Although it was widely known that the recently passed moratorium on Interactive Gaming in Australia would stop any new operators from opening up show Down Under, some current operators are deciding it is easier to cease operations than worry about complying with the new legislation. One such operator, Queensland's Gocorp Limited, has decided to shut down its online casino, Ausvegas.
Under the moratorium, no new licenses will be granted to Internet casinos for one year. The bill also calls for any existing operation that wasn't launched before May 15, to shut down.
Those who are in violation of the bill, both companies and executives, can face massive fines. Companies face up to $1.1 million a day for staying open while top-level individuals can face fines of up to $200,000.
That's where Ausvegas comes in.
Although the site was up and running before the cut-off date of May 19, Gocorp felt there were too many loop holes in the new regulation which made it hard for Ausvegas to fully comply. While the site officially launched before the cut-off, the legislation states that the casino must have had at least one customer and hadn't changed names. Ausvegas started as SevenRed and while the site launched in May, it didn't have any paying customers until June.
While Gocorp is only the second company to announce the closing of an online casino in Australia since the bill passed--the Federal Group made a similar announcement last week--many industry insiders Down Under are saying this is the start of a much larger domino effect that won't end until the entire industry is out of Australia.
"Every online operator in Australia has been affected by this," an unnamed industry analyst was quoted as saying on ZDNet Australia today. "The spirit seems to be to kill the online gaming industry. In one fell swoop government legislation will kill off an entire industry."
Gocorp and the Federal Group have both indicated they are considering court action to recoup millions of dollars the companies invested into getting their online casinos up and running and in full compliance with government regulations.
Gocorp says it's considering legal action to compensate for the $30 million-plus that was spent developing the business. The Federal Group has hinted that it is considering legal action based on the $20 million already invested, plus the 20 jobs that will be lost in Tasmania where the company is located.
The ban isn't just affecting online gaming operators. One of Australia's leading game testing software developers for the gaming industry, GGS, announced this week that it is reorganizing its focus to South Africa. The company will begin testing casino systems there, where gaming regulations are much friendlier for operators, and a regulatory scheme for online gambling is said to be on the horizon.
Further compounding troubles for Gocorp, the company went public in June and raised over $20 million from initial investors under the premise that it would be operating an online casino. A few days before closing Ausvegas, the company announced it was suspending trading of its stock until it can reorganize itself.
In a statement made by Gocorp to the exchange, the company took some shots at the federal government for passing the bill. "This legislation does nothing whatsoever to protect the interests of Australian consumers," it read. "In fact, it takes away the only consumer protection for online gamblers that exists in cyberspace today and will only serve to force consumers into the arms of the many potentially unscrupulous and unregulated operators that exist."
While Gocorp Chief Executive Paul Appleby declined to comment on his company's future, it is understood Gocorp is most likely to change into an e-commerce and data center software licenser.
With the Australian market now closed, online casino operators are expected to flock to South Africa (provided that regulations are put in place there), tax havens such as Vanuatu and Gibraltar and North American Indian reservations.