Internet Gambling Regulation. Richard Brading Principal Solicitor Wesley Community Legal Service

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1 Internet Gambling Regulation Richard Brading Principal Solicitor Wesley Community Legal Service

2 Mediums for interactive gambling Internet gambling on a computer Phone gambling voice or interactive phone Digital television Factors convenience, speed, privacy

3 Forms of internet gambling Wagering horse races etc. Sports betting Outcome of events, e.g. elections Casino-style games Online poker machines (slots) Online poker Online lotteries Gambling within virtual reality games

4 World Online Gaming Market 33 million active online gamblers in 2008 (excludes wagering) $US 20 billion revenue to industry 6.8 million online poker players $3.5US billion revenue to online poker businesses

5 World internet gambling revenue $US

6 Top 10 Internet Gambling Jurisdictions (2007) 1. Gibraltar (British overseas territory) 2. United Kingdom 3. Antigua and Barbuda 4. Malta 5. Kahnawake Mohawk Territory (Quebec) 6. Aldernay (British Channel Island) 7. Hong Kong 8. Netherland Antilles (Curacao) 9. Phillipines 10.United States

7 Gibraltar World s leading internet gambling jurisdiction

8 Offshore providers Wagering sites sports and racing Internet casinos Poker sites Lotteries Virtual reality sites Competitions

9 How much is gambled overseas? Australians gamble about $1 billion offshore Online sportsbetting & wagering 424,000 accounts - $391 million spent Online poker 363,000 accounts - $249 million spent Online casinos 703,000 accounts - $541million spent

10 Australian online providers Wagering Centrebet, Sportingbet, Luxbet, Betchoice etc. based in Northern Territory Tabcorp online wagering & others Betting exchange BetFair Tasmania Lotteries

11 Wagering online Wagering involves placing a bet against a bookmaker at fixed odds or through a totalizator where a dividend is paid based on the volume of bets placed Sky Racing Active is an interactive television wagering service for TAB customers Bookmakers or totalizators can be licenced in any State or Territory Overseas bookmakers are not licenced in Australia

12 Sportingbet Australia s biggest bookmaker

13 Exotic bets Winner of reality shows Winner of Logies, Oscars, Emmies, Dancing with the Stars Election results Reserve Bank interest rate determinations Stock market indexes Royalty and celebrity weddings Weather

14 Betfair Betfair is a United Kingdom company that has a Tasmanian licence. Betfair is a betting exchange, not a bookmaker. Betfair introduces individuals who bet against each other & charges commission Example I bet that Americain will win the Melbourne Cup and you bet that Americain will not win. If Americain wins, then you pay me and Betfair charges commission.

15 Betfair v Western Australia State of Western Australia passed law prohibiting betting exchanges Betfair was licensed in Tasmania and advertising in WA Betfair took WA to High Court and won under s.92 Constitution (trade and commerce between States)

16 Internet casinos Offer a wide range of casino-style games Online poker machines (slots) May also offer poker and wagering Free play offered to give players the chance to try out the products without risking money Free cash offered to get players to open an account

17

18 Poker sites Poker is considered a game of skill so has low level of regulation Poker games against the casino Poker games against other players Free play option Risk of cheating

19 Poker P2P format Players compete against each other in a peer-topeer format Poker operator has no stake in the final outcome but charges a fee for facilitating the game.

20 Popular Poker Sites Partypoker.com Fulltiltpoker.com 888.com Pokerroom.com Pokerstars.com Mansion.com

21 Lotteries Popular in Europe, Asia and Latin America Major lotteries Instant lotteries Lottery scams

22 Virtual reality games Gambling occurs within virtual reality games such as World of Warcraft and Second Life. These games offer gambling using virtual currency. Gambling offered by some forms of Massive Multiplayer Online Role Playing Games may be prohibited by the Interactive Gaming Act.

23 Government responds to virtual gambling In 2007, Second Life banned gambling from its virtual world

24 Problem Gambling There is no evidence that internet gamblers have a higher prevalence of problem gambling than other gamblers.

