Banks in Australia are facing the same problem American banks face with Internet gambling.
It's dicey for them to accept online casino gambling transactions, but difficult for them to identify and decline every single attempted wager, especially when the purchase is not coded correctly.
"There is no magic switch that can be flicked to block gambling spending at online overseas casinos."
- Heather Wellard
The Australian Bankers' Association
A difference, though, is that in Australia there is a clearly defined law addressing Internet casino gambling. It is illegal for Australian companies and offshore companies to offer online casino bets to residents. Online sports and horse race betting is legal, however.
Even so, problems in the way banks deal with a law that asks them to be able to decline some types of transactions have arisen. The Sydney Morning Herald reported two weeks ago that one year after making Internet casino gambling illegal in the country, Australia's federal government still hasn't been able to get banks to decline all offshore online gaming transactions.
Heather Wellard, director of media and corporate relations for the Australian Bankers' Association, said her organization has formed a working group to examine the many issues related to Internet casino gambling. The industry hasn't resolved itself to a position on I-gaming because it is still looking at options.
"There is no magic switch that can be flicked to block gambling spending at online overseas casinos," she said. "While Visa in Australia has said that transactions that are coded can be tracked, not all gambling transactions are coded and therefore cannot be blocked," she said.
Paul Edwards of the media relations office of ANZ Bank referred questions about ANZ's policy on Internet gaming to a paper the bank submitted to the country's National Office of the Information Economy (NOIE). The submission, titled "Interactive Gambling Regulations: Unenforceability of agreements relating to illegal interactive gambling services," is dated October 2001, meaning that it was written shortly after the country adopted its anti-Internet gambling stance.
In an e-mail, Edwards said that since ANZ submitted the paper, there has been little activity from the NOIE to address the situation.
In the paper, ANZ states that it has systems in place to, as an acquiring bank, make sure that it doesn't provide merchant services to illegal Internet gambling companies. The bank also has processes in place to address customer concerns about the activities of a particular merchant. ANZ also writes that it is willing to consider any other steps it might take to inform customers about their rights and obligations regarding the use of ANZ credit cards for Internet gambling.
The bank also writes, however, that it cannot block transactions with offshore I-gaming operators.
"However, even though taking these steps ANZ is in a position only to address the transfer of money for the purposes of illegal interactive gambling where the interactive gambling service provider is located in Australia and where ANZ is the acquiring bank," ANZ states. "ANZ would not be in a position to address this issue where the interactive service provider is located overseas and where ANZ is the card-issuing bank."
In the paper, ANZ calls for a working group consisting of NOIE, banks and credit card companies to address the issue of overseas-based gaming. Edwards said this hasn't happened yet.
"The National Office for the Information Economy has not pursued this matter further and no further action has been taken," he said.
Like in the United States, where PayPal has been subpoenaed by the attorney general of New York, Eliot Spitzer, for any documents relating to its Internet gambling activity, third-party payment solutions are a confounding situation for banks in Australia as well. Wellard said online gamblers in Australia typically use third-party billing systems to ease the payment process.
"The bank does not know this transfer of money is being used for gambling transactions," she said.
The bottom line, Wellard said, is that the banking industry still doesn't have a solution to the problem of offshore Internet gambling. One year after the moratorium was made permanent, Australia and its banks still haven't figured out a way to seal the country in an Internet gambling-free vacuum.
"This issue here is why should banks be responsible for the debt associated with transactions they cannot identify," she said. "This is clearly unreasonable. The industry is still working on trying to find solutions that are workable in a consultative framework."