Australia Passes Gambling Amendments To Restrict Unlicensed Online Poker – PokerStars Exit Is Imminent

After passing its third reading in the Senate on March 21, the Interactive Gambling Amendment Bill 2016 now moves to a vote in the House of Representatives.

The lower house is expected to vote in favor of the bill. Within a few months it will likely become law.

The text of the bill and associated documents are available here.

888 has already exited Australia, PokerStars will be next

888 has already left the market in anticipation of the new law. But PokerStars will probably continue for a month or two until the law comes into force.

Following this week’s parliamentary debates, Amaya’s Vice President of Corporate Communications Eric Hollreiser effectively confirmed that a PokerStars exit is imminent:

“Amaya continuously monitors the regulatory environments of the countries in which it operates, and where a regulatory model exists always seek to comply with it. While Amaya currently offers poker to Australian customers through PokerStars under its Isle of Man global gaming license, if proposed legislation passes into law players located in Australia would likely be blocked from playing on our sites.”

Hollreiser added that PokerStars will keep customers informed of developments. He noted that player funds will remain secure and accessible for withdrawal.

Impact on Amaya revenues will be manageable

During Amaya’s conference call to investors for its Q3 2016 earnings, CFO Daniel Sebag gave advance notice that it was considering a PokerStars exit from the market:

“In Australia, we currently offer poker and are reviewing the applicability of proposed legislation to player versus player games of skill. At this time, it would appear likely that if the legislation passes, we would block players from Australia.”

PokerStars has shown that it will stay in a market until the last possible minute. When Portuguese lawmakers introduced new legislation in 2015, PokerStars was one of the last of the major operators to leave the market.

The hit to Amaya’s revenues is likely to be minor, since the Australian online poker market only accounts for around 2.5 percent of total revenues. Amaya doesn’t offer sports betting or online casino games in the market, only online poker.

Amendments strengthen regulatory powers against unlicensed operators

There is no licensing system for online poker in Australia, either for domestic or offshore operators.

The new law makes it an offense for any operator to offer online poker to Australian customers. It also provides additional enforcement powers to the Australian Communications and Media Authority (ACMA), which acts as the regulator.

The additional powers include:

• ISP blocking
• The imposition of civil penalties for offending operators
• Allowing the immigration department to disrupt the travel of directors of offending gambling companies
• Granting authority to the Australian Communications and Media Authority to disclose information on offending operators to other national regulatory bodies
• The creation of a blacklist of unlicensed operators

These deterrents are sufficient to make the main online poker operators comply with the new law.

They can take a longer term view that Australia is a lucrative market. And should the law change to allow online poker in the medium term, they will not jeopardize their chances of obtaining a license.

However, Australia has limited enforcement powers over online poker operators based in other countries.

The market left open to less scrupulous operators

The owners of the offshore sites which continue to target the US online poker market are unlikely to be deterred by concerns that they should not visit Australia for fear of being detained.

Australian players are concerned about the situation and are asking for support on social media sites. Players are receiving advice from their peers to switch their play to poker rooms such as Americas Cardroom (ACR) and SWCPoker, which operates a bitcoin-only online poker room.

One poster on the 2+2 forum asked why he would still be able to play at other sites. He received an illuminating answer:

“Q: How sure are you guys that ACR will still be playable? Wouldn’t the bill apply equally to all sites? Why would ACR be exempt from it?”

“A: They have no[t] cared about the law in any other region, why would Aus be different?”

Of course some law-abiding Australian online poker players will now give up their hobby. But the systemic impact of the restrictions is likely to be negative for consumer protection.

Players interested in online poker will rapidly find that their choice restricted to a few offshore operators. While one or two of these operators pay attention to issues such as player fund protection and problem gambling, many do not.

Australians who continue to play online poker are not breaking the law themselves. But they will now be channeled to offshore operators that are prepared to break the law. This is generally not a good outcome from legislation.

Online poker players may switch to more harmful forms of gambling

Online poker is one of the less risky gambling activities available in terms of gambling addiction. Top Australian gambling researcher Sally Gainsbury mentioned this in the evidence she gave to the government’s Review of the Interactive Gambling Act 2001 (IGA).

A type of slot machine known as a Pokie is the most popular form of gambling in Australia.

Play on slot machines was shown to be more addictive than online poker in many studies of problem gambling. If poker players switch from playing online to playing Pokie machines, then the new law will have increased risks, not reduced them.

All in all, Australia has taken a backwards step in approving the new legislation.

Much of the credit goes to Sen. Nick Xenophon, a lawyer who has waged a virtual vendetta against gambling.

While there is considerable support for a more progressive form of gambling legislation, Xenophon and his supporters have crushed it.

The prospects for any future legalization will probably have to wait until Xenophon’s influence disappears.