The Interactive Gambling Act was passed in two thousand and one. The goal: prevent Australians from accessing online casinos. The mechanism: make it illegal for operators to offer online gambling to Australian players. The result: absolutely nothing changed except the law existed.
A law cannot regulate the internet because the internet is not bound by geography. An operator based in Malta, licensed by Malta, can broadcast to Australia. The law says casinos cannot target Australian players. The law does not say Australian players cannot access casinos. The operator simply does not advertise in Australia. They accept Australian customers anyway. They are technically in violation of Australian law but they are not subject to Australian enforcement.
The act has specific prohibitions. Poker is not prohibited. This is because poker is classified as a game of skill under Australian law. Blackjack is prohibited. Roulette is prohibited. Slots are prohibited. These are games of chance. A player can legally access an offshore poker site. A player cannot legally access an offshore blackjack site. But enforcement against the player is non-existent. Enforcement targets operators, and operators ignore the law because they are outside Australian jurisdiction.
The act created a market contradiction. Australian players wanted to gamble online. Offshore operators were happy to accommodate them. The Australian government was unable to prevent this. The result is that Australians play at unregulated casinos because the regulated domestic option does not exist.
The licensing regime under the act allows the Northern Territory to issue interactive gambling licenses. No operator has ever obtained such a license because the license comes with restrictions: cannot advertise in Australia, cannot market to Australians, cannot operate from Australian territory. The license is economically worthless. An operator can just ignore the law and operate without the license.
The Regulatory Failure
What happened in Australia is a textbook example of regulatory failure. The government created a law that was unenforceable. The law did not prevent the behavior it was designed to prevent. The law did not generate any licensing revenue. The law did not generate any tax revenue. The law did nothing except exist on the books while players accessed offshore casinos.
Sports betting is regulated differently. Operators can obtain licenses. PointsBet and DraftKings operate in Australia legally. The difference is that sports betting is offered by a limited number of operators, so licensing and enforcement is possible. Online casinos are offered by hundreds of operators worldwide. Enforcement is impossible.
The government has proposed amendments to close loopholes and clarify what is permitted. The amendments have been pending for years. The gap between law and reality has grown. What was supposed to be a protected market is now an open market dominated by offshore providers that pay no taxes and provide no consumer protection.
An Australian player at an offshore casino has no recourse if the casino steals their money. No deposit protection. No licensing oversight. No dispute resolution. The government banned regulated gambling to protect players, thereby forcing players into unregulated gambling where protection does not exist.
The lesson from Australia is that you cannot regulate a digital service through prohibition. You can only regulate it through licensing of operators. The offshore gambling market in Australia is not smaller because of the act. It is unregulated because of the act.
