Australian Online Sportsbooks Prove Too Strong for the Government

Posted on: May 3, 2022, 05:53h. 

Last updated on: May 4, 2022, 01:56h.

Erik Gibbs Read More
Expertise: Asia Pacific Gaming, Gaming Business, Global Gaming.

