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IN-DEPTH 20 February 2018
Is Australia pushing for prohibition?
Partner, IP and Gambling Regulation at Memery Crystal LLP, Carl Rohsler speaks to Gambling Insider about the tumultuous nature of the Australian Gambling market and how the regulatory framework will need to adapt in order to facilitate the old pastime
By Gambling Insider


Gambling and gaming has a rich history in Australia, having long been connected with Australians’ enjoyment of sports and racing. The latest edition of Australian Gambling Statistics estimates that expenditure in the legal gambling industry was over A$22.7bn in 2014-2015. This puts annual per capita gambling expenditure at A$1,250, demonstrating that Australians have a robust appetite for gambling. These figures exclude so-called “interactive gaming”, which encompasses online and telephone-based gambling, most of which are prohibited in Australia. Recently we have seen new legislation introduced to strengthen the protective regime, but it’s still up in the air as to whether or not it will be effective.


The regulatory framework for gambling is broadly split into two parts. In general terms, land-based gambling is regulated by the states and territories while internet gambling is regulated at both the federal and local level. In some cases, states and territories have failed to keep up with the speed at which the gambling industry has developed, particularly in the online realm, leading to a varied regulatory picture across the country.


It is against this rather mixed background that the Australian parliament recently enacted the Interactive Gambling Amendment Act 2017 (the “IGA Act”). The IGA Act came into force on 13 September 2017 and it amends, amongst other legislation, the Interactive Gambling Act 2001 (the “2001 Act”), which is the primary piece of federal legislation on interactive gambling. The introduction of the bill which led to the IGA Act, followed recommendations from a 2015 review conducted by the former Premier of New South Wales, Barry O’Farrell.

One of the main aims of the IGA Act is to prevent off-shore gambling operators from providing services to Australian citizens and residents. Under the original 2001 Act, many off-shore gambling operators exploited perceived grey-areas (particularly around practical enforcement) in order to provide online gambling services to Australians.

The 2001 Act made the provision of so-called “interactive gambling services” with an “Australian-customer link” a criminal offence. If found guilty of the offence, a corporation would have been liable to a fine of A$2.1m for each day on which the offence was committed. The 2001 Act also created numerous other criminal offences, such as the publication of an advertisement for interactive gambling services, which carried a maximum penalty of A$126,000 for corporations on each day that the offence was committed. Fines for individuals were similarly punitive.

However, the enforcement regime which sat behind the 2001 Act was ineffective, with not a single prosecution brought by the time the IGA Act was introduced to the Australian parliament 15 years later. The evident absence of enforcement on the part of the Australian authorities and a perceived sense of uncertainty regarding the state of the law created a vacuum which, in the opinion of the Australian government, allowed offshore gambling operators to thrive.


The IGA Act has amended the 2001 Act to, in effect, prohibit the provision of all interactive gambling services unless the particular service in question is expressly permitted under the IGA Act and the provider is licensed to provide such services. The limited exclusions include telephone betting services and online horse-race betting services. The IGA Act has also materially increased the fines for criminal offences under the 2001 Act. By way of example, the fine for corporations that commit the offence of providing a prohibited interactive gambling service with an Australian-customer link now equates to A$5.25m for each day on which the offence is committed.


One of the most significant amendments in the IGA Act is the introduction of a new civil penalty regime which runs parallel to many of the criminal offences. For example, there is a new civil penalty for corporations that provide a prohibited interactive gambling service with an Australian-customer link which equates to A$7.875m for each day on which an offence is committed. Aside from the eye-watering numbers involved, the introduction of civil penalties has a more practical impact on would-be providers of prohibited interactive gambling services, because they require a lower standard of proof than for criminal cases where a case must be proven beyond all reasonable doubt. For the Court to impose civil penalties it must only be reasonably satisfied that the alleged acts have occurred and that satisfaction must be commensurate to the seriousness of the allegations. This is a significantly easier burden of proof for the Australian enforcement agencies to discharge relative to that required in criminal cases.


One of the main criticisms levelled at the enforcement regime under the original 2001 Act was that the “competing priorities” of enforcement agencies meant a criminal prosecution was considered by offshore operators to be unlikely or at least unlikely to be effective when coupled with the perceived lack of clarity as to the state of the law. Importantly, the amendments contained in the IGA Act also empower the Australian Communications and Media Authority (the “ACMA”) to enforce the civil penalties set out in the IGA Act. The ACMA is now able to utilise a range of enforcement tools, from the imposition of sizeable civil fines, to the use of infringement notices, formal warnings and injunctions. The IGA Act also amended the Australian Communications and Media Authority Act 2005 to enable the ACMA to disclose information to the Department of Immigration and Border Protection for the purposes of restricting the travel of executive-directors of entities engaged in activities which are prohibited under the amended 2001 Act. Similarly, the ACMA is now able to notify regulators in other jurisdictions of entities that are engaged in the provision of interactive gambling services contrary to the amended 2001 Act. Under the previous framework, the ACMA was required to refer complaints to the Australian police for criminal charges to be brought against the alleged offenders. Whilst this is still the case in respect of criminal offences under the amended 2001 Act, the ACMA has the power to enforce the new civil penalties regime independently of the Australian police. The ACMA’s ability to impose sanctions without the involvement of other agencies will likely give new impetus to the enforcement of the amended 2001 Act.


The enactment of the IGA Act has already had a deterrent effect on many prominent gambling operators, with the likes of PokerStars and 888Poker withdrawing from the Australian market. However, following lobbying from Liberal Democratic Senator David Leyonhjelm, the Senate referred the issue of the regulation of online poker to the Environment and Communications References Committee for inquiry and report. In particular, the Committee is required to consider whether the current regulatory approach to online gambling is reasonable and proportionate to the personal or social harms that might result from participating in online poker.


News of the inquiry has brought hope to the online poker community in Australia. If nothing else, its existence indicates that the debate on online gambling is ongoing and there is potential for regulations to soften in the future. There also remains the real question of whether effective enforcement action (in terms of criminal prosecution or actually enforced fines) will be effectively levied. Whenever prohibition is used, there is this paradox: prohibitions tend to drive away the well-regulated, and create a vacuum sucking in less scrupulous operators into the market. So the real question is whether the authorities are prepared to provide a sufficiently benign environment for a home-grown market which can satisfy the local need and give the Australian population no reason to look elsewhere.
IN-DEPTH 4 September 2019
Virtual reality: Creating next-gen experiences for players

Singular CEO George Shamugia discusses a new revenue stream for casino operators

The competition in online gaming is intensifying, with players becoming more and more demanding. In some markets, single-customer acquisition costs can reach up to €400 ($440) alongside growing churn rates. Furthermore, the online gaming sector struggles to attract one of the most lucrative groups of players – millennials. The experience provided by casinos no longer appeals to the younger generation.

On  the other hand, the video gaming industry perfectly understands the needs of millennials and by introducing elements of luck in their games offers the best of both worlds. With the launch of loot box systems and Grand Theft Auto’s in-game casino, we have seen their first successful steps in targeting the online gaming sector. GTA V online, with 33 million active players, recently opened an in-game casino, where players gamble real money on games such as poker, roulette, slots, etc. As a result, churn users returned and GTA Online reached the highest number of active players since its launch in 2013.

The online gaming industry has almost fully utilised the potential of the mobile medium. The time has come to look for new, innovative ways of delivering a next-gen experience to customers.

The potential of VR

Could the next big thing for online gaming be a fully fledged virtual reality (VR) casino delivering an immersive experience and limitless new opportunities?

Although not widely adopted yet, VR has a sizable number of customers. Analysts predict it’s poised for explosive growth to become mainstream in about five years. According to market intelligence firms, the VR market will be worth $117bn by 2022, and according to Juniper Research bets made through VR will reach $520 billion by 2021. Upcoming 5G mobile network technology will propel VR’s mass adoption by allowing the development of fully portable untethered and affordable VR headsets.

Different level of social interaction

The captivating nature of gambling comes from its social aspect. Unfortunately, personal interaction is widely missing from online gambling sites. VR technology creates multiple opportunities to bring back and even enhance that social moment. The ability to connect with other players is one of the main reasons behind Fortnite’s popularity. This form of co-experience is the next generation of entertainment. Research conducted by Facebook has found participants spend more time on VR compared to any other medium. This directly translates into increased profits for casinos.

Pokerstars has made efforts in this direction by implementing Voice UI. Instead of using hand controllers to make a call, pass, or raise, players give voice commands.

Another opportunity for bringing in the social element are the players’ avatars. They enable players to build their identity reflected in the avatars’ appearance, but also the avatar's social, competitive and community status. For instance, players are willing to pay real money for virtual drinks at the bar. Operators can offer these social touchpoints for free to VIP customers as an act of appreciation.

VR also brings a new dimension to customer support. Customer support can also be represented with avatars to assist the player in person. The social moment increases the LTV of players and contributes towards lower churn rates.

Rethinking game design

VR is a way more capable medium than a 2D mobile or desktop screen. Instead of copying the existing online experience, games must be redesigned from the ground up for a competitive advantage with VR. For example, a VR slot game can become fully immersive by teleporting the user into the slots’ world of Ancient Egypt. Next, enrich the experience with high-fidelity graphics, realistic spatial sounds and animations. When betting on virtual race cars, the user can be teleported inside the car he/she made a bet on and experience the race firsthand.

New revenue streams

VR casino lobbies create new revenue stream opportunities: ad placement of brands on the venue walls, company logos decorating the bar etc. This kind of branding is not intrusive in the VR space and feels natural from the user's perspective. VR also gives users the ability to change venues from a Las Vegas casino today, to Macau or even Mars casino, the very next day. The dynamic and diverse experience increases retention rates.

The majority of profits for online gaming operators come from their high-roller players. Although they represent a small subset of active players, an operator can launch a separate VR casino brand for them. Providing exclusive VR gaming experiences to high rollers/VIPs, the operator can minimise churn and maximise VR efforts for these player demographics.

The catch with VR is to focus on quality, rather than scale. The target audience might be limited yet, once these players experience it, they will become ambassadors for your offering.

Surely, the opportunities and possibilities offered by the VR medium truly exceed anything offered by mobile and desktop. VR is a new frontier not just for gaming but for every industry, and it’s exciting to see where it takes the industry and what kind of innovation it brings upon us.