Conflict Stirs Again Down Under as Another U.S. Player Takes the Dive

21 June 2000
The parliament for Australia's Norfolk Island yesterday announced the issuing of an online gaming license to, a subsidiary of U.S.-based game developer Silicon Gaming Inc. The development isn't sitting well with the federal government.

The license was issued March 29, along with two bookmakers' licenses--one to uBET and another to Worldwide Totalisators Pty Ltd. of Queensland. The gaming license permits uBET to operate an online casino from Norfolk Island, while the bookmakers' licenses permit betting on games and races via telephones and the Internet.

Silicon Gaming is expected to have the uBET site ready within six months. "We are quite satisfied that they are a reputable company and have the financial resources and the know-how to make this a successful operation," Kevin Leyshon, Norfolk Island's Director of Gaming told the Sydney Morning Herald.

Gaming Minister Geoff Gardner says that uBET could generate A$2.5 billion in bets, which would earn Norfolk Island "$100 to $150 million a year" (ten times the island's annual budget) via the island's 4 percent tax rate. Silicon Gaming has already paid a $50,000 non-refundable deposit, and even if the company only generated $100,000 annually, it's still, as Garner termed it, "money we can use."

Federal officials reaffirmed that the moratorium against new interactive licenses applied to Norfolk Island in a meeting there June 9. Federal legislation would make the moratorium retroactively effective May 19, and it's unclear whether the NI licenses would be valid, as the licenses were reportedly issued in March, but not formally announced until this week.

The federal government maintains that the uBET license is not valid. A spokesman for Senator Richard Alston, who flew to Norfolk Island for the meeting, told SMH that Norfolk Island "can issue all the licenses they like; it will not be possible for them to legally operate the service."

How the government would enforce such a ban and what type of sanctions would be imposed for defying the moratorium were not explained.

The territory's defiance could be the first step toward a constitutional confrontation, although Alston's spokesman scoffed at the prospect. "If someone wants to waste their money on a constitutional challenge to the Government's authority to regulate telecommunications, let them," he said.

Northern Territory officials, however, have already vowed to fight the moratorium all the way to High Court.

In addition to the three licenses issued in March, a provisional license has reportedly been awarded to an unnamed company, while five more license applications are under consideration.

Silicon Gaming officials did not return calls for comments.