The Australian Federal government has opened a can of worms as the Senate prepares to debate a permanent ban on Internet gambling this week.
Yesterday the government agreed to exempt horse racing, sports betting and lotteries from the ban. The changes were expected to win over senators from minor parties who had opposed the bill. The Senate is scheduled to begin debate on the bill today and take a vote on the initiative by week's end.
The updated bill also would ban all advertising of interactive gaming services and remove any elements of its original legislation, which inadvertently restricted all forms of land-based gambling, such as electronically linked poker machines.
The legislation would make it illegal for any foreign, or Australian-owned company, to offer online casino-style gaming to anyone physically located in Australia, but places the onus on gaming operators to install software that prevents Australians from accessing their websites.
The Australian Casino Association is angry that the federal government's proposed online gambling ban will stop the country's online casinos from operating offshore and that the government has made concessions to please the racing industry.
Democratic Senator Lyn Allison said she will try to pass an amendment removing the ban on overseas operations when the bill is debated in the Senate next week.
The move to leave sports and horse betting out of the permanent bill came after the horseracing industry applied pressure on legislators. The Australian Horse Racing Association stepped up its lobbying efforts last week and had Prime Minister John Howard at its Hall of Fame ceremony. It was at that banquet where industry leaders met with the Prime Minister to try and convince him that including horse racing in the ban would have a devastating effect on the industry.
"They have put up a very reasonable proposition and that is something that the government will have to consider," he said after the meeting. "We don't have any desire to hurt the horse racing industry. Our desire is to further stop the spread of problem gaming in Australia and we remain very committed to that."
Although word of the watered down bill was good news for the racing industry, it seemed to ruffle some feathers among online casino companies, which argue that they're being targeted unfairly.
The Federal Opposition's communications spokesman, Stephen Smith, said the amendments would provide welcome relief to the racing industry, but the Australian Labor Party remained opposed to the legislation because the bill, as far as the ALP is concerned, does not tackle the real issues related to the growth of problem gambling.
Greens Senator Bob Brown wants the bill amended further so that Australian companies would no longer be able to run Internet gambling businesses overseas. He has also suggested penalties for Australian Internet users caught playing casino-type games for real money on foreign websites.
Democrat John Woodley agrees, but if this bid is successful, the bill would come under renewed attack from Australian companies wanting to operate online casinos offshore.
Tasmanian Independent Brian Harradine also wants the bill amended further because he believes that Australians will still be able to bet at Internet sites operated from other countries.
The ALP is steadfast that regulation is the only way to truly curb the outbreak of problem gambling and prohibition will not address the situation at any degree.
The passing of the watered-down version of the bill would bring hundreds of millions of dollars to the telephone account betting industry.
Companies such as Tabcorp and TAB Ltd. would be able to slash their costs by phasing out phone betting in favor of cheaper online services.
The nation's seven TABs would benefit the most from the exemption, which would enable them to continue to push telephone customers onto Internet accounts, which are about 10 times cheaper to operate.
TABs derive no profit from bets of $10 or less taken over the telephone, yet can make a profit from bets of $2 and up taken online.
The nation's biggest wagering company, TAB Ltd, already generates turnover of about $110 million annually through Internet wagering accounts--the company's fastest source of growth.
Communications Minister Richard Alston says it would be hard to ban horse racing through the Internet considering how long the sport has been a part of the Australian culture. "In the case of the racing industry, the government remains concerned about the impact of Internet wagering, but recognizes that this concern needs to be balanced against the impact of a ban on a bona fide and long-established industry in Australia," he said.
The amendments may have been the result of pressure from the horse racing industry, but the federal government knew changes had to be made to get the support of fringe senators such as Brown.
Brown praised the government's proposed amendments and feels they are enough to get him to support the bill. "I'm glad Senator Alston has backed the Greens' plan, which paves the way for me to vote for the legislation," he said.
But things may just be heating up in the Senate chambers.
As debate on the amended bill is scheduled to start Wednesday, Country Liberal Party Senator Grant Tambling of the Northern Territory could commit political suicide if he votes for the bill.
Senator Tambling has ignored the instructions of the CLP, announcing he will support the bill.
"[It was a] difficult decision. . . lots of emotion, lots of principles, and it is one of those issues when there are times that you have to make a personal decision as well as a party political one," he said.
Tambling says the amendments address the previous weaknesses of the bill, but problem gambling remains an ethical concern for him.
However, the Northern Territory's Chief Minister, Denis Burke, says he is bitterly disappointed by Tambling's decision and says Tambling will face disciplinary action from the party.
"If that's his position now, to my mind he's not a representative of the Northern Territory," he said.
CLP president Suzanne Cavanagh has said Senator Tambling's pre-selection will be reviewed if he doesn't oppose the bill--a statement that surprised Tambling.
"That's entirely a matter for the Country Liberal Party Central Council," he said. "I'm pleased to stand before them at any time on my record, my reputation and my abilities. I reject completely any suggestion that I have failed to stand up for the territory and any question of my loyalty to the CLP."
Cavanagh admits that Tambling still has time to save face on the issue and his political career.
"It's the last thing the CLP wanted to ever have to do, and I hope that when the bill comes before the Senate that Grant does what we have asked him to do," Cavanagh said, "and that is to cross the floor and then none of this will ever eventuate."
But she also admits that the chances of Tambling changing his vote are slim.
"I have a very bad feeling in my stomach that this is not going to happen and it's not something that we want to have to face but we will face it because there is one thing the CLP will always do, and that is stand up for the rights of Territorians," she said.
Alston says the government is pleased with the concessions to the bill because it still addresses what he sees as the main problem with Internet gambling.
"Casino-type activity is almost by definition mindless, highly repetitive, highly addictive," he said, "and that's the major area of problem gambling."