South Australia Gets Cold Feet About Esports Betting And Bans It

Written By Joss Wood on August 9, 2016 - Last Updated on January 22, 2018

[toc]The state government in South Australia has directed the Independent Gambling Authority not to approve betting on esports, “irrespective of where the event occurs.”

The Minister for Consumer and Business Services John Rau explained that:

“Children are particularly vulnerable to the attraction of gambling on sporting contests conducted on the platform of video games…. We do not want them to be introduced to gambling under the guise of a game.”

The minister referred to the South Australia state policy on “Children, Technology and Games,” which promised to “encourage the use of games which are fun or educational,” and to “act against activities which lured children into gambling.”

The decision has been taken without any supporting research, and the press release notes that:

“There is very little research on eSports’ betting and the potential dangers, especially to children and young people.”

The state government appears to have decided to act on the precautionary principle and ban esports betting in case it is a harmful activity.

Esports betting is legal in the Northern Territories and Victoria

The “only jurisdiction” which explicitly authorizes esports betting is the Northern Territories, according to the official statement by John Rau.

However, he is unaware that the Crown Casino, Melbourne, which is in the State of Victoria, offers betting on organised video game tournaments through Crownbet, including betting at the esports competitions held in the casino itself.

The Crown Casino, which is famous for hosting the annual Aussie Millions poker tournament, was the first to host a major esports tournament in Australia.

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In October 2015, he Crown Counter-Strike Invitational put up a AU$55,555 prize pool for a CS:GO event hosted by ESL. The match was broadcast on Fox Sports, and won by esports team Virtus Pro, who beat Team Immunity in the final.

In the Northern Territories, last April, Australian online gambling firm TabCorp established a deal with esports betting company Unikrn. Tabcorp’s Luxbet sports betting platform now provides an esports product offering for Unikrn including League of Legends, CS:GO and Dota 2.

Anti-gambling campaigners are becoming vociferous about esports

One of the most active anti-gambling politicians in Australia is Senator Nick Xenophon. He has loudly declaimed any and all efforts by the federal government to expand online gambling legislation.

After the announcement by John Rau, Xenephon was not slow to jump on the bandwagon with his own public statement:

“Mario Kart is a fantastic game that many millions of people around the world have enjoyed, but there are legitimate questions to ask about a kids game being used as a vehicle for online bookmakers and for gambling.”

“We need to listen to the researchers who are concerned with the links between video games children play and gambling, which does not reflect on the game or those that play them.”

Australian government report recommendations ignored

Nick Xenophon and a few other like-minded politicians have thoroughly deterred the Australian government from liberalizing its online gaming market.

The previous government commissioned a review of online gambling published in 2013 as the “Review of the Interactive Gambling Act 2001 (IGA).” The current federal law allows only limited online sports betting and online lotteries.

The review recommended expanding the range of online gambling to include such activities as online poker tournaments. It also pointed out that ISP and financial transaction blocking measures were ineffective against the unlicensed offshore operators that currently provide most of the online gambling to Australian citizens.

The government of the day decided to reject the report, and embarked only on a program of harmonizing harm-minimisation measures across the regional state governments.

Early indications from Tony Abbot, then in opposition, but now Australia’s prime minister, suggested that he would accept the recommendations of the report.

Then, shortly before the last general election, his manifesto website (paywall) added a commitment to “investigate methods of strengthening the enforcement of the Interactive Gambling Act and ensuring Australians are protected from illegal online gambling operators.”

He followed up on this with a comment (paywall) in reply to a parliamentary question, that, “We will implement stronger restrictions on online gambling.”

More research ignored, Bet365 advice ignored, reality ignored

Prime Minister Abbot commissioned another review in September 2015, with the aim of strengthening the enforcement of the existing gambling act. The O’Farell report made 19 recommendations, four of which were to do with online gambling.

In Bet365’s submission to the reviewBet365 is a legally licensed sports betting operator in Australia—it argued that 60 percent of wagering takes place at offshore sites, and concluded, similarly to the 2013 review, that the only solution is for other online gambling activities to be legalized:

“No other strategy to reduce illegal offshore wagering will suffice—payment blocking and site blocking simply do not work and the offshore leakage in Australia is simply too big, and the resources too small, for other measures to do anything more than tinker around the edges of the problem.”

The review did not take Bet365’s advice, and instead is legislating for a series of measures which will likely make no noticeable difference to the offshore operators and provide no additional consumer protection for online gamblers.

  • The government will give the Australian Communications and Media Authority (ACMA) the power to levy new civil penalties for those who facilitate illegal offshore sites—including both operators and affiliates.
  • It plans to disrupt “travel to Australia by directors or principals of illegal providers” who ignore ACMA rulings and will “consult” on other ways to prevent offshore operators, including “voluntary ISP and payment blocking.”
  • The government is also going to create “name and shame” lists which will be published online in order to somehow embarrass the unlicensed operators into obeying Australian law.

The 2013 review told them these tactics don’t work. Bet365 told them they don’t work and the experience of other online gambling jurisdictions around the world shows that such measures don’t work.

Uphill battle for esports betting in this political environment

Against this political background, with little political support for recognized gambling activities, esports betting will struggle to gain a national legal framework.

Fortunately, the Victoria state government and the Northern Territories government are more flexible and realistic. Outside these states, Australian players who want to gamble on esports can find plenty of offshore providers willing to take their bets.

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Joss Wood

Joss Wood holds an English degree from the University of Birmingham and also earned a master’s degree in organizational development from the University of Manchester. Joss has a special focus on the international online gambling market, though he also writes extensively on US regulated markets, sports betting, and esports betting.

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