Overshadowed by the debate about the government’s media legislation, the final report of the review of the Interactive Gambling Act 2001, published last week, received comparatively little attention.

Like the government’s response to the report, the sparse media coverage focused on measures to prevent problem gambling — undoubtedly an important issue — but failed to discuss the fact Australian gamblers, recreational or otherwise, continue to get a raw deal. The report seems likely to perpetuate a culture of high-margin, low-risk bookmaking, cutting Australians off from the global market under the guise of consumer protection.

Also missing from the debate are two other questions: are Australian gamblers getting value for money, and where do the growing number of social games fit into the regulatory landscape?

The review’s suggestions for expanding the industry are predicated on the adoption of a proposed “national minimum standard for harm minimisation”, which seeks to iron out differences between states by focusing on responsible gambling messages, credit, pre-commitment, age verification, spend-tracking and self-exclusion, as well as measures to ensure companies hold sufficient funds to pay out winnings. Among the review’s recommendations are measures to encourage unlicensed operators to agree on Australian regulations, along with further limits on advertising.

Underlying the recommendations is the review team’s belief that Australian consumers who uses overseas-based online gambling services “run the risk that their funds will not be afforded an appropriate level of access and protection” and “are not covered by Australian consumer laws if they wish to make a complaint about the actions of a service”. The reality, however, is that the level of consumer protection in the Australian gambling industry doesn’t always live up to the rhetoric. It seems strange, for example, the report, which runs to some 183 pages, makes no mention of Australian bookmaker Sports Alive, which collapsed in 2011 owing about $3.9 million, having allegedly traded while insolvent.

Earlier this month, Victoria Supreme Court Justice Ross Robson found Sports Alive had failed to keep customer funds segregated from operating expenses, and so had insufficient funds to pay customers at the point of liquidation. His ruling notes that the evidence suggests “a wholesale failure by Sports Alive to comply with its statutory obligations”, which led punters’ representative Dennis Tuan-Mu to complain the ACT Gambling and Racing Commission had failed to act for “more than eight years” and “that even rudimentary checks … would have uncovered these issues … and would have prevented the loss of $3.9 million from over 18,000 account holders”.

Australia excels in some areas of gambling regulation — the NT Racing Commission’s transparency regarding betting disputes is a good example — but the core objective of all regulators must be to keep customers’ funds safe. Before we ask internationally licensed operators to subscribe to Australian regulation, protection is needed to ensure there is no repeat of the Sports Alive fiasco.

Licensing and regulating is an expensive process, so it would seem logical for there to be some cross-recognition of best practice regulation. For example, would it not be feasible to allow UK-licensed operators access to the Australian market (and vice-versa) rather than requiring operators to apply for licenses in each jurisdiction? Doing so would promote competition, reduce margins, and encourage gambling operators to agree to some form of governmental oversight.

*Read the rest of this article at Inside Story