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Feature
A Regional Look at Online Gambling: The South Pacific
by Mark Balestra
28 Jan 2001

We've all learned to believe that the Internet has created a world without borders. When you travel from site to site on the World Wide Web, you usually don't worry about where the pages before your eyes originate. They're all on your screen, and as far as you're concerned, it doesn't matter where the actual data is stored. Add the transfer of money to the equation and suddenly the point of origin becomes extremely important. Suddenly the laws of the jurisdiction in which the service is offered become very relevant.

Through this three-part series, I'm offering a very broad overview of the 50-plus jurisdictions where the operating of Internet gambling services is either regulated or tolerated. Two weeks ago, I briefly covered the broad approach toward regulation that is taken in the Caribbean. This week we move on to the South Pacific, namely Australia.

Before getting into some of the details, I should mention that online gambling services licensed in Australia offer more assurance of fairness than sites based in any other part of the world. Further, Australia has gone to great measures to promote responsible gaming. This is mostly because gambling is extremely popular in Australia, and the increasing accessibility of gambling Down Under has resulted in a very high rate of problem gambling.

I should also mention from the get-go that gambling policy has traditionally been legislated and enforced in Australia on a state-by-state basis. The federal government, until recently (more on that in a moment), has left gambling issues in the hands of the individual states and territories.

Gambling in Australia is broken into three categories: lotteries, gaming (casino games etc.) and wagering (betting on horse races, sporting events and other miscellaneous events such as political elections or awards ceremonies). To regulate event-oriented wagering, the state governments have simply extended the same policies for regulating land-based gambling facilities to the Internet. Subsequently, several of the country's land-based sports and race betting operations, particularly the TABs (totalisator agency boards), have launched online services to complement their terrestrial offerings. Likewise, lotteries and lottery agencies have adopted the Internet as a new distribution channel.

Regulating casinos is a whole other ball of wax because winning or losing is determined solely by the random number generation of computer software. In layman's terms, casino games can be rigged very easily. A site could, for example, advertise a 98 percent payout schedule for a game that actually pays out at a rate of 40 percent to 50 percent. In the absence of stringent regulatory measures, doing so would be a walk in the park.

So, Australia was only willing to legalize the operating of online casinos if a set of very high standards was met. This was accomplished through the establishment of a national regulatory model, which was drafted by Australian regulators in 1997. The states and territories, with the exception of the Northern Territory, base their Internet casino gaming policies on this model. The Northern Territory adopted a comparable act that is as equally effective.

The first state to pass an Internet gambling act based on the national model was Queensland, and in doing so, Queensland instantly became a model, worldwide, for how it should be done. The Australian Capital Territory and Tasmania later followed by passing laws similar to the Queensland act. The government of Victoria agreed to adopt legislation based on the national model, however, it was never enacted.

The national model seeks to accomplish two things. First it seeks to prevent, if at all possible, compulsive gambling. It does so by mandating several policies such as the requiring of players to set their loss limits before gambling, the ability and right to refuse bets from players who have exceeded these limits or exhibited other signs of problem gambling, the ability to enable family members of compulsive gamblers to have them locked out of a casinos system and the posting of ample information for how and where compulsive gamblers can get help.

Further, the national model seeks to ensure that all online casinos offer games that are fair and that they are operated by upstanding companies and individuals. It accomplishes this by outlining a detailed process for conducting extensive background checks on all companies (as well as on their key employees) that develop and operate online casinos. In terms of the fairness of the games, the national model also establishes guidelines for testing gaming software before it's approved as well as conducting periodic audits to be after the site is up and running.

The first licensed Australian online casino to open for business was Lasseters Online (www.lasseters.com), operated by Lasseters casino of the Northern Territory. Launched in 1999, Lasseters Online is recognized by many as the most highly regulated casino on the Internet.

Then, in mid-2000, three more online casinos -- www.AusVegas.com, licensed in Queensland, www.wrestpointcasino.com, licensed in Tasmania, and www.countryclubcasino.com, also licensed in Tasmania -- began taking wagers over the Internet.

The three new Australia-licensed online casinos have since been shut down because the federal government has imposed a moratorium on the expansion of Internet gambling. The moratorium, officially implemented in December and still currently in effect, is retroactive to May 19, which was before the three casinos were officially launched.

This is where all the good news about gambling sites based in Australia ends and the bad news -- for online gamblers -- begins. During the moratorium, the federal government, which previously left all gambling matters in the hands of the states, will decide whether it will prohibit or regulate online gambling. Based on their comments and actions, those who strongly support the moratorium, particularly Communications Minister Richard Alston and Prime Minister John Howard, appear to be leaning toward a ban. The only other alternative would be for regulators to draft a revised, even more stringent, version of the national model -- one that is accepted by the federal government.

If a ban is imposed, even Lasseters could be forced to shut down its online operations and gambling at online casinos based in Australia would no longer be an option for consumers concerned with game fairness. More than likely, lotteries and event wagering services would be allowed to continue offering their services online, but it's even possible that they will be closed down too.

Let's summarize then, shall we?

Australia-licensed online gaming sites are arguably the best places to play in terms of consumer protection. Unfortunately, the government is leaning toward prohibiting such services, thereby removing them as an option and ultimately leaving the country's residents, as well as gamblers throughout the rest of the world, with only the option of gambling at sites which don't offer nearly the same protection... at least until another government comes along -- possibly the United States or the United Kingdom -- and reestablishes the standards set by Australian regulators.

In two weeks I'll finish this series by covering the approach toward regulating Internet gambling in Europe.

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