25 Responsible Gambling Strategies Warnings and information Self-set bet limits or time limits Self-exclusion Links to online counselling services Surveys suggest these are of moderate value

26 Is it legal? Interactive Gaming Act 2001 (Commonwealth) Prohibits online casino games & online gaming machines Wagering and lotteries are not prohibited. Instant lotteries (online scratchies) are prohibited. Confusion about whether online poker is legal or not. Players do not commit a Commonwealth crime by gambling on the internet

27 Is it legal? Unlawful Gambling Act 1998 (NSW) makes it a crime for NSW residents to wager on a thoroughbred, greyhound or harness race with unlicensed bookmaker Legal to bet with bookmakers licensed in other Australian States Punter commits a crime placing a bet with unlicensed bookmaker located in NSW Max penalty $5500/12 months prison BUT unclear whether a NSW punter commits a crime by placing a wager on a horse or dog race with an offshore bookmaker

28 What is the government doing? Very little Governments can t stop offshore internet businesses taking bets from Australians Bets are actually made in the countries where the online business is located Restrictions on advertising by offshore gambling businesses in Australia

29 Australian Communications and Media Authority (ACMA) ACMA is responsible for enforcing Internet Gambling Act ACMA has a complaints hotline Internet industry code of practice ACMA notifies makers of Family Friendly Filters of prohibited internet content ACMA has included online poker sites on its blacklist

30 No prosecutions Despite 17 referrals from other agencies since 2001, Australian Federal Police have failed to lay any charges against suspected illegal operators (The Age, 30 May 2010) Productivity Commission said the law was largely ignored

31 Office of Liquor Gaming & Racing OLGR responsible for enforcement of Unlawful Gambling Act 1998 (NSW) OLGR will prosecute unlicensed bookmakers in NSW OLGR has never prosecuted a punter for betting with offshore bookmakers

32 USA Each State has different laws about online gambling most allow online wagering, all prohibit internet casino gaming Federal Wire Wager Act 1961 forbids taking bets by telecommunications unless legal at both place bet made and place bet received Jay Cohen, President of World Sports Exchange (Antigua) convicted of violating Wire Wager Act in 2001 and jailed for nearly 2 years Indian tribal gaming has own laws

33 US financial regulations 2010 US financial institutions prohibited from providing banking services to offshore internet gambling companies Will affect some credit card transactions with online gambling companies Does not affect overseas banks dealing with Americans

34 United Kingdom All forms of internet gambling are legal Gambling Commission issues licenses and prosecutes unlicensed providers (if based in UK) Requires licensed providers to comply with codes of practice Provides government certification

35 Other countries Canada prohibition, except for First Nations e.g. Kahnawake Mohawks China - prohibition France in process of online gambling Germany prohibition India legal New Zealand - prohibition Russia prohibition Sweden - legal

36 Payment Options Credit cards instant credit Bank transfer 1-3 working days BPAY 1-3 working days Paypal instant transfer of funds Mail cheque post time + 2 days

37 Issues Taxation Gambling by persons under 18 Credit Self-exclusion Advertising Funding treatment for problem gamblers Lack of consumer protection

38 Taxation NSW bookmaking and TAB revenue falling as punters move to online bookmakers in Northern Territory and Betfair in Tasmania NSW racing industry depends on share of local wagering taxes

39 Gambling by persons under 18 Australian wagering sites conduct some checks of age, e.g. fax 100 points of i.d. Problem is that adults assist minors to gamble Offshore sites have little or no age checks Main restriction is credit card/bank account

40 Credit Bookmakers offer credit for gambling Inadequate credit checks Gamblers exceed credit limits Problem gamblers get into financial difficulty Legal proceedings to recover debt commenced in other jurisdictions

41 Self-exclusion Some online gambling operators offer selfexclusion

42 Advertising It is illegal to advertise offshore casinos and other prohibited gambling services in Australia But impossible to prevent Australians seeing gambling advertising online or in overseas media (e.g. televised sporting events)

43 Funding Treatment NSW model funding guaranteed from a tax on Star City Casino Northern Territory model funding provided by gambling industry on voluntary basis United Kingdom model Gamcare raises own funds from endorsing gambling Online gambling companies do not contribute to treatment of NSW problem gamblers

44 Consumer protection Online gambling companies regulated by jurisdiction of registration, e.g. Northern Territory, Gibraltar Consumer protection measures are mostly voluntary Certification by private businesses, e.g. ecogra Australian consumer protection laws apply to Northern Territory bookmakers

45 Counselling Issues Few online gamblers seeking counselling Overcome problems without assistance? Growth in online gambling counselling Do differences in gambling medium require modifications to counselling approaches? Complex issues for financial counsellors

46 Gamcare advertisement

47 Case study Rachelle was employed in the finance industry. She played poker in hotel and club tournaments with some success, then tried to make money playing poker online. Rachelle lost heavily playing online poker and stole $500K from work which was all gambled chasing her losses. She was convicted of fraud and imprisoned.

48 Contacts and references ACMA - NSW poker info r_tournaments.asp FaHCSIA internet gambling trends ugs/pubs/review_trends/documents/defau lt.htm

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