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Thursday, 16 May 2013
Page: 2736

Senator XENOPHON (South Australia) (12:22): I move:

That this bill be now read a second time.

I table the explanatory memorandum relating to the bill and seek leave to have the second reading speech incorporated in Hansard.

Leave granted.

The speech read as follows—


This bill aims to address a serious and significant loophole in our current online gambling laws. Online gambling is developing at a rapid pace; it now goes beyond sports betting and online poker to a myriad of different games played through Facebook, on iPhones and internet gaming.

Currently, the definition of 'gambling service' in the Interactive Gambling Act 2001 reads:

(a) a service for the placing, making, receiving or acceptance of bets; or

(b) a service the sole or dominant purpose of which is to introduce individuals who wish to make or place bets to individuals who are willing to receive or accept those bets; or

(c) a service for the conduct of a lottery; or

(d) a service for the supply of lottery tickets; or

(e) a service for the conduct of a game, where:

   (i ) the game is played for money or anything else of value; and

   (i i) the game is a game of chance or of mixed chance and skill; and

   (i ii) a customer of the service gives or agrees to give consideration to play or enter the game; or

(f) a gambling service (within the ordinary meaning of that expression) that is not covered by any of the above paragraphs.

Currently, under the law, virtual items purchased within a game or in relation to a game are not considered 'items of value' under this definition. That means that many of the games currently operating, which any reasonable person would consider to be gambling, do not come under the regulations set out in the Act.

I was first made aware of this issue when a constituent of mine approached me. He had been playing a game called DoubleDown Casino through Facebook. At the start, players used free virtual chips to gamble on roulette and blackjack. However, as the game progressed, players - including my constituent - had to purchase additional virtual chips with real cash.

The problem came when my constituent tried to cash out his winnings, and couldn't. Despite the fact he had paid real money to gamble, the game would not allow him to exchange the virtual chips he had won for hard currency. He was only able to cash out his winnings for more virtual chips.

At the time, I wrote to the Australian Media and Communications Authority, asking them to investigate the operator for breaches of the Interactive Gambling Act. My belief was that this was a clear example of a gambling service, and therefore prohibited under the Act.

However, ACMA responded that because the chips were virtual and gamblers were therefore not technically playing for real money, DoubleDown was not covered by the definition of 'gambling service' and therefore not subject to the provisions in the Act.

In short, there was nothing ACMA could do.

I also wrote to Minister Conroy, who responded that this matter would be considered as part of his Department's review of the Act. However, no changes were suggested or implemented on this matter once the review was concluded.

This is a clear loophole in relation to online gambling regulation. It is a simple matter of consumer protection, and the fact that this definition in the Act has failed to keep pace with technology, and it doesn't take into account the way many of these sites operate. The current legislation is 12 years old. Given the rapid take-up of online gambling and the expansion of the industry, it needs to be overhauled.

DoubleDown is not a one-off example. On a similar front, Zynga Poker is an online gambling game where players also use virtual items or credits to bet. However, Zynga goes one step further and sells 'gift cards;' in supermarkets and toy stores, which can be used to purchase items within the game. These cards can be purchased, using real money, by children as young as thirteen - or even younger, if that restriction is not enforced at the point of sale.

Zynga, like DoubleDown, does not allow these virtual credits to be cashed out.

Dr Charles Livingstone of Monash University is an expert in gambling behaviours, and has previously spoken out about his concerns with these kinds of online games and the access children have to them.

Earlier this year, speaking to the ABC he said:

" They are in a sense preparing kids to find gambling, particularly slot machine or poker machine gambling, an attractive form… It ' s hard for governments to act when these things emerge but I do think that it is an important priority that they act to ensure that young people do not have access to games which mimic existing gambling opportunities and which have the potential to create a whole new generation of gambling-dependent young folk. "

We have seen multiple examples of games played through social media or online gaming where buying virtual items with real cash is commonplace. These virtual items become a de facto currency for the game and take on an intrinsic value.

There have even been court cases overseas where people have been charged and penalised for the theft of virtual items.

We are lagging seriously behind in consumer protection measures on this front. These games are genuine gambling activities and involve the loss of real money; in fact, they cannot truly be called 'games' at all.

They need to be appropriately regulated and controlled so that consumers, including children, are protected.

This bill amends the definition of 'gambling service' to specify that 'items of value' include virtual tokens, credits, coins, objects or any similar thing that is purchased within, or as part of, or in relation to, the game.

This will ensure that sites such as DoubleDown and Zynga have to come clean about their activities, and that consumers will know whether they are participating in gambling activities or not.

It will also ensure that these sites are not available to children.

This measure is straightforward and necessary, and it will significantly improve consumer protection and online gambling regulation in Australia.

I seek leave to continue my remarks later.

Leave granted; debate adjourned.