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A daily podcast delving into the biggest stories of the day throughout the sports betting and igaming sector.
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My view is what is the benefit of a license if you don't have the right rights to promote? Australia is home to one of the world's most famous betting markets. It's well known that Aussies love a flutter and there are plenty of global operators who are in the competitive markets across the nation's various states. But as we've seen across the globe, regulatory uncertainty is rife and there is pressure on gambling from outside forces, both in the media and in parliament. There are parliamentary reports and ongoing court cases that have the potential to upend the Aussie rulebook if implemented. What is the future of iGaming in Australia and how can operators and suppliers alike plan ahead when uncertainty reigns? Welcome back to iGaming Daily, by Optimove, the creator of positionless marketing and the number one player engagement solution for sports betting and iGaming operators. I'm Charlie Horner and today I'm joined by SBC News editor Ted Orme Clay. And to discuss this one, we needed a local expert, so we've... We've got Jamie Nettleton, partner Australian law firm Addison's and a member of the International Masters of Gaming Law Group of Lawyers on the show to dissect all of this with us. Jamie, thank you very much for joining us. How are you doing? Thanks for inviting me, Charlie. Nice to meet you all. Fantastic. And Ted, thanks for coming on as well. How are you? Yeah, I'm good. Thank you, Charlie. Yeah, Australia is a country I've never had the privilege to visit yet. I would very much like to, but it is a market that we've been following quite closely on SBC News, a lot of interest in regulatory and political discussions, so I'm interested in hearing some local expertise on the topic. Brilliant. Well, let's dive straight into this then because Australia is one of the most famous and one of the biggest markets in the world. But Jamie, I'll start with a... you could say this is a simplistic question, but a very complex question at the same time. Is the regulatory framework adequate to support such a famous and big market? Wow, how long have we got there, Charlie? That's a great question. Look, I've been working in the Australian market for online gambling for the last 30 years. And what's amazing about country like Australia, with a sure gambling market, is how unclear the future of the regulatory regime actually is. It's changed enormously over time and every year marks new changes. Fit for purpose is a very interesting question because it's a federal regime and in a federal regime, as you know from other markets that you're looking at, gives rise to all sorts of added complexities. No, absolutely it does. We see this in the US as well. But Ted, looking at your coverage on SBC News of this, what's the debate like for the introduction of a national regulator in Australia from your perspective? And then we'll go over to Jamie. Well, from what I've seen, obviously as an outside observer to the market covering it from a journalistic perspective, the creation of a national regulator is one of the is one of the big cause celebrities, I guess, of the gambling reform advocacy movement, if you want to call it that, in Australia. It was one of the key recommendations of the Murphy Report, I believe, from 2023, and it's one that we often see a lot of MPs, specifically back bench MPs mainly, who have an interest in this area. It's one of their big calls, you know what mean? It's one of the things they really want to see implemented. We'll get into this a more later, I guess, with that and some sort of crackdown and gambling advertising, I think. em One of the things that I've always kind of found interesting about Australia is that with the exception of, as Jamie mentioned, it has a federal framework which the UK doesn't have, I do think Australia and the UK have some very similar market dynamics. We do share some of the same companies, Flutter, Entei, and Bet365 and so on. And there's similar betting habits, I think, among consumers, similar preferences. And that, you know, the one thing that is different is the lack of a national regulator in Australia because of that federal framework. I do think to an extent maybe the introduction of a national regulator could be good for the market in the long run, kind of from a uh PR perspective, if anything, because it would em provide some more clarity, as Jamie has mentioned, and as a result of that would probably help the industry. Help the industry's image m in the midst of some political and public scrutiny it's receiving. That's my opinion as an outsider. I shouldn't obviously reiterate again. Jamie, how would you add to this one? Look, I couldn't agree with anyone more. The concept of having a national regulator, one regulator for any form of industry in a federal framework is extraordinarily attractive. So only attractive for everyone. It gives rise to essentially consistency, uniformity, and uh you'd to think some form of transparency in respect of how the actual business would be regulated. But that is unfortunately far too simplistic because this may be the case when