Australia's Productivity Commission released its final report to the public today, and not surprisingly, it isn't short on words. Despite Prime Minister John Howard's recommendations for a ban on Internet gambling based on the Commission's findings, the report is fairly balanced in terms of weighing the pros and cons of Net betting. It should be noted, however, that some of the Commission's sources are questionable.
Chapter 18, "Policy for New Technologies," addresses Internet gambling. In a nutshell, it covers the following:
- the presence of online gambling in Australia, including history, definitions and a breakdown of lotteries, sports/racing sites and online casinos;
- economic benefits of online gambling;
- societal costs of online gambling, including problem gambling and accessibility to minors;
- fairness and integrity;
- the effects of online gambling on land-based companies;
- taxation implications;
- questions regarding controllability; and
- a look at state policies in Tasmania, Queensland, Victoria, Northern Territory, ACT, and Norfolk Island
Some of the more interesting discussion involves recommendations for taxation, which include the suggestion of basing it on the jurisdiction of the player rather than the operator. The Commission also recommends a set rate for taxing foreigners for all jurisdictions and examines the effects that establishing Net betting taxation policies might have on other forms of e-commerce in Australia.
View a PDF version of Chapter 18.
View a PDF version of the report summary.
Following is a synopsis of the Chapter 18:
Key messages:
- Current use of Internet and interactive gambling by Australians is negligible, but is
expected to grow strongly.
- Online gambling offers significant potential benefits to some consumers and scope
for commercial returns.
- On the other hand, online gambling also poses significant new risks for problem gambling. It represents a quantum leap in accessibility to gambling, and is likely to involve new groups of people in gambling.
- Risks to minors, a major concern for many, are potentially less significant where
there are properly licensed sites--given screening requirements, ease of monitoring of accounts and the inability to access any winnings.
- It is not clear that liberalizing Internet gambling would involve significant tax losses.
- The Commission considers that, regardless of what regulatory approach is taken, there are strong grounds for governments to pursue palliative measures, such as:
--warning people of the hazards of offshore online gambling;
--providing information on the Internet about gambling help services and gambling sites which meet consumer protection criteria; and
--making available or promoting software for providing consumers with greater control over their gambling.
- However, there are also grounds for regulation of Internet gambling, along the lines of regulations applying to other gambling forms. The Commission considers that there are ways of controlling online gambling sufficiently to exercise such regulations.
- Prohibition of online gambling would clearly reduce gambling problems associated with the Internet, but would also eliminate any benefits of the technology.
- Managed liberalization--with tight regulation of licensed sites to ensure integrity and consumer protection--has the potential to meet most concerns, as long as the approach is national.
- Uncertainty about the magnitude of the possible impacts of internet and Interactive gambling, would normally suggest a more gradual implementation of liberalization, but this may not be feasible given the nature of the technology.