ONLINE GAMBLING
An Australian perspective
1
Overview
1.
2.
3.
4.
The development of online gambling in Australia
The legal framework governing online gambling in Australia
Market specifics
What it means for racing
i.
ii.
iii.
iv.
v.
5.
6.
Increased competition for gambling dollar generally
Increased competition for wagering dollar
Facilitation of free riding
Challenge to retail exclusivity of pari-mutuel
Stress to race club ‘bricks & mortar’ business model
What racing has done to improve its market share
Protecting racing’s intellectual property rights
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1. The development of online gambling in
Australia
•
•
Online gambling in Australia commenced in approx 1995
Two types • Virtual online gambling
• Gambling on separate physical event
•
•
•
First attempts at virtual online gambling were slow casino-type games with
simple graphics. By late 1990s full online casinos were being developed
e.g. Lasseters Online – year 1 - 12,000 registered players (82% overseas
residents), player registrations doubled every month
Gambling on a separate physical event. Centrebet – American Football –
20% of customers sourced from Scandinavia
0-6% of Australians gambled on the Internet in 1998-99
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2. The legal framework governing online
gambling in Australia
•
Interactive Gambling Act (IGA) 2001
prohibition on anybody offering online gambling to Australians.
prohibition on anybody advertising online gambling services to
Australians.
•
IGA was a response to community concerns about levels of problem
gambling
1990s State Governments hungry for revenue.
Australia has the eighth highest per capita number of slot machines in
world: one machine per 110 people (UK has one machine per 300
people)
online gambling seen as taking this one step further – “CLICK THE
MOUSE AND LOSE THE HOUSE”.
1999 Productivity Commission report.
online wagering exempted from ban – online gaming = shift from
bricks and mortar to living room. Online wagering equivalent to
telephone account wagering.
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•
The IGA ban has had limited effectiveness. To be more effective it requires:
Technological blocks impeding access to offshore gaming websites.
Financial transactions controls.
Resources allocated to prosecuting offenders.
•
The 2010 Productivity Commission report recommended that online poker
be exempted from the ban as a trial of a regulation versus prohibition. The
Australian Government rejected this recommendation.
•
The current political environment in which anti-gambling has suddenly
emerged as a highly important issue means that no liberalisation of the IGA
will occur in the foreseeable future.
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3. Market Specifics
Volume of Transactions
(rank order)
Number of Internet
gambling sites
Year first hosted
Internet gambling
Gibraltar (British overseas territory)
1
126
1998
United Kingdom
2
99
1996
Anitgua and Barbuda
3
197
1996
Malta
4
146
2000
Kahnawake Mohawk Territory (Quebec)
5
377
1999
Aldernay (British Channel Island)
6
36
2001
Hong Kong
7
1
Netherlands Antilles (Curacao)
8
299
Phillipines
9
14
United States
10
28
Costa Rica
11
236
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2
Australia
13
18
1996
Isle of Man
14
9
2001
Sweden
15
6
1999
Russian Federation
16
13
Austria
17
9
2000
Belize
18
49
1996
Aland Islands (province of Finland)
19
1
2001
Seychelles
20
3
2003
Jurisdiction
Kalmykia (republic in Russian Federation)
1996
1996
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4. What it means for racing (i): Increased
Competition for Gambling Dollar Generally
Wagering - All Racing vs Total Gambling
2007/08
All Racing
Tot al Gambling
7
3000
300
2500
250
2000
200
1500
150
1000
100
500
50
0
1981-82
0
1986-87
1991-92
1996-97
2001-02
Sports wagering expenditure ($m)
Race wagering expenditure ($m)
(ii) Increased Competition for Wagering
Dollar
2006-07
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(iii) Facilitation of Free Riding
•
Symbiotic relationship between racing & wagering
•
TAB privatisation did not effect this relationship. In 2009 TAB paid some
$500m to the Australian thoroughbred racing industry.
• Internet has enabled new market entrants. These have achieved phenomenal
growth: corporate bookmakers alone have gone from turnover on racing of
$75m in 1999 to turnover of $3.5b in 2008/09.
•In 2009, they now represent 21% of the market for wagering on thoroughbred
racing.
•Dilemma. racing produces 20,000 races a year which the wagering industry:
tabs, on oncourse bookmakers, corporate and the betting exchange, all use to
take bets.
•But now we had some 1/5th of the wagering market paying nothing meaningful
back to racing.
•This is obviously unsustainable.
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Challenge to retail exclusivity of pari-mutuel
•
•
•
TABs currently have retail exclusivity
2009 Rising Sun Hotel (Melbourne) makes available internet betting
terminals to customers
June 2010 Victorian Commission for Gambling Regulation issues 12
charges – possession of an unauthorised instrument of betting, running a
betting house.
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Stress to Race Club Business Model
•
•
The business model of race clubs based on attendances has come under
considerable strain. One metropolitan club estimated a $23.00 cost to
attract and cater for each customer attending a race meeting. The average
spend per customer was $22.00.
In 2009 NSW race clubs collectively lost $13.9 million.
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5. What has racing done to improve its
market share
• Development of the Free TAB Sportsbet I-Phone Application
• Development of Sky Active, which allows users to bet and access information
over the TV http://www.skychannel.com.au/active/
• Creation of Star Stable (fantasy horse racing game)
• Agreements with phone companies to screen races on mobile phones.
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6. Protecting racing’s intellectual property
right
•
•
•
Classic case of free riding
ARB makes case for legislative reform to Australian Conference of Racing
Ministers
Race fields legislation: irrespective of where they are based every wagering
operator is compelled to –
• Pay an appropriate commercial fee to racing
• Provide the Stewards with access to betting records
•
•
Constitutional challenges
Productivity Commission
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