The Australian Legislature is entering its last sitting day before a six-week break and the body has the full attention of the Internet gaming industry.
The government is expected to introduce a bill that would permanently ban Internet gambling. Under the legislation operators would be allowed to stay open and rely on offshore customers for their base. Australian citizens would also be allowed to gamble online, but only with operators located outside of Australia.
It's becoming clear that the government is not set on compromising on the issue and opponents of a permanent ban are trying to figure out what their next move will be.
Some have expressed a concern to move offshore so they can still target Australian bettors. Others have toyed around with the idea of suing the government for the cost spent over the last couple years in getting their operations compliant with Australian laws and regulations. And still a small faction of operators and others opposed to the move are still pushing for an alternative.
Most are attacking the government for being hypocritical in passing the bill. The permanent ban comes on the heels of a one-year moratorium the government started last May on Internet gaming. The government is looking to take the yearlong moratorium to a permanent status in May, it says, in large part to protect the rising number of problem gamblers in the country.
One opponent to the move is sports betting manager with Centrebet, Gerard Daffy. His company has been online as a subsidiary of Jupiters Limited since 1998. Daffy feels all the ban will do is open up Australian gamblers to fraud they would be protected from if they went to Australian-based sites.
"Those who still want to bet, and I’m quite sure there is nothing to suggest that they will stop betting, they will go and bet with somebody else in another country," he said in a statement. "Those betting transactions will be conducted in another country, so those particular governments in those jurisdictions, if there’s any turnover tax or betting tax in place, they’ll be the main beneficiaries."
Sen. Kate Lundy, a leading political opponent to a permanent ban, feels that the Internet ban is being used as a quick fix to a more serious problem.
"What we’re concerned about is the deep hypocrisy in setting up the Internet as a scapegoat for the ongoing social problems associated gambling," she told ABC radio. "The government’s proposal in this bill will do absolutely nothing to prevent those who want to gamble online from finding the sites to do that. I think the best thing, the most responsible thing, that governments, most state and federal, can do with respect to that is to provide a safe, regulated, licensed environment for interactive gambling."
But, it isn't just those opposed to the bill who are using the word "hypocrisy" in the debate about Internet gambling’s future.
That was the word communications Minister Richard Alston used to describe Canberra-based bookmaking firm CanBet and their thoughts of moving offshore if a permanent ban goes through.
CanBet executive Richard Farmer reportedly received $500,000 in government export grants in starting his business.
"Given the hypocrisy displayed by Mr. Farmer, I've got to say I wouldn't have been giving him any money," he told Channel 10. "I mean, he's threatening to go offshore when 98 percent of his revenue already comes from there, so all I can conclude is that he probably thinks it's about time he had an overseas trip."
While some operators are considering moving offshore some are looking into getting compensated from the government.
Victoria's Tabcorp and Centrebet are considering the move.
Federal Hotels managing director Greg Farrell said the company spent more than $20 million developing its online operations and was not sure if they could be resurrected if the new regime passes the Senate.
"It means we have suffered a huge economic loss for a result that will be identical to the situation we were operating in before," he said.
But, Communications Minister Richard Alston said there was no obligation to pay compensation for companies that could close because of the ban.
"There is no basis for paying compensation because the mere fact that someone wants to start up a business is not a reason to allow them to do that. Otherwise we would be setting up plenty of heroin farms to create new jobs," he said in a statement.
There are a few operators who are pleased with the new law. Lasseters Online and Kerry Packer's e-corp both have an international approach toward the business. They will see little difference once the law is passed from the status quo.
Meanwhile, the Internet Industry Association (IIA), a Canberra-based lobbying group, says the proposed online gambling ban would abandon problem gamblers, "leaving them to services and overseas services outside Australian control."
IIA Director Peter Coroneos says it doesn’t make any sense to set up tough standards operators must meet, but not let Australian citizens take advantage of such protection.
"We get the bizarre situation where Australians are deprived of the superior protections developed in Australia for Australian sites under strict State and Territory laws," he said in a statement. "Recently the governments of the U.K. and South Africa have said they will regulate online gambling, but not ban it. These jurisdictions are likely to adopt regulatory standards similar to those developed by Australia's states and territories. We find it ironic that the Internet is being singled out as particularly pernicious on the basis that it provides better access to gambling services."
If the government truly wanted to address the issue of problem gaming, according to Coroneos, it would look at how land-based casinos are run first.
"Sixty percent of Australians live less than five minutes from a betting establishment where no protections apply to control what they lose," he said. "Access is not the issue here at all. The Internet provides an opportunity to introduce player protection."
Adding fuel to the fire, one of Australia's leading market research units, Dataquest's Gartner group, published a report showing how ineffective a permanent ban will be on solving problem gamblers.
Joe Sweeney, research director, says the ban would simply push Net casinos into the hands of ungoverned, offshore gambling services.
"Gartner sees the ban as completely ineffective in stopping Australian consumers from gambling online," he said in the report. "Despite the government’s suggestion of filtering Internet traffic (by Australian operators), the government is completely mistaken. Filtering is already ineffective against even the most basic of Web-based static content."
The report echoes the sentiments of Daffy in that the Australian consumers will be open prey to less than scrupulous operators.
"By banning online gaming vendors from the Australian market, but then effectively only enforcing the law against local vendors, the Government is guaranteeing pirates will have the entire Australian online market to themselves," the report says. "There is a better than 80 percent chance that within three years the Government will be forced to mandate a greater level of filtering on the Australian Internet industry."
Opposition leader Kim Beazley has joined the many that are concerned the legislation is losing site of its main cause.
"This is absurd," Beazley said. "This is legislation which does not stop Australians using the Internet to gamble but puts them in the hands of unscrupulous operators who would prey on an out-of-control habit while protecting foreigners who choose to gamble in Australia on the Internet with an appropriately structured regulatory regime."
TAB operators in Australia have also voiced concern with the permanent ban. Unlike the moratorium, the permanent ban will also outlaw Internet betting on racing and sports.
"This is totally ill-conceived from a government that should have been concentrating on the policy issues surrounding cyber-casinos in the Caribbean and unscrupulous unregulated operations elsewhere," commented Peter Fletcher of the New South Wales TAB
In an editorial published in The Sunday Age, Farmer summed up the feelings of those opposed to a permanent ban.
"They will allow you to make a bet using a telephone if you speak the bet to me," he wrote. "But if you use the same telephone line to connect your computer so that you type the bet in yourself, that becomes illegal. To speak is legal, to type is illegal. This is totally illogical."