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Nov 3, 2011

Offended by 'nanny state', Coalition wants more censorship on gambling

The Coalition has proposed greater internet censorship as part of its counter-proposals on gambling reform. The US experience shows it doesn't work.

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After complaining that proposed mandatory pre-commitment pokies reforms were “nanny statism”, the Coalition has called for comment on ways to strengthen internet censorship and restrict advertising in its own gambling reform paper.

The discussion paper, launched yesterday, invites comments on a voluntary pre-commitment scheme, more counselling services for problem gamblers and a review of exclusion programs. It also suggests the current bans on online gambling — via the Howard government’s 2001 Interactive Gambling Act — be “strengthened”:

“The Coalition does not support any relaxation of these laws. However, there are ongoing community concerns that the laws are not adequately enforced and that Australians are able to access online casino style games and poker machine style games. The risk for users of online gaming sites is that they are offshore (and therefore no guarantee of probity, return on funds won, authenticity), can be accessed by minors and problem gamblers with ease and do not operate within the checks and balances (such as counselling and self-exclusion) that are outlined in this paper. In addition, online gambling sites do not pay tax in Australia and invariably do not employ Australians, unlike the broader domestic gambling industry. The Coalition is keen to receive input about how the current laws might be further strengthened to limit the risk of online gambling access to Australian consumers.”

The Howard-era laws purport to ban the provision of the quaintly-named “interactive gambling services” to Australians. As the Productivity Commission showed in its gambling review, the laws are a dead letter. The PC found Australian online gambling via foreign sites had “grown strongly” since the laws were introduced (as it has in other countries) and — as the Coalition admits — therefore Australian gamblers use poorer regulated sites and Australian governments miss out on tax revenue because of the ban. The PC called for the ban to be lifted in favour of “managed liberalisation.”

The PC also investigated whether it was feasible to implement the IGA more effectively. It concluded the only way to do so would be to add identified gambling sites to the government’s proposed internet filter. Even then, of course, the filter can be easily bypassed by anyone with a modicum of IT knowledge.

Many US states and the US government have similar anti-online gambling laws and have gone in far more extreme directions in an effort to make them work, including bans on financial institutions transferring money to them. In September, the state of Kentucky tried to seize several gambling-related domain names, an approach also tried by the FBI. The US has also repeatedly indicted foreign nationals for operating gambling sites or related financial transactions, including an Australian citizen. Online gambling in the US has been similarly unaffected by even these draconian laws. Analysts estimate the US online gambling market accounts for more than a quarter of the global market and is worth $7 billion a year.

The Coalition also invited comments on a proposal to ban most gambling venues, including online venues, from offering credit to gamblers, which would also be a dead letter for foreign-based gambling sites, and banning the promotion of live odds during broadcasts of gambling-related events.

The paper also alludes to other mechanisms for online regulation in its final proposal, that lawmakers “cooperate with financial institutions” in the enforcement of online gambling bans. Putting aside that it’s usually financial institutions that have to cooperate with lawmakers, the proposal appears to raise the possibility that financial institutions could be required to somehow prevent payment by Australians to overseas gambling sites. As the PC noted in considering a separate proposal to ban credit card usage for gambling, this would be easily circumvented by mechanisms such as PayPal.

Given the PC’s conclusions about the difficulty of “strengthening” the current online gambling ban, it appears the only other means of doing so open to the Coalition would be to embrace the US approach of trying to seize domain names and extradite foreign nationals for operating sites. However, as the US experience suggests, even these draconian attempts have failed to stop people gambling online.

Either the Coalition isn’t serious about gambling reform, or it has failed to do the most basic homework on why governments usually fail when they want to “regulate the internet”.

Bernard Keane — Politics Editor

Bernard Keane

Politics Editor

Bernard Keane is Crikey’s political editor. Before that he was Crikey’s Canberra press gallery correspondent, covering politics, national security and economics.

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