Chapter 2Key issues and committee views
2.1All submitters either supported, or did not oppose, the prohibition on online wagering providers accepting credit or digital currency for gambling services. However, differing views were expressed about whether the bill should make lotteries exempt from this prohibition.
2.2The Australian Banking Association (ABA) cited survey evidence that showed an overwhelming majority of Australians support restrictions on the use of credit to pay for online gambling services, and consultation undertaken by the Department of Infrastructure, Transport, Regional Development, Communications and the Arts (DITRDCA) found that stakeholders broadly supported the exposure draft of the bill.
2.3Several submitters expressed support for the establishment of a consistent approach to gambling on credit for both in person and online gambling.
Harms caused by online gambling
2.4Online gambling poses a significant risk to the welfare of many Australians. According to DITRDCA, '30 per cent of Australian online gamblers (around 1million people) [are] at risk of, or experiencing, a degree of gambling harm'.
2.5Online wagering services produce significant harms in a short amount of time, the Australian Institute of Family Studies (AIFS) argued, due to their high level of accessibility, highly immersive interface, facilitation of uninterrupted gambling across multiple events/sports, and the enabling of simplified and high‑speed spending. According to the Alliance for Gambling Reform, 'Australians also lose the most money to online gambling per capita, more than 20% more than any other country in the world'.
2.6DITRDCA stated in its submission that 'around 15-20% of online wagering is currently done with credit cards'. The Department also referenced research by the Gambling Treatment and Research Clinic at the University of Sydney which found that 54 per cent of surveyed participants who reported using their credit card for online gambling met criteria for problem gambling, and a further 19percent met criteria for moderate risk gambling.
2.7As highlighted by the AIFS, 'credit card transactions for online gambling are treated as cash advances', and consequently 'the accumulated debt typically attracts very high interest rates'.
2.8The Uniting Church Synod of Victoria and Tasmania (Uniting Church) noted that debt problems have been found to be the 'the primary indicator of financial impairment in gambling disorder'. They also cited research which found that gambling-related debt problems are associated with poor psychosocial functioning, adverse family impacts, involvement in crime, the possibility of suicide, and alcohol related problems.
Support for the bill
2.9Submitters from both the gambling industry as well as the social advocacy and not‑for‑profit sector all supported the bill.
2.10The Alliance for Gambling Reform (AGR) welcomed the bill, and the Uniting Church urged the committee to 'recommend its prompt passage through the Parliament'.
2.11The AIFS noted that the bill would bring Australia into line with other countries where the use of credit cards for online gambling is banned, such as the UnitedKingdom, New Zealand, and Singapore. It also endorsed the review process proposed by the bill.
2.12Sportsbet highlighted the bill's consistent approach to the acceptance of credit across all gambling services:
The Bill's prohibition on payments directly from a credit card, or payments linked to a credit card in a digital or e-wallet, is the final element necessary to prevent access to credit and ensure customers can conduct their wagering activity with only their own clear funds.
2.13The ABA stated that they had 'long advocated for this important, yet simple change to be enshrined in law' so as to bring 'online gambling into line with gambling in-venue'.
2.14Other submitters, such as Tabcorp and the AIFS, also expressed support for the bill on the same basis, observing that it brings the restrictions on the acceptance of credit for online gambling into line with that for gambling in-venue.
2.15The Lottery Corporation urged the committee to support the passage of bill, with the exemption for lotteries intact.
Lotteries exemption
2.16The PJC inquiry found that lotteries 'lead to relatively lower harm than other forms of online gambling' and recommended that they be exempt from any ban on the acceptance of credit by online wagering providers. The bill reflects this recommendation, as lotteries are exempt from the new penalties it seeks to impose.
2.17It its submission, DITRDCA noted that consultation undertaken by the department in early 2023 corroborated the PJC inquiry's findings regarding the lower level of harm from lotteries.
2.18Operators of several charitable organisations submitted to the PJC inquiry that they sold lottery and raffle tickets to raise funds, and that over 90 per cent of these transactions were made on credit cards. Tabcorp estimated that around 30 per cent of not-for-profit lottery sales are now conducted online, and therefore are regulated under the IGA Act.