you're talking about a completely new regime. where you're looking at all the other markets which you're looking at, some of which would be federal regime, bringing in place online gambling for the first time. National regulation makes a lot of sense because it's never been regulated previously. In Australia, we've got decades of history in respect to regulation of betting, particularly in respect of obviously racing, where it goes back into the early 1800s. And with that comes a lot of baggage in respect to the regulatory regimes in Australia. And so, much as there it seems attractive, the fact is you've also got the differences which exist in each state and territory regime, which will apply to the operators. uh They will make it very difficult to get the agreement that's required to have that uniformity. And I think one thing which may illustrate this better than anything else, we do have a national consumer protection framework setting out various harm minimization standards for consumers of betting. This has trumpeted a number of years as a result of one of our federal inquiries. And in fact, was part of an entree towards considering further liberalization in respect of online governing. It's had the opposite effect. We can come back to that Charlie. setting it up for you to ask further questions about it. But I think to go back to it, uh because the National Consumer Protection Program sets out the minimum standards to be met, but is allowing each state and territory to impose stricter standards on each state and territory. And in fact, there are stricter standards in each state and territory. which immediately illustrates the difficulty in having a national regulator, which is going to be satisfactory to all states and territories. Indeed, that complexity does often create confusion amongst operators or those within the market. You set me up, so I will tap the ball home. The Murphy Report, it was published in 2023. And we haven't had a response from the Australian government as of yet. Why is the progress around that report implementation being so slow? it a lack of political will? it a lack of... What is the stem of that issue? Look, I think there are multiple, Charlie, which is, again, it was a cross-party report where it was unanimous to... put in place all these recommendations, one of which was to a national regulator. But remember, uh national regulator is just one. Perhaps the one that's been the subject of the greatest focus is by having a prohibition in respect of advertising, oh in respect of online betting. And that's where all the focus has been. That was the core recommendation that was made. And it's the difficulties which have been uh realized as each day has passed in a thousand plus days since the report was released. And it is partly in respect of, well, my view is what is the benefit of a license if you don't have the right to promote? Now that's a lawyer's perspective and that's in respect of many of the people in New Origins. If we're not going to have the right to advertise, why do we really want to have a license? sufficient just to have the ability to promote services. The problem that comes from that, which has really become more evident over time, not in my view because it existed beforehand, but certainly it's certainly become much more widely known amongst the sports, the regulators, the politicians, is the size of the black market, which is growing. eh Now, that's not just in respect of betting, it's in respect of other forms of online gaming, but That's been realized as one of the difficulties in making it very attractive for offshore. So where's the real benefit? It was just providing services, paying uh what is probably one of the highest rates of tax in respect of the online uh gambling sector in Australia, and also a number of the highest restrictions, which did not exist for the black market. But... oh Coming back to it, why is it? It's because of the revenues which are generated from betting. The revenues from betting go to the sports, go in respect to the media, just illustrated now as times are coming a little more difficult, those revenues are very welcome for both to assist sports, for example, in both funding, as some would say also in respect of integrity missions, and in respect of media, well, you only need to see any form of live or delayed sports broadcast in Australia to see the extent to which there are there is sports-winning advertising taking place. They're part of the pressures which have come to the fore in the last thousand days. Yeah, it's certainly a long time to hear back, you whether in a positive or negative light, but Ted, this is very reminiscent of some of these global conversations that we're having about online gambling regulation at the moment, isn't it? It's pressure on advertising, it's tax, it's the battle against the black market and the offshore and losing revenue to offshore companies. You know, could you just add a bit of context from a global perspective of some of the conversations that we've had over the last few months? Yeah, I mean, you you've you've kind of hit the nail on the head already there, Charlie. These talking points, the ones that Jamie has just outlined are near enough identical to what we're seeing in a lot of the markets we cover over