The Crazy Internet Gambling Scene
It’s a new and interesting time for law makers who are looking at how to regulate the application of information technology. Since online gambling has become one of the more lucrative applications of e-commerce, and the gambling industry has traditionally been highly regulated, it is one of the first Internet-related issues to be tackled by legislators.
Before we look at the legalities in Australia, let’s take a quick look at the US online gambling situation at the moment. If you follow US technology news you would have heard of the Kyl bill, a proposal driven by Arizona senator Jon Kyl to ban Internet gambling, for US citizens at least. In July the US Senate voted 90-10 to ban Internet gambling in America. The bill has not progressed any further, though; it missed out on approval in the last US legislative session for 1998 due to delays. Kyl, who has said Internet gambling is breeding crime, has vowed to fight on for the bill next year.
Aside from the Kyl bill, online gambling in the US is complicated by differing state laws regarding gambling. A case last year saw the state of Minnesota (where gambling is illegal) suing a businessman in Nevada (where gambling is legal) who intended to set up an online betting site. According to Don Phelps, head of Loud3r, a web company consultant, the Web site had advertised its new service would be a “`legal way’ to bet on sports from anywhere in the country”, C-NET reported. A lawsuit was duly filed by Minnesota’s attorney general who was aiming to prove the state’s jurisdiction reigns over all gambling within Minnesota — even that conducted in cyberspace by Minnesota residents.
A similar situation may indeed evolve in Australia. The states and territories, which have jurisdiction over gaming, are moving right now on legislating for (and against) what has been dubbed “interactive gambling”. The Draft Regulatory Control Model for New Forms of Interactive Gambling, a report commissioned by the ministers of gaming across Australia, was published last year, and since then each state and territory has decided how it will deal with interactive gambling.
STATE BY STATE
In New South Wales it is illegal for NSW residents to participate in or operate Internet gambling, under The Gaming and Betting Act 1912. And although the Act pre-dates the electronic age, it does give NSW police the authority to prosecute individuals and confiscate the tools used in the illegal activity — that is, the PC. And if you think there’s any hope a new law will be devised to legalise interactive gambling, you’re probably wrong. The NSW Minister for gaming and racing, Jack Face, has recently announced that the NSW Government will not move down the same path that other states and territories have, or are intending to take, in legalising and regulating Internet gambling.
Western Australia too is grappling with the idea of extending existing gambling opportunities into the home (note WA is now the only state that does not permit electronic gaming machines in hotels and pubs). It is understood that the West Australian Government has so far decided not to license Internet gambling operators. It is also understood that currently there is no specific law that prohibits West Australian residents a from using such sites.
The rest of Australia’s states and territories meanwhile, have passed laws or are drafting laws right now, which legalise interactive gambling.
The Queensland Government has decided to adopt the regulatory model as suggested in the report mentioned above. The Interactive Gambling (Player Protection) Act, which was enacted on October 1, established a regulatory framework to license online gaming operators. To become licensed, operators must pass a series of checks on their background and computer equipment, for example, and pay substantial fees and taxes.
The first piece of legislation passed by the Queensland Government to regulate activity on the Internet specifically, the Act is there to protect players (Queenslanders) from shonky online gaming operators. And it applies to any online gaming operator that is providing services to Queensland residents, so if an online gaming organisation wants to do business with Queenslanders it must be licensed by the Queensland Government. If it isn’t and is caught, penalties will apply: up to two years imprisonment and/or 200 penalty units, currently valued at $60 per unit.
Andrew McMicking, policy adviser with the Queensland Treasury concedes it will be difficult to police thoroughly.
“I’m sure there will be games going on that we’re not aware of,” he said, “but from this legislation we’re offering users security knowing that providers are licensed and have gone through a vigorous checking process.” And it will only take a few complaints about dodgy organisations to bring unlicensed online gaming operators unstuck, he added.
Under the framework, taxes — 50 per cent of gross profits derived from Queensland residents — will be payable every month.
“That rate has been the result of negotiations and talks with other states and territories. It’s very important that all states have a similar regime, so you don’t have everyone going to one state for their business,” said McMicking. The Act also provides for recognition of interactive gaming licences awarded by other states and countries that the Queensland Government has entered into an agreement with — none currently stand.
The ACT and Northern Territory governments have already passed laws facilitating interactive gaming, and the Victorian and South Australian Governments are in the process of drafting legislation to do the same.
So, you live in South Australia and are wondering if you can gamble online right now? According to Daryl Hassam, manager of gaming administration in the South Australian Office of Liquor and Gaming, it depends where the transaction takes place.
“I’m not aware that it’s an offence for someone to have a bet in Antigua, whether they’re over there personally or whether they do it via electronic means … and I probably would know if it were,” Hassam said.
“There’s no legislation at present that I’m aware of that prevents a person from entering into a transaction in Grand Turk Island or the Bahamas or wherever,” he added.
In Tasmania, meanwhile, it is legal for casinos already operating under the Gaming Control Act 1993 to provide online gambling services. Tasmanian residents are excluded from using those services, but strangely it is not illegal for them to gamble on sites operated outside of Tasmania.