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Thursday, 17 August 2000
Page: 16555


Senator ELLISON (Special Minister of State) (9:39 AM) —I table the explanatory memorandum and move:

That this bill be now read a second time.

I seek leave to have the second reading speech incorporated in Hansard.

Leave granted

The speech read as follows—

The Interactive Gambling (Moratorium) Bill 2000 (the bill) aims to halt the further expansion of the interactive gambling industry in Australia for a period of 12-months from 19 May 2000 while the Government investigates the feasibility and consequences of banning interactive gambling.

The Government is concerned that if it does not take immediate steps to constrain the growth of this industry, the Australian interactive gambling industry could continue to expand while the Government conducts its investigation. This would make it more difficult for the Government to implement any outcomes that may arise out of the investigation.

A moratorium also puts the interactive gambling industry on notice that its future is uncertain and that it should hold-off introducing new services until its future is resolved.

Why the Government is concerned

The Government is concerned that new interactive gambling technology could provide unprecedented access to gambling. Interactive technology brings gambling into the home in a way not previously possible. By its very ubiquity, interactive technology presents a serious risk to problem gamblers, their families and the wider community.

The Government is particularly concerned that the new level of accessibility combined with the alluring interactive nature of these services could attract new and younger gamblers resulting in a new cohort of problem gamblers. The Government is mindful of recent experiences where new technology, such as poker machines, attracted new gamblers and resulted in new problem gambling.

Because this industry is still in its infancy, it is practical for the Commonwealth to take action now. In another year or two the industry may have grown to be too big and established for any government to take action. This is exactly the situation our State and Territory colleagues have found themselves in with poker machines. I am sure there are a lot of State and Territory lawmakers who regret earlier decisions to allow these machines to proliferate so dramatically in clubs and pubs. However, the inertia and the revenue generated by a large and established industry is overwhelming. The Commonwealth is determined not to repeat this mistake with interactive gambling.

The Commonwealth is not trying to curtail Australians' access to gambling. We are, after all, a nation of gamblers. Over 80% of us regularly gamble and for the great majority of it is a harmless and fun activity. However, for a few hundred thousand Australians gambling is serious problem - not just for the problem gamblers but also their families, friends, and wider community. The Government considers problem gambling to be a significant social issue given that as many as one in ten Australians is affected in some way by problem gambling. The Commonwealth is determined not to allow this new mode of gambling to exacerbate problem gambling in this country.

How the moratorium works

The bill makes it an offence to provide an interactive gambling service in Australia. However, because this is a moratorium and not a ban, the bill exempts services where it is proven that the service:

is the same or substantially the same service as a pre-19 May 2000 service;

uses the same name as the pre-19 May 2000 service; and

had at least one genuine paying customer prior to 19 May 2000.

The burden of proving these elements will fall to the defendant. The Government considers that the defendant is uniquely placed to access the information necessary to prove that it is, on the balance of probabilities, exempt. It would be extremely difficult, if not impossible, for the prosecution to negate such a defence.

This exemption prevents new entrants from establishing services during the period of the moratorium and yet allows existing services to continue to provide the same or substantially the same service as they did prior to the moratorium. However, this exemption also constrains existing providers from introducing new services to take advantage of their privileged market position.

The bill also specifically exempts phone betting and services relating to certain futures and options contracts.

Phone betting has been around since the fifties and it would be wrong to conflate this form of interactive gambling with the more modern, high-tech interactive gambling that we are concerned about.

While online share trading, online insurance policy applications and other risk-bearing financial transactions are clearly not gambling, there are some futures and options contracts that share some of the characteristics of gambling. The Corporations Law already recognises this and specifically exempts these contracts from being subject to gambling laws. In order to remain consistent with the Corporations Law, and to remove doubt about the type of services this moratorium is intended to affect, the Government decided to make it clear that these futures and options contracts were not subject to the moratorium.

The bill also provides the Minister with a power to determine when a service is not an interactive gambling service for the purposes of this moratorium. I envisage this as a reserve power that enables the Government to ensure that this law only applies to those services it intended to make subject to the moratorium. These determinations will be subject to disallowance by the Parliament.

Coverage

The bill covers providers of gambling services linked to Australia that is making a business out of providing gambling via a specified communications service. It is important to note that the linkage to Australia not only covers an interactive gambling service provider carrying on its business within Australia, it also covers those enterprises where the central management and control of the business is located within Australia but the gambling service is actually hosted in an offshore jurisdiction. This extraterritorial application of the moratorium is important if we are to prevent Australian interactive gambling providers from circumventing the moratorium by setting up a server in an offshore location.

The bill focuses on businesses providing gambling because the Government does not intend the moratorium to affect `not-for-profit'-type fundraising activities, private friendly bets or other non-commercial betting such as office tipping pools.

Penalties and Enforcement

The bill proposes significant maximum penalties for any breach of the moratorium. The maximum penalty for a breach is set at 2,000 penalty points for every day of the offence. This currently equates to a maximum daily penalty of $220,000 for individuals and $1.1 million for corporations. Given any breach of the moratorium is a criminal matter, the Australian Federal Police will enforce the moratorium.

While the moratorium runs from 19 May 2000 to midnight on 18 May 2001, the law commences the day after Royal Assent. Enforcement and penalties will accordingly apply prospectively from commencement. The Government considers this the most reasonable option given the significant ramifications of a successful prosecution.

The moratorium is a short-term measure. The Government intends this law to last for only 12 months while it investigates the feasibility and consequences of banning interactive gambling. To make this absolutely clear, the bill contains a sunset clause stating that the moratorium expires at midnight on 18 May 2001.

Internet service providers (ISPs) will not be liable for the offence of providing an interactive gambling service if they merely host the site and do not provide the content of the interactive gambling service. The moratorium will also not affect any of the ancillary services associated with an interactive gambling service such as software developers, testers, accountant or marketing staff unless they themselves are providing the gambling service.

The States and Territories rejection in mid-May of a voluntary moratorium has left the Commonwealth with no other option but to legislate a moratorium to pause the growth of this industry while it undertakes its investigation into banning.

Over the past year, the Commonwealth has sought to work constructively with States and Territories to address issues of problem gambling. Dealing with interactive gambling was one of the first issues taken by the Commonwealth to the new Ministerial Council on Gambling. The out-of-hand rejection of the Commonwealth's position by most of the State and Territory Ministers present at that Council signalled that those governments were more interested in protecting the potential revenue stream generated by this industry than addressing the harm associated with this new mode of gambling.

Conclusion

The Commonwealth is going to continue to investigate the feasibility and consequences of banning interactive gambling regardless of whether or not a short-term moratorium is in place. However, without this moratorium, the interactive gambling industry will continue to establish itself in Australia. Such a situation can only complicate the implementation of any recommendations arising out of the Commonwealth's investigation and leave the industry in an uncertain position.

Ordered that further consideration of this bill be adjourned to the first day of the 2000 summer sittings, in accordance with standing order 111.