2.19The Lottery Corporation recognised the high participation of Australians in lotteries, with 'the equivalent of approximately 53% of the Australian adult population (9.7 million people) [having] purchased a lottery product in the past 12 months', but cited the 'relatively modest $11.75 average weekly spend per player' as evidence of lower risk.
2.20On behalf of their members, the Australian Lottery and Newsagents Association (ALNA) submitted that any reforms that restrict online sales of lottery products on credit will impact newsagent revenues, as they receive shared commission revenue from customers who purchase both in-store and online, and also sell syndicate lottery shares online. Expanding on their view of the place of lotteries in society, the ALNA stated:
It is well established in multiple reviews both in Australia and overseas that the type of lottery products our members sell, which are relatively infrequent compared with other gambling models, are low harm, and are a net community benefit. They provide significant state taxes and community grants in the case of Western Australia with approximately 25% of sales being contributed, they offer integrity for consumers and a guaranteed prize pool with approximately 60% of sales going back to customers, and they are well managed.
2.21DITRDCA and the ABA also expressed support for ensuring that the bill does not negatively impact charitable lotteries and newsagents.
2.22Other submitters expressed the opposite view. The AGR argued that the harms that can result from online lottery and keno products have been understated by some stakeholders:
The Alliance is becoming increasingly concerned about Lottery and Keno products as they move online. Many of the products are also exempt from BetStop, the National Self Exclusion Register, including the Lott and Keno. This means people that have signed up to the Register can still gamble online on these products and receive promotions and marketing from the companies encouraging them to gamble. On the Lott app you can easily spend $10,000 on tickets immediately, and Keno is a maximum of $1,000 every 3 minutes.
2.23While recognizing that some lottery providers support charitable causes, the AGR insists that 'the principle that people should not be able to gamble with money they do not have should take precedent.'
2.24AGR and Financial Counselling Australia (FCA) suggested that the bill could have the unintended consequence of increasing gambling harms from lotteries, as they would be the only gambling product purchasable on credit.As put by FCA:
Carveouts are a mistake and lead to market distortions. Put simply, money flows to whatever segment gets a carveout.
2.25FCA argued that newsagents were being used by lottery companies as an 'emotive tool' to avoid being subject to the prohibition on the acceptance of credit, arguing that the lotteries carveout is equivalent to giving fast food franchisees an exemption from the application of food safety laws.
2.26In response to the argument that lotteries are low-harm gambling services, AGR stated that 'almost one-third of lotteries only gamblers were at some level of gambling related risk.'
2.27According to FCA, 'gambling financial counsellors reported substantial harm in their client casework'. Of these counsellors, '56 per cent were 'very concerned' and 33 per cent ‘a little concerned’’ about lottery products.
2.28The AIFS suggested that the government continuously monitor for possible adverse consequences of exempting lotteries from the penalties the bill seeks to establish.
Keno services
2.29Keno services are distinct from lotteries, as they involve draws every three minutes, with multiple games which can be played simultaneously. The PJC recommendations, which the bill seeks to implement, explicitly excluded keno services from its definition of lotteries. However, keno services are lotteries for the purposes of the IGA Act, and therefore the bill would not ban credit or digital payments on keno-type lotteries.
2.30FCA considered that there was no justification for treating online keno as having a lower risk profile than other online gambling services:
The new platform KenoGO, with its 3 minute draws, intensive betting for extended periods, continuous and automated gambling and heavy marketing is the final nail in the coffin for any lingering perception of safe lotteries.
2.31Elaborating on the harms that it argues KenoGO could pose to the public, FCA emphasised the amount of money that could be spent by a customer in a short period of time:
You can prepay 50 games, and play multiple cards simultaneously, and multiple different games simultaneously. You can easily spend $2000 or even $10,000 in a single spend, or $50,000 if you load your cart.
2.32Noting their fast rate and high spending limit, Sportsbet argued that online keno products, where they are offered, should be covered by the prohibition on the acceptance of credit on the basis that 'consumer protection policy reforms are most effective if applied consistently across all forms of gambling'.