here in Europe, the UK. I'll start with that one. The conversation is more or less the same. There's been a lot of scrutiny on advertising and sponsorship over here. during the gambling act review, also was something that took quite a long time. know, politics is politics. No matter where you are, the wheels of government often take a long time to get in motion and reach their final destination, don't they? No matter what country you're in. During the gambling act review, there was a lot of discussion about sponsorship and marketing. There were a lot of calls for clampdowns on that. Throughout all of that though, and during the subsequent debate around taxation we saw last year, obviously the black market was... a really, really big argument of the industry against over regulation, against over taxation. The gambling commission has acknowledged the extent of the black market and are doing research into it. Across Europe as well, know, the Netherlands and Germany are two very big, two very prominent examples of countries that are battling against the black market and facing a lot of difficulties. Sweden, there's a lot of offshore casino there. You know in in Finland, we're seeing a complete regulatory overhaul of the monopoly system there Which is in response to the fact that offshore firms are targeting the country so much that they want to create a more competitive regulated market and Yes, it's no surprise that we're seeing the same sort of conversations in Australia where like Jamie said there are a lot of offshore firms a lot of unlicensed firms targeting the market as well and I think this is probably something where going back to our original conversation about a national regulator that would come in handy to have a central authority who's one of their key responsibilities would be to investigate and uh clamp down on the black market. Obviously we do see, I'm always seeing updates coming out from the Australia Communications and Media Authority, the ACMA, about, we've blocked X amount of sites this week, but it's never ending. An analogy we often hear from people in the industry is just like a Hydra, isn't it? As soon as a site is shut down, it just pops back up under another domain. So I think having a more modern framework under a national regulator in Australia would probably be a good step towards combating that more effectively. Yeah, and I think Ted, do, and to pick up on the ACMA, in one sense, it is a national regulator. um It has the enforcement powers. both in respect of local operators, in respect of where they're breaching various standards which they administer. For example, rules relating to advertising, in-play betting, oh and also in respect of um if there is any activity which seems to fall foul of the rules relating to bed stock, exactly the same as the UK. That's action which is taken by the ACMA. uh The black market absolutely is a target. the ACMA to try to shut it down. The difficulty is very much they've been numerous media releases about how successful they have been in closing various sites. And you may get to mostly onlinecasin23.com haven't been uh closed. The next data goes out to onlinecasin24.com. And it's clear that there are real challenges. But hasn't been, there probably hasn't been as much of a focus of the general population and certainly not in respect of the people looking after the consumers who suffering harm from gambling. They're not really focused as much about the black market. It's much more about the harm that's being suffered. Is that going to be better served by having a national regulator with having uh national standards? And that's That was the reason for the recommendation coming from the BIRT report. Well, Jamie, Ted, we'll take a short break and then we'll take a bit of a pivot and we'll talk about a bit of a court case that could have a wide impact on Australians' online gambling market. Welcome back to iGaming Daily. Today we're putting the Australian sector underneath the spotlight and we're joined by IMGL's Jamie Nettleton. Jamie, this is perhaps a complex case to sum up in just a short period of time, but... Perhaps you could give us an overview of what the case is between Ostrac and Entain, and then just add a little bit of context of what the impact might be on the wider Australian market. uh Unlike in the UK where you essentially have one regulator that's regulating both in respect of uh conducts, in respect of... uh integrity in respect to the gambling regulation compliance with rules relating to harm minimization and also in respect of uh anti-money laundering. Australia's got two uh separate regulators which deal with the issues. Oztrax, the Australian regulator, uh is essentially targeted with, uh targeted focusing in respect of uh money laundering and counter-terrorism uh financing. The laws have been in place for quite some time, but it's only in recent years that they've seemed to focus on the designated services. Initially it was on the banks, and secondly it was on gambling services. The case involving Entain is in fact the second wave of cases really involving gambling entities. The others were involving casinos. Crown Casino, which is probably the largest Australian casino chain, was essentially targeted by Oztrak for having failed to comply and