Online Gambling Law Trailblazers Are Doing a Rethink

They blazed a legislative trail shortly after the turn of the millennium and now find themselves wondering whether they took right path. Governments that thought they could control how, where and with whom their residents chose to gamble with on the internet are now having to rethink their online gambling strategy.

One of the best case studies in this regard is the Australian experience.

In 2001 the Australian Government surprised many industry observers when they passed the Interactive Gambling Act 2001 ("the Act"). The Act took a prohibitive approach to online gambling, rendering it illegal for offshore operators to offer their product to Australian residents, as well as limiting the nature of bets that locally licensed operators could offer. 'In-play' sports bets were a notable bet type that Australian licensed sports books could not offer.

It was a bold law with clear intent; to limit Australian resident access to gambling sites that were not licensed in Australia. But from its release many believed that the government was being overly optimistic regarding their ability to effectively police the provisions of the Act. One blaringly obvious issue was that those who the legislation was primarily aimed at - offshore online gambling sites, were beyond the jurisdiction of the Australian judiciary and therefore unlikely to change their operating practices because of the law.

Another key difficulty was the fact that the law would have no real impact on either Australian's propensity to gamble, or their ability to access the sites which the legislation was supposed to prohibit.

Nevertheless, lawmakers thought the Act would make a difference and curb 'illegal' online gambling. But the reality 8 years down the track is that the number of Australians gambling online at websites prohibited by the Act can be counted in the hundreds of thousands. Locally licensed operators are now complaining that they can't compete with their offshore counterparts and the government is seeing millions of dollars in potential tax revenue flowing out of the country.

As a result, the Australian Government is now undertaking a consultation process to study gambling reform. This is government speak for 'we got it wrong the first time round and are now going to have to do an about face.

And the Australians are not alone. France is another country that went down the online gambling ban path, only to do an about face years later and announce their intentions to enact new laws opening up their online gambling market and licensing processes. Of course France has the added incentive of having to please the European Commission and not breach freedom of provision of services laws. But that's another story altogether.