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ONLINE GAMBLING

This article provides an overview of the development of online gambling in Australia, the legal framework governing it, market specifics, and its impact on the racing industry. It discusses the challenges faced by racing clubs and how they have tried to improve their market share. Additionally, it delves into the issue of protecting racing's intellectual property rights.

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ONLINE GAMBLING

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  1. ONLINE GAMBLING An Australian perspective

  2. Overview • The development of online gambling in Australia 2. The legal framework governing online gambling in Australia 3. Market specifics 4. What it means for racing • Increased competition for gambling dollar generally • Increased competition for wagering dollar • Facilitation of free riding • Challenge to retail exclusivity of pari-mutuel • Stress to race club ‘bricks & mortar’ business model • What racing has done to improve its market share • Protecting racing’s intellectual property rights

  3. 1. The development of online gambling in Australia • Online gambling in Australia commenced in approx 1995 • Two types - • Virtual online gambling • Gambling on separate physical event • First attempts at virtual online gambling were slow casino-type games with simple graphics. By late 1990s full online casinos were being developed e.g. Lasseters Online – year 1 - 12,000 registered players (82% overseas residents), player registrations doubled every month • Gambling on a separate physical event. Centrebet – American Football – 20% of customers sourced from Scandinavia • 0-6% of Australians gambled on the Internet in 1998-99

  4. 2. The legal framework governing online gambling in Australia • Interactive Gambling Act (IGA) 2001 - prohibition on anybody offering online gambling to Australians. - prohibition on anybody advertising online gambling services to Australians. • IGA was a response to community concerns about levels of problem gambling - 1990s State Governments hungry for revenue. - Australia has the eighth highest per capita number of slot machines in world: one machine per 110 people (UK has one machine per 300 people) - online gambling seen as taking this one step further – “CLICK THE MOUSE AND LOSE THE HOUSE”. - 1999 Productivity Commission report. - online wagering exempted from ban – online gaming = shift from bricks and mortar to living room. Online wagering equivalent to telephone account wagering.

  5. The IGA ban has had limited effectiveness. To be more effective it requires: - Technological blocks impeding access to offshore gaming websites. - Financial transactions controls. - Resources allocated to prosecuting offenders. • The 2010 Productivity Commission report recommended that online poker be exempted from the ban as a trial of a regulation versus prohibition. The Australian Government rejected this recommendation. • The current political environment in which anti-gambling has suddenly emerged as a highly important issue means that no liberalisation of the IGA will occur in the foreseeable future.

  6. 3. Market Specifics

  7. 4. What it means for racing (i): Increased Competition for Gambling Dollar Generally

  8. (ii) Increased Competition for Wagering Dollar

  9. (iii) Facilitation of Free Riding • Symbiotic relationship between racing & wagering • TAB privatisation did not effect this relationship. In 2009 TAB paid some $500m to the Australian thoroughbred racing industry. • Internet has enabled new market entrants. These have achieved phenomenal growth: corporate bookmakers alone have gone from turnover on racing of $75m in 1999 to turnover of $3.5b in 2008/09. • In 2009, they now represent 21% of the market for wagering on thoroughbred racing. • Dilemma. racing produces 20,000 races a year which the wagering industry: tabs, on oncourse bookmakers, corporate and the betting exchange, all use to take bets. • But now we had some 1/5th of the wagering market paying nothing meaningful back to racing. • This is obviously unsustainable.

  10. Challenge to retail exclusivity of pari-mutuel • TABs currently have retail exclusivity • 2009 Rising Sun Hotel (Melbourne) makes available internet betting terminals to customers • June 2010 Victorian Commission for Gambling Regulation issues 12 charges – possession of an unauthorised instrument of betting, running a betting house.

  11. Stress to Race Club Business Model • The business model of race clubs based on attendances has come under considerable strain. One metropolitan club estimated a $23.00 cost to attract and cater for each customer attending a race meeting. The average spend per customer was $22.00. • In 2009 NSW race clubs collectively lost $13.9 million.

  12. 5. What has racing done to improve its market share • Development of the Free TAB Sportsbet I-Phone Application • Development of Sky Active, which allows users to bet and access information over the TV http://www.skychannel.com.au/active/ • Creation of Star Stable (fantasy horse racing game) • Agreements with phone companies to screen races on mobile phones.

  13. 6. Protecting racing’s intellectual property right • Classic case of free riding • ARB makes case for legislative reform to Australian Conference of Racing Ministers • Race fields legislation: irrespective of where they are based every wagering operator is compelled to – • Pay an appropriate commercial fee to racing • Provide the Stewards with access to betting records • Constitutional challenges • Productivity Commission

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