Regulation Down Under: What happens next?

Australia’s long-awaited Interactive Gambling Amendment (IGA) Bill 2016 seemed to have cleared a major hurdle last week after it was passed by the Senate, but the regulatory climate Down Under is really only just heating up.

Contrary to numerous press reports, the new legislation – which clarifies the ban on online poker and in-play betting – still has some way to go before it becomes law. And current circumstances suggest it is unlikely to happen anytime soon.

Meanwhile, discussions are underway at the very top of Australia’s Department of Treasury over the possibility of introducing a new nationwide point of consumption (PoC) tax.

EGR Intel looks at some of the biggest talking points currently taking hold in one of the world’s biggest online gambling markets: 

IGA Bill is not a done deal

When the Bill was debated by the Senate last Tuesday (21 March), the legislation should, in theory, have almost immediately joined Australia’s statute books and entered into law. Both major political parties have previously announced their support for the changes to be introduced by the Bill. However, it is now back where it originally started: the House of Representatives.

The #Senate has agreed to the Interactive Gambling Amendment Bill 2016 with amendments

— Australian Senate (@AuSenate) March 21, 2017

The spanner in the works for the government is the addition of a new amendment, introduced by renowned anti-gambling Senator Nick Xenophon, to prohibit the use of credit betting.

According to Sydney-based gaming lawyer Jamie Nettleton, this has now changed the course of the bill completely. “It would have been fairly easy to pass if it hadn’t included that amendment – it would probably have come into effect just after Easter,” he says.

The amendment, which was passed with the support of the Australian Labor Party, must now go back to the House of Representatives for a vote –  the final makeup of the bill must be ratified by both houses of Parliament.

So when will the Bill pass?

The amended legislation was still towards the bottom of the House of Representative’s order of business at the time of writing.

There is also just one day left of this session of Parliament, meaning the chances of it going through this week are fairly low.

Parliament resumes on 9 May – a week dedicated almost exclusively to the Federal Budget. This means the IGA Bill may nots unlikely to be debated, or approved, in the House of Representatives until June at the earliest.

A source familiar with the matter told EGR Intel that the Federal Government is now seeking to hold further discussions with state/territory governments about the amended bill. All federal/state/territory Ministers responsible for gambling are scheduled to hold a meeting on Friday (31 March).

Credit where credit is due

Senator Xenophon has long been a thorn in the side of ‘corporate bookmakers’ and has admitted his credit betting scorn is directed at them, rather than the on-course bookies. However this stance has done little to calm the nerves of the latter.

An estimated 80% of on-course bookmakers’ business is now done on credit and over the phone with the big staking punters. The CEO of Victorian Bookmakers Association, John Clancy, also recently told the Herald Sun that a ban on offering credit would force a majority of its 180 members out of business.

Gaming lawyer Nettleton claims a change of approach might now be needed. He says: “From a political perspective it seems like a no-brainer because everyone more or less agrees with it, but in practice, it is quite different as providing credit is part of the normal business of the on-course bookmakers.”

Meanwhile, Luc Pettett, CEO of affiliate Punters.com.au, adds that while credit betting poses social responsibility concerns, the current discussion dominating the government is far too subjective.

“The proposal to ban it completely smacks of incompetence from a government which does not understand an ever-changing industry,” he says. “It’s so important now more than ever to do the research required to properly implement problem-gambling strategy, in amongst all of the other changes under review.

Ladbrokes and Hills still have much to lose

In its current guise, on-course bookmakers have the most to lose from the credit ban, but this in no way means online heavyweights will be unaffected. Xenophon is on record as saying he would be willing to work with the government to ensure on-course businesses are not hit hardest by the reforms.

As a result, one source speculated William Hill could have the most to lose, while Ladbrokes Australia’s growing VIP business could also be under threat. VIP-focused brands such as BlueBet, set up by former William Hill Australia CEO Michael Sullivan, will also be keeping a watchful eye on proceedings.

Both William Hill and Ladbrokes have yet to join the new gambling trade association, the Responsible Wagering Australia (RWA), set up to replace the now defunct Australian Wagering Council (AWC). Sportsbet’s apparent dominance of the RWA’s agenda and a general scepticism that the body will follow in the footsteps of the AWC’s lack of success have all been cited as reasons for their absence.

However, the RWA’s social agenda, which includes a ban on offering credit to customers, is also believed to be a major barrier to Hills and Lads becoming members.

Is a point of consumption regime really on the cards?

Last Friday, Australia’s Department of the Treasury sent out a surprise press release, announcing that a nationwide PoC tax for the wagering industry was under consideration.

Had a productive meeting with State & Territory Treasurers today to progress issues of national economic significance. pic.twitter.com/CrLPsDT8Q8

— Scott Morrison (@ScoMo30) March 24, 2017

The press release suggests that there is already some agreement among state and territory treasurers to creating a consistent tax across Australia, as well as introducing a National Consumer Protection Framework.

Each state and territory has now been tasked with assessing the potential of a PoC tax model and the impact it could have on sports organisations within their jurisdictions.

They will report their findings at the next Council on Federal Financial Relations meeting.

But what could the impact of the tax be?

Given discussions are still in the early stages, details of how a national approach could work are still rather scarce.

Treasurer Scott Morrison has said the government will take some guidance from South Australia – scheduled to implement its own 15% point of consumption regime in July.

However, some sources have told EGR Intel that following South Australia’s example could lead to tighter margins and, as a result, more consolidation within the industry as the smaller firms struggle with the burden. It also brings into question what the Northern Territory would do to keep corporates such as bet365 and Unibet in the jurisdiction.

Pettett says: “Completely re-architecting the taxation within the industry needs to be a very considered and well-modelled change as it will completely change the stimulation of products and competitive pricing on offer to the punters. To us, it’s the punters that matter and competition shouldn’t be hindered.”