Blocking use of credit cards
2.33The EM notes that while the bill does not prescribe a method for blocking credit cards and other forms of credit or digital currency, or who will be responsible for implementing these blocks, it is expected that Bank Identification Numbers (BINs) will be used to identify banned payment methods.
2.34The ABA suggested that BINs could be used to identify and whitelist debit cards, blocking all credit and pre-paid products by default. They also submitted that the responsibility for implementing these blocks should sit with online wagering service providers, as the responsible merchants.
2.35Responsible Wagering Australia (RWA) set out three different options for using BINs to block acceptance of credit:
(1)The creation of a regularly updated and audited central repository of all BIN numbers to facilitate the blocking of credit cards by online wagering service providers, either by a government regulator, or a financial services provider.
(2)The sourcing of BIN lists from third parties by online wagering service providers.
(3)Online wagering service providers requesting that their payment gateway operator and merchant facilities implement a block on BINs for credit cards.
2.36The RWA and Sportsbet expressed a preference for the first of these options, to ensure that there is a single reliable list of BINs available to online wagering providers. Both submitters emphasised that domestic and international credit cards should be included in any BIN lists used, so that international cards cannot be used to circumvent the block.
2.37However, RWA and Sportsbet also argued that blocking acceptance of credit via BIN lists is flawed as a long-term solution, as lists have to be updated on a regular basis. RWA also noted that it is unclear if cards issued by cryptocurrency websites, which allow customers to access their cryptocurrency balance, would be captured by BIN lists.
2.38As an alternative approach, the RWA and Sportsbet endorsed the creation of a new Interactive Gambling Merchant Category Code (MCC) which would allow card issuing banks and/or card networks to identify and block transactions with online wagering service providers, while excluding lotteries. Sportsbet argued that this approach would have the additional benefit of preventing the use of credit to purchase illegal offshore wagering services, as MCCs are listed in an international standard.
2.39The PJC inquiry noted that the current MCC for gambling services (MCC7995) includes lotteries, and that MCCs are set globally rather than by the Australian Government. However, it noted that the 'justification in the application for a new MCC can be based on a national requirement in laws or regulations'.
2.40In its submission to the PJC inquiry, Mastercard indicated that only the bank which issued the card would have the oversight of cardholder transactions necessary to implement a block on an online wagering service MCC. Visa indicated that while they have the capacity and authority to block transactions, this role is primarily undertaken by the issuing bank.
Pre-paid products
2.41As set out in Chapter 1, the bill does not explicitly set out whether pre-paid products such as travel and entertainment cards, or Buy Now Pay Later (BNPL) services, are proscribed methods of payment.
2.42FCA stated that on their reading of the bill, online wagering service providers would be allowed to accept payment via vouchers and pre-paid cards. They cited the example of the United Kingdom, where following a credit card ban similar to that proposed by the bill, vouchers valued at up to $1000 became available on the market. These vouchers, such as the Flexipin and Paysafe, are already accepted by online wagering providers such as Bet365.
2.43Returning to the Australian context, FCA pointed to the availability of Neosurf vouchers in remote communities, where they are already being used to purchase online gambling services.
Compliance and enforcement
2.44Sportsbet raised the question of the liability of wagering service providers given that BIN lists, which must be sourced externally, are sometimes unreliable. It recommended that an entity, such as the Australian Communications and Media Authority (ACMA), be made responsible for monitoring the accuracy of BIN information used to block proscribed payment methods. Under this proposal, an audit would be undertaken one month after the new penalty provisions commenced to identify issues of compliance 'for resolution rather than prosecution'. Audits would then take place on at least a six-monthly basis.
2.45Expanding on the capacity of wagering service providers to avoid contravening the new prohibitions the bill seeks to establish, Sportsbet stated that online wagering service providers will rely on the companies that provide digital wallets to identify and block the credit funding source.
2.46AIFS and the Uniting Church expressed concern that the penalties imposed by the new criminal offence and civil penalty may be insufficient to deter gambling service providers with deep pockets. The Alliance for Gambling Reform added that fines should be regularly reviewed to ensure that they are having the intended deterrent effect.
2.47The Uniting Church also recommended that each separate transaction constitute a separate offence, and that it be made an offence for online wagering service providers to not put due diligence processes in place.
Committee view
2.48The committee recognises that online gambling causes significant harm to many Australians. The measures put forward by this bill will implement important changes to the Interactive Gambling Act 2001 to mitigate some of these harms.
2.49In implementing the recommendations of the PJC inquiry, the bill seeks to ensure that Australians who choose to gamble cannot do so on credit. As submitted by the Uniting Church, gambling on debt is associated with negative outcomes for problem gamblers and their families.
2.50The committee notes that all submitters were in support of the bill, agreeing that Australians should not be gambling on debt. Multiple stakeholders also supported the bill's extension of existing bans on in-venue gambling services providers to online wagering, putting in place a consistent approach.
2.51Preventing online gambling service providers from accepting credit is a reform that has significant buy‑in from the Australian public, as shown by research undertaken by DITRDCA and the ABA.
2.52It is prudent that the operation of the bill's provisions be subject to review shortly after commencement, and allow for prompt Ministerial interventions, should they be deemed necessary.
2.53The committee is of the view that the mandated review of the new provisions provides both a safeguard and increased transparency around the efficacy and impact of the credit ban. The committee believes the review will assist in addressing any concerns relating to implementation of the ban which have been identified by submitters.
2.54Submitters have put forward a number of methods that could be used by online wagering service providers or credit card platforms/issuers to block credit cards, including via BIN lists and MCCs. The committee supports further discussion regarding which methods will be used to ensure compliance with the new provisions and who will be responsible for implementation.
2.55The committee believes that the penalties established by the bill are appropriate to deter contraventions by providers of online wagering services.
2.56In light of the support for the bill and the importance of gambling harm reduction, the committee recommends the Senate pass the bill.
2.57The committee recommends the Interactive Gambling Amendment (Credit and Other Measures) Bill 2023 be passed.
Keno-type lotteries
2.58It was made clear during the inquiry that keno-type lotteries would not be captured by the ban on credit or digital payments, as keno services are considered lotteries for the purposes of the IGA Act. The advice from DITRDCA indicated the harms associated with lotteries are considered sufficiently low to justify their exemption from the prohibition on gambling service providers accepting payment on credit.
2.59Submitters also pointed out that lotteries play a vital role for charities, community groups and other similar causes, which rely on the sale of lottery tickets for fundraising—with most of these transactions taking place via credit card. The committee appreciates the role lotteries have in fundraising efforts and would not wish to put that fundraising in jeopardy.
2.60Notwithstanding the advice from DITRDCA, and the community function of lotteries, the committee acknowledges that keno-type services can still cause harm to some individuals. However, amendments to the current bill and to the definitions of various lotteries under the IGA Act to address such harms, could result in unintended consequences without proper consideration.
2.61The committee therefore recommends that over the next 12 months the Minister for Communications complete a review into the application of the IGA Act and the harm which could be mitigated, should a credit and digital payment ban be introduced for keno-type lotteries in the future. The speed and frequency with which these types of services can operate also lends itself to such a review.
2.62In completing the review, the committee encourages the Minister to examine the impact of this bill's amendments, how they have assisted in gambling harm reduction, and how a similar approach might be applied to keno-type lotteries without any unintended adverse outcomes.
2.63Further, the consideration and passage of the bill should not be impeded by the Minister's review. Noting the importance of this bill in reducing gambling harm, its progression through the Parliament should be considered a priority, with the Ministerial review taking place concurrently. Consideration of the best way to regulate keno-type services and lotteries under the IGA Act can take place while continuing implementation of harm reduction policies which are already in progress.
2.64The committee recommends that the Minister for Communications undertake a review over the next 12 months into the regulation of keno-type lotteries under the Interactive Gambling Act 2001. The review should consider the potential for how credit and digital payment bans and other harm reduction policies may be applied to keno-type lotteries.
Senator Karen Grogan
Chair