The Internet Industry Association (IIA) of Australia is warning that operators of Internet gambling websites, under the terms of proposed federal prohibition legislation, could end up being wrongly charged with accepting bets from customers in Australia by mistake.
The proposed bill calls for fines of up to $1.1 million for such a violation, and the IIA is concerned with how it will be determined whether accused operators exercised "reasonable diligence" in preventing Australians from gambling on their sites.
"In view of the massive penalties within the legislation and the fact that the defendant bears an evidential burden in relation to the provision of services, this is bad law," IIA Executive Director Peter Coroneos said. "It may be the reason why PBL (Kerry Packer's Publishing and Broadcast group), for example, recently announced its intention to operate its licensed operation from Vanuatu--because it cannot manage the risk of locals accessing it here."
According to the IIA's research, tracing Internet Protocol (IP) addresses is not a reliable means of locating Internet users. "Over 100,000 Australians could presently be wrongly identified accessing the Net from outside Australia based on either the use of 'edge devices' such as firewalls, which may have a 'non-au' IP address, thus presenting all users behind that device as 'non-au' to the gaming operator's system or because their IP addresses are derived from Internet addressing blocks not sourced from within ranges correlating to Australian use," Coroneos added.
In addition, the IIA says that many Australian Internet service providers give their subscribers American IP addresses, while other Australians access the Internet via corporate accounts that use foreign IP addresses. The group also says that technical alternatives, such as traceroutes or ping time, are likewise unreliable.
"The former would be difficult to execute in real time and are liable to error if the original IP address suggests an offshore user," Coroneos said. "The latter could be deceptive with ping times within Australia potentially exceeding those from nearby countries like New Zealand."
"That leaves the operator," he continued, " with only a user declaration--a promise that they are not in Australia--or the use of a payment address which can also be falsified or redirected."
Coroneos points to the Nevada Gaming Control Board's infiltration of American Wagering's border control system during a 1999 investigation to emphasize that the IIA's concerns are not just theoretical. (The Board filed a complaint against AWI for allegedly taking bets from investigators located in Nevada.
The investigators were able to circumvent Mega$ports efforts to keep out U.S. players, thus setting the legal ball rolling that eventually led to AWI selling off its holdings in the Internet betting site.) He additionally outlined several scenarios whereby Australian operators could potentially find themselves in trouble for taking bets from punters in Australia.
"This all adds up to a situation which will provide a level of exposure that simply cannot be sustained," he said. "While the government thinks that it has struck a reasonable compromise by allowing Australian licensed operators to continue to serve offshore customers, we can't see why operators would take the risk."
Instead of an outright ban, the IIA supports strong regulation of Internet gambling under Australia's stringent state gaming laws. Such an approach, he says, would prevent criminals from running sites, prevent money laundering, prevent credit card betting, limit advertising to encourage betting, help problem gamblers by setting up time and money limits and enable family members to request that problem gamblers be restricted from playing too deeply or too long.
The Australian Senate will begin debating the ban next month.