was fined $450 million when it was signed off by a court. So that's a very significant sum for conduct which resulted in state inquiries in three jurisdictions as well as the Oztrak case. There's also an Oztrak case involving Sky City, Adelaide, and there's another one involving star, which is in Sydney, Brisbane. So I think it's necessary to see the Entain case in the color, but it's also the second wave or recent wave I should put. There's a historic one involving Typeco, obviously also another betting company that's very early on. But one with Entain is moving the focus, if you like, from the uh terrestrial. operators to the online operators. the intern case is the only one which has gone to court, uh with the others being subject to inquiries which have been publicized. uh And I'm also aware of that having focus in respect of the active investigations being conducted in respect of the online, lot of the online betting operators. There's also another case involving another terrestrial operator in Sydney called Mounties. What does this really mean? What it really means is that there's been certain behavior by the relevant operators, in this case uh Entain, which has been a subject of an investigation, considerable discussion taking place uh between Oztrak and Entain. Such proceedings have been brought in respect of the conduct. this is all the... really going through the courts. It's actually a fairly early stage at this stage at the moment, Charlie. We know that there are discussions taking place to try to find some form of resolution. And in fact, that resolution was founded, but has occurred in the context of Crown. Essentially, there have been discussions in respect of Sky City that resulted in resolution. It's exactly the same in the context of Ainsley to see if the matter can be resolved. where there's an agreed statement of facts as to the actual conduct which occurred, which was problematic in breaching the law, to see if there could be agreement reached in respect of what the appropriate sanctions are. And those sanctions are likely to be involved in payment of a significant fine, but also undertaking subordination and remediation plan to ensure that it's complied with to odd strikes satisfaction over a period of time. And this has been a consistent measures which is applied. NTEN is the only one that's court proceedings in connection with aging entries. So it'll be very interesting to see how that ends up. Charlie, but yeah, that's been watched as well as other cases in the Australian environment involving other litigation with the betting operators. So we're all watching these things. Remember, AUSTRAC is the regulator related to money laundering. It's probably slightly different from the focus in respect of the Murphy Report, which is more looking at the context in the practices which are being engaged with, whether or not they were sufficient to address the harm that's caused by gambling. So they're two different, completely separate paths, harm minimization, financial services. Now, some of that may be. problematic from harm, not having conducted appropriate KYC in respect of customers, not having checked their background appropriately, not conducting appropriate reporting in respect to transactions, reviewing in respect to transactions. All of these be fairly similar to a number of the obligations which you'll see in the UK in respect to the AML investigations being conducted by the Cabinet Commission. Excellent context there, Jamie. Thanks for giving us that overview. You mentioned enforcement and that these things tend to end up in some sort of financial settlement, but you also mentioned remediation and ensuring that things like this don't happen again. Ted, I'll just bring you in now. Do you think that this demonstrates that AML and consumer protections are becoming increasingly important talking points for Australian operators? And just as a bit of a follow-up to that, do you think that perhaps this is another pro for national regulation in terms of we're seeing the Oz track as a national regulator, albeit of a different sector, is being particularly effective? So on the first part of the conversation, I'm very glad to say yes, absolutely. I think... not just in Australia, but across various global markets, we're seeing AML and customer protection really getting pushed to the forefront, particularly by a lot of political conversations, a lot of public pressure, starting off in campaigns around gambling harm and the societal impact of gambling. As Jamie has mentioned, obviously there is an important distinction to make between. You've got these campaigns and people calling for reform based on gambling harm and these investigations which are more in the financial side of things and financial compliance and AML and so on. But they do all feed into each other I think. They all kind of feed into the wider public narrative of scrutiny on the industry and so on and wanting to ensure that it's remaining compliant with various regulations of various types. I think, I know in Australia, if we just look at the state level as well, some states have been, I think Victoria in recent years has been em upping the game a bit on AML and customer protection, particularly in the casino space. I remember writing a few things about that over the past couple of years. Quite a few updates from the Victoria gambling commission on that. And then on the latter half of the question, it will probably play quite heavily into the argument, yeah. I mean, You know, one could argue, look at OzTrak doing these extensive investigations here. We've got the ACMA, who as Jamie mentioned are kind of de facto the national regulator anyway, doing lots of investigations into the black market, investigations into non-compliance. I think you could probably make a good case of the creation of uh a new national regulator solely dedicated to the gambling industry and encouraging cross-collaboration between the three of these. looking into these various different topics would be beneficial to the industry. And again, kind of relating back to what I said earlier, helping its public image as well uh of greater regulatory clarity and transparency and so on. Jamie, what do you think? oh Imagine we're having this discussion about the US and I'm about to go to an IMG conference in the US next month and say same discussion. Let's bring into place a national regulator there. Now, what are we really talking about? We're talking about having consistent standards. And we're sort of talking about AML-CTO, national regulator, national regulator in the UK. We're talking about in respect of BetStop. BetStop's organized at the national level, national level in the UK. But it's actually talking at two things. It's talking about in respect of licensing. and making sure that there are consistent standards in respect to licensing and that you've got the ability to, uh if the licensing standards aren't complied with, that they're going to be applied uniformly by the regulator. Or does that mean the regulator, whether in the US or other federal jurisdictions, are not acting appropriately at a state or territory level? And that hasn't really been looked at completely in Australia. It's just much more hearsay than actuality. respect to it. Is it because licenses have been granted to the wrong people? That wasn't really touched on in the Murphy report. It was much more focusing on the fact that we really want to ensure that there's national standards in respect of the standards of harm that are going to be applied. And that's always going to be very difficult. That's suggesting there's something wrong currently. In the US, we can see it. That's almost like it was in Australia 10, 12 years ago. in the UK, standards have improved in respect to the UK. that's part of the most recent inquiry. So going back to that national regulator, really, you can ask what is the hole that they are filling and to make sure that their job is going to be performed in a better way as being performed to date or even currently. There's been a thousand days since the Murphy inquiry. Maybe standards have changed. Yeah, perhaps. Jamie, we're running out of time and we're really grateful for you being so generous with your time. But just to end things really, because em we like to tackle the big issues on iGaming Daily. we, know, often that does mean talking a bit in terms of doom and gloom on markets. But we can't forget that Australia is a huge market. It's one of the most famous markets in global gambling. So despite that regulatory uncertainty that we've been talking about today, Australia is still a promising market for many global operators and it stands out as an M &A target. So very briefly, why do think that is? Well, despite the fact that we have some of the highest rates of taxation would apply to the strictest standards that apply in respect to harm minimization, there are reasons. It's always a market where an efficient operator can still essentially have a viable business. The viable businesses essentially are going to be achieved, in my view, either by having the largest one with the efficiencies of scale, particularly to deal with compliance or the niche operators. And both of those still exist in Australia. And there is still opportunity for others to look at existing plans, whether it's through consolidation, through acquisition, and that will occur. And I think Charlie, in the last month, I can say this, we continue to have inquiries from overseas companies to essentially set up business in the Australian betting market. the operators are still coming in. um In respect of acquisitions, absolutely. You want to have global business, and this is sometimes forgotten. If you can do well in Australia, you can actually do well anywhere, because it's a really competitive, tough market. But there are opportunities to still make sure you've got a viable business. And you learn issues like harm minimization, you do it well. And that's what's being learned in the Australian market. I think that's the benefit of having those high standards that we've been talking about as well. yeah, Jamie, it's good to end on a positive note and a positive note. We do leave it on. So thank you ever so much for your time today, Jamie. I really appreciate it. And uh thanks to Ted as well for joining me here in the studio. And thanks to the audience for tuning into today's episode of iGaming Daily. Thanks to our sponsor, Optimo for supporting the show and join us again tomorrow to keep up to date with all the latest. Global Gambling News. you