Imagining a Regulated Online Gambling Sector in Australia

There’s an old saying that Australians will bet on two flies crawling up a wall. Yes, it is something of a cliché, akin to the archetypal image of …

Sydney Australia

There’s an old saying that Australians will bet on two flies crawling up a wall. Yes, it is something of a cliché, akin to the archetypal image of the surfer dude or the outback survivalist with corks hanging from his hat, but like every cliché, it has its basis in fact.

From pokies to poker to horse racing, betting is an inherent component within many of Australia’s most popular pastimes. Conservative estimates suggest that Australians spend around $200 billion on gambling every year. When you consider that this is for a country whose population is less than that of the state of Texas, you start to appreciate what an immense market it represents and the opportunities that exist for businesses and investors.

The move online

Almost every product, service or pastime you can think of can now be procured online, from routine groceries to movies to life insurance. Gambling services have gone the same way, and across the globe, lawmakers have battled to keep up with the technology. The UK, a nation whose legal system is not traditionally associated with speed and innovation, led the way by introducing a legislative framework for online betting in 2005 and placing it in the safe hands of the UK Gambling Commission (UKGC).

Any online business selling gambling services to UK customers needs to be licensed by the UKGC, regardless of whether it is based domestically or offshore. The licensing rules are not onerous, and customers have become accustomed to checking that sites have that all-important logo and license number in place when assessing a new gambling platform.

Australia has seen the same shift towards online betting, and is ideally positioned to go down a similar road to the UK. Many might argue that it should have done so years ago. As things stand, laws prohibiting the provision of online betting services has simply driven gamblers to offshore providers. It puts consumers at greater risk and also means Australia is missing out on tax revenue that could run into the millions.

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Investment opportunities abound

There are numerous other case studies out there as well as the UK, especially across mainland Europe and in several US states. All demonstrate that as well as being beneficial in terms of consumer protection and the generation of tax revenue, a regulated online gambling market presents a world of opportunity for investors.

With a formal regulatory structure in place that has clear and transparent rules to govern areas such as financial controls, tax and consumer protection, investors would have the opportunity to either start their own online operation or invest in existing Australian online casinos that apply for a license. What’s more, they could do so with the confidence that this is an area that can thrive under even the most extraordinary social, economic and political circumstances.

Make no mistake, regulation is good news for investors. Yes, there are drawbacks in terms of complexity and a greater tax burden, but these are more than outweighed by the benefits. Clarity is vital from an investment perspective. The current unregulated market is occupied by shady operators who are here one day and gone the next, as these are the only types of business that will enter these stormy waters to meet customer demand.

In a regulated environment, professional operators can get themselves established and start building customer ties through appropriate communication and marketing. Nobody in their right mind will choose a questionable provider over a reputable one that is licensed in the local market and meets all the regulatory requirements. It means that slices of that $200 billion Australian gambling market are there for the taking just as soon as regulations are in place.

The shift to mobile

While the Australian regulatory system has stagnated over the past two decades, the market it is supposed to serve has experienced several seismic shifts. None have been bigger than the move to mobile. Industry experts say that around two thirds of wagers are placed using mobile devices and it has drastically changed the market, improving fan engagement and increasing loyalty.

The aspect that should have would-be investors sitting up and paying attention, however, is that the technology is continuing to evolve incredibly fast and new betting experiences are being developed all the time. We’ve mentioned already what a crowded market this is, so every platform is desperate to be able to offer something a little different to the rest.

The very latest trends tend to focus on the “instant gratification” side of gambling, and in-play betting on sports events is a prime example. It’s conceptually quite different to the traditional idea of placing a bet well in advance of, let’s say, a soccer game, then watching the action and then either collecting your winnings or throwing away your betting slip. Instead, fans can be poised over their phones, placing small wagers on everything from what time the next goal will be scored to who will take the next corner.

Good for everyone

The business world in general has found good news stories to be in short supply, and that applies particularly to the world of investments. The rise of regulated gambling markets across the world has presented a rare shaft of light in otherwise dark times.

Australian investors will doubtless be frustrated that they are unable to cash in as they would like. However, it is surely just a matter of time before online betting makes its way onto the statute books.

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