prohibited online gaming. Emergent research like that of Phillips and Blaszczynski in 2010 is starting to shed light on the effects of new technologies and their possible impacts. Other researchers have started taking this inquiry forward. However, much of the recent work (such as that done by the Productivity Commission in 2010), while drawing together research from around the world, makes few conclusions based on these summaries. Data sets from also come before significant changes to online gambling uptake and behaviours. Indicators of this change are perhaps most significantly shown in the profit levels of companies offering online sports betting. For example, Centrebet s Australian online turnover is up 23% to AU $625 million, and online revenue up 85% to 45 million (source: Centrebet, Annual Report More research in Australia, attuned to the specific regulative conditions, gambling and non gambling culture is required. Importantly, this research needs to assess the harm potential and best policy approaches to online gambling. As Australia has seen, the introduction and rapid expansion in availability of new gambling forms can have harmful effects unforseen by policy makers. Recent and emergent research More recently, some more qualitative research involving small survey and focus groups has been undertaken into the experiences and motivations of those who gamble online (see for example: McCormack and Griffiths 2010; Phillips and Blaszczynski 2010). However, some of this work has been limited in its effectiveness due to the relatively small size of the research field and survey numbers. 5
7 Through this inquiry, researchers such as McCormack and Griffiths (2010) are beginning to locate and identify some of the characteristics of online gambling and gamblers. Their research shows that online gambling can offer: potentially higher levels of access than any other form of gambling. Gamblers can use it from almost any location at any time, for as long as they like, with minimal effort wide and frequent betting options that in turn can generate rapid results. For example, multiple bets with bookmakers can mean a continuous flow of choices and results, multiple hands of poker can intensify the gambling experience, and virtual EGM games can replicate the speeds of any real ones high levels of privacy/anonymity. While online gambling does not have to take place in environment devoid of social interaction, it can do a distinctive range of fantasies that due to its controlled environment are less likely to be punctured. Some online casino sites for example now offer avatars feelings of safety and control due to lack of pressure of face to face interaction and technological interfaces levels of tracking meaning players can be offered tailored and personalised services. Through the use of technology providers can keep learning about individual gamblers and keep attuning the services they provide to them. Each of these distinctive points raises concerns in relation to existing knowledge around problem gambling. But their distinctiveness also suggests that the types of screening, the research base and typologies for them need modification in future inquiry. CONCLUSION AND RESEARCH RECOMMENDATIONS There is little doubt that as convergence takes place online gambling is evolving and rapidly expanding, particularly in its accessibility and availability to Victorians and Australians more generally. Furthermore, it is clear that the existing Interactive Gambling Act 2001 has effectively been left behind. This is particularly the case where technologies are greatly facilitating increased accessibility and availability to online gambling, wagering and even gaming via the internet. Policy makers and legislators need to be informed by research that asks questions on and around interactive and online gambling. These questions could include: Who are online gamblers, how prevalent are they and at what rate are new and existing (traditional) gamblers taking up this form? What aspects of online gambling are new and existing gamblers finding attractive (or not)? What are the relationships of online gamblers to the broader gambling and general population? How do levels of addiction in online gamblers compare with that of other gambling forms? 6
8 What capacities might be provided for minimisation of potential harm brought on by online gambling? And what are the most effective means for putting harm minimisation mechanisms in place? What are the ways in which online gambling might be changing patterns of behaviour and even the language around some sports? This last point needs to be examined both in relation to gamblers and the broader community. Furthermore, this raises significant concerns about how online and gambling more broadly may be being normalised in broader Australian cultures and importantly, changing our lexicon with regards to some sports. Existing literature and research is yielding limited data, empirical evidence and providing only tentative answers to some of these pressing questions. REFERENCES AND FURTHER READING The Allen Consulting Group. (2009). Review of current and future trends in interactive gambling activity and regulation: literature review in Report to the Australian Government Department of Families, Housing, Community Services and Indigenous Affairs, Commonwealth of Australia: Canberra, ACT. Cotte, J. and Latour, K. (2009). Blackjack in the kitchen: Understanding online versus casino gambling, Journal of Consumer Research, vol.35, no.5, (pp ). Gainsbury, S. (forthcoming). Emerging Trends in Online Sports Betting in Australia, Southern Cross University Centre for Gambling Education and Research: Australia. McCormack, A. and Griffiths, M. D. (2010). Motivating and inhibiting factors in online gambling behaviour: a grounded theory study, International Journal of Mental Health and Addiction, DOI: /s (pp.1 15). Phillips, J. G. and Blaszczynski, A. (2010). Gambling and the Impact of New and Emerging Technologies and Associated Products: Final Report, Tender No 119/06 for Victorian Department of Justice: Melbourne. Productivity Commission. (2010). Gambling, Report no. 50: Canberra. (particularly Vol.1, pp.35 36). COMMENTS AND FEEDBACK ON THIS TOPIC The Responsible Gambling Advocacy Centre would like to hear your views. info@responsiblegambling.org.au or write to us at Responsible Gambling Advocacy Centre Level 13, 350 Collins St Melbourne VIC
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