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Creina Chapman, EGR Australia Power Summit, 2019

Interactive Gambling Act 2001: Year in Review

Thank you for inviting me to speak today.

I’d like to begin by acknowledging the traditional custodians of the land on which we are meeting today—the Gadigal people of the Eora nation. I would like to pay my respects to elders past, present and emerging.

The last 12 months has been a big year for gambling regulation in Australia. The ACMA has just completed its first year administering the amended Interactive Gambling Act and in 2018 we were also given expanded responsibilities—in the area of gambling advertising during live sport.

Today, I will focus on these two areas of the ACMA’s activities:

  • a review of the first 12 months of our activities under the reformed Interactive Gambling Act and the impact that we have seen on the illegal offshore gambling market, and
  • secondly, the implementation of new restrictions on gambling advertising in live sport.

As you would be aware, the IGA was introduced in 2001 with the objective of minimising harm to problem gamblers, by limiting the provision of interactive gambling services to Australians. It also aims to minimise other social and financial impacts of offshore gambling including, loss of revenue to Australian licensed operators, sporting bodies and the government and to reduce threats to the integrity of sport. The IGA seeks to achieve this by prohibiting certain interactive gambling services being provided or advertised in Australia, including online casino-style games, most forms of in-play betting and unlicensed wagering.   
The reforms to the Act which were passed during 2017 did not alter the objectives of the Act, nor the types of interactive gambling services that are prohibited under the Act. But the changes are designed to strengthen enforcement of the prohibitions by introducing a civil penalty regime with significant penalties:

  • The civil penalty for an individual providing a prohibited or unlicensed service to Australians customers can be more than a million dollars a day.
  • And for organisations, it’s up to nearly eight million dollars a day.
  • The penalties for advertising prohibited or unlicensed services or providing lines of credit are less onerous—but still significant.
  • Disruption measures have been introduced, such as the ability to place directors or other principals of contravening companies onto the Movement Alert List. This can disrupt people’s travel to Australia.
  • And the Act removes ambiguities, making it clear operators need to be licensed by an Australian state or territory to provide services such as wagering to end-users in Australia. 

A consumer education element has also been added in. We have a responsibility to raise awareness of Australian gambling laws and we publish a register of licensed interactive wagering services so that consumers can be aware of which services can legally be provided to Australians. This package of reforms also included a credit betting ban which came into effect 12 months ago. And most recently, coming into effect in January of this year, is a prohibition on betting on the outcome of lotteries.

Importantly, our role has been expanded by giving us responsibility for the process from handling complaints through to enforcement. Our focus over the first 12 months has been on disrupting illegal gambling. But in this area, there are a number of challenges in using standard enforcement tools:

  • there are jurisdictional challenges due to the cross-border nature of the activity
  • there are practical challenges due to the level of obfuscation some offshore operators go to in running services, so unpicking ownership and operational structures can be complicated
  • we face technological challenges due to the speed at which websites can change and morph into a new ‘skin’/URL; and the mainstreaming of technologies such as crypto-currencies (e.g. Bitcoin)
  • we face complicated business models such as the use of agents to process bets or affiliate and operator relationships which can make it difficult for us to understand the true operator of a service.

To most effectively minimise supply of offshore gambling services we are taking a multi-pronged approach involving:

  • key engagement
  • targeted investigations
  • regulatory cooperation
  • support from third parties
  • and raising consumer awareness.

We see the so-called ‘soft regulatory’ options of education, persuasion, encouragement and deterrence to be crucial in communicating key compliance messages and achieving positive policy outcomes. This has meant that a key area of focus has been to target influential players in the offshore gambling market in order to amplify our message and reach as many offshore providers as possible.

We have engaged with our fellow regulators and industry stakeholders such as software suppliers, payment processors, affiliate organisations and trade groups. Our objective in doing this is twofold—to raise awareness of the change in law in Australia, and that we will be active about enforcing compliance. It’s fair to say that, before the 2017 reforms, Australia was considered a so-called ‘grey market’ where operators took a risk-based approach and provided services here on the basis that they were unlikely to be prosecuted. We needed to change that perception and show that we are serious about enforcing compliance; and to provide operators with the opportunity to change their behaviour.

Given the potentially costly and time-consuming nature of formal enforcement, it is clearly preferable for us for operators to either restrict access to Australians—or alternatively apply for a licence off their own bat.

We have also conducted a campaign of targeted investigation and enforcement. We had a similar amount of own-motion investigations and complaint-based investigations. Most of our own-motion investigations focused on illegal wagering, with the complaint-based investigations largely being gaming-related matters.

Of the 62 matters investigated in our first year, 138 were websites, resulting in identification of 90 contraventions—54 for providing prohibited interactive gambling, like online casinos, 20 for providing unlicensed regulated interactive gambling, such as wagering services, and six involved advertising contraventions. We issued 19 formal warnings and notified overseas regulators on 15 occasions.

Given the challenges in regulating offshore entities, we see great value in regulatory cooperation. Combating illegal offshore gambling is an issue we have in common with many jurisdictions. The ACMA has established collaborative relationships with gambling regulators around the world—focusing particularly on the key online gambling licensing jurisdictions who together license over 4,000 online gambling websites.

Overseas gambling regulators have assisted us by passing to operators who are licensed in their jurisdiction information about our changed regulatory landscape. We also notify regulators when we find a provider licensed in their jurisdiction has breached Australian laws and, in many cases, they have lent their regulatory ‘weight’ to our enforcement action. This has been very effective in getting offending operators to withdraw from our market.

We are continuing to explore opportunities for further collaboration with overseas gambling regulators.

We have also focused on establishing cooperative relationships with other regulatory agencies in Australia who have a role in regulating the online gambling market, as well as broader issues of sports integrity, money laundering, taxation and combating the black economy. These have included state and territory regulators, key sporting and racing bodies and other federal government agencies including AUSTRAC, the ATO and ACIC.

Many online gambling services rely on third parties for their essential services, such as accessing the games on the website or processing payments. These third parties can be involved with hundreds or thousands of gambling websites and can influence or directly impact access to their services by Australians. Following the amendments to the IGA, the prohibitions and penalties now extend to any person who is a party to a contravention of the IGA. This has led us to engage with third parties and explain the ancillary liability they may face if they facilitate the provision of offshore gambling services.

We also looked at consumer awareness. Many illegal offshore gambling websites target Australians by using Australian themes and images, such as the Australian flag and native animals. Australian consumers inadvertently use prohibited or unlicensed online gambling providers, unaware they are not covered by important harm minimisation measures and consumer protections required by Australian licensed services.

We commonly receive complaints from Australian players who have been unable to access their winnings on prohibited or unlicensed gambling websites or having poor customer experiences. Research we have been involved in, indicates that offshore gamblers have low levels of knowledge about what online gambling services can be legally provided to Australians and low knowledge about which country provides the licence for the gambling websites they are using.

Using the register of licensed wagering providers, we are taking steps to help consumers identify which online gambling services are legally provided to Australians.

In October last year we published a 12-month report of our activities administering the IGA. Over this time, we have seen a real behavioural shift from many offshore operators and a significant change in compliance with the IGA.

We’ve seen a number of websites exit the Australian market—some well before the amended IGA came into effect in September 2017—and others have restricted their services after the changes, either of their own accord or in response to our compliance action.

In relation to market exits, we’re aware of criticisms from some quarters to the effect that when one services exits another comes in and replaces them. On this point, we do receive complaints about these new services which triggers another investigation, but this is a real problem. When we enforce against an offshore provider and we know they operate multiple websites, we seek compliance from across the operator’s entire portfolio of sites, not simply the sites we have investigated.

We have also observed changes by operators, including geo-blocking Australian customers, including Australia as a restricted market in T&Cs and removing Australia as an option to choose from sign-up pages.

Our work with software suppliers is also leading to results where a supplier can restrict access to their games across potentially thousands of websites—sometimes via technical fixes at their game server-level or through enforcing contractual obligations with offshore providers. This is seeing a real diminishing of offshore gambling supply, even in circumstances where an offshore gambling website may wish to continue providing services to Australians illegally. These changes are also reflected in a downward trend in revenues. It is challenging to quantify what is an illegal activity, and this is reflected in wide differences in data from statistics providers. However, this is a significant change from forecasts a few years ago in the O’Farrell review, which noted that according to data providers like H2GC, the offshore market was set to grow quite significantly.

GBGC forecast offshore gambling expenditure will fall by over 50% between 2017 and 2018; H2GC forecasts a 7% fall in offshore gambling expenditure between this period.

Our 12-month report on credit betting prohibition particularly focused on disruption in the illegal offshore gambling market, the credit betting prohibition impacts more directly on Australian licensed wagering operators. The prohibition came into effect in February 2018. As part of our compliance activities, we have reviewed operator T&Cs, identifying a number of operators whose documentation needed updating, which has all been completed now.

It’s worth pointing out that we have not found any breaches of the prohibition to date but, as part of our compliance monitoring role, we will be looking at business practices of operators this year.

I would now like to turn to the other significant recent change we have been involved in—namely, gambling advertising restrictions during live sport. These changes stem from a May 2017 Australian Government announcement as part of its media reform package which included additional restrictions on gambling advertising during live sporting events on broadcast and online platforms.

The new rules were introduced to build on earlier betting odds restrictions during live sport and aimed at providing a distinct zone during which parents can have confidence that their children will not be exposed to gambling advertisements.

We worked with industry to implement new broadcasting code rules under the co-regulatory scheme in the Broadcasting Services Act, and they came into effect on 30 March 2018.

The online rules are a legislative instrument made under the Act and came into effect on 28 September 2018, following two rounds of public consultation. In short, the new gambling advertising restrictions apply to live sport coverage on both:

  • broadcasting services—including commercial television, commercial radio, subscription television and SBS, and
  • online streaming services.

The result of the new restrictions mean that:

  • between 5 am and 8.30 pm, no gambling advertising is permitted from five minutes before the scheduled start and until five minutes after the conclusion of play, or until 8.30 pm (whichever comes first)
  • between 8.30 pm and 5 am, no gambling advertising is permitted during play, but ads that do not include promotions of betting odds are permitted during breaks.

Other restrictions that were imposed in 2013 continue to apply and include a ban on commentators promoting live odds from 30 minutes before play to 30 minutes after play, and a requirement that gambling representatives are identified as such and do not appear at the venue. The rules are not applicable to horse racing, harness racing or greyhound racing.

We undertook measures to monitor the new restrictions over the first 12 months of their operation. To inform what effect the rules have had on ad placement and to inform our monitoring process, the ACMA has conducted research consisting of data-gathering and analysis of commercially available audience and advertising data, and qualitative and quantitative research about community behaviours in relation to the consumption of live sport, attitudes to children’s exposure to gambling advertising and awareness/perceptions about the new regulations. We will be publishing this research later in 2019.

Looking at the year ahead for the ACMA, we will continue our investigation and enforcement work. We have focused on the offshore wagering industry as key to our compliance initiatives and we are looking to do the same this year. We will look at further escalating enforcement against non-compliant services. Our options include litigation, or referrals to the Movement Alert List, among others. We’ll also be looking into other avenues for disruption, be it through opportunities to market services or further work with third parties.

We’ll look at further awareness raising campaigns to educate consumers to the risks of offshore gambling. We’re also aiming to deepen our engagement with overseas regulators who have been key in assisting us over our first year. On this, we’ll actively look at opportunities for further information sharing and potential coordinated action against illegal services.

Domestically, we’re also looking at avenues for facilitating greater information sharing with Australian law enforcement and other domestic regulatory agencies. And as mentioned earlier, we’ll be monitoring the new live sport advertising rules and undertaking research.

In new activities this year, we will be working with the Communications Alliance to put in place a blocking scheme for illegal wagering websites under the Interactive Gambling Industry Code. This will provide use with an additional compliance tool. And from this year, work to implement the new National Self-Exclusion Register will start. Once the enabling legislation has passed, the ACMA will be responsible for licensing a provider and having regulatory oversight of this new scheme.

We’ve certainly had a busy 12 months under the new rules, and the coming year will be another active one for us in this the gambling space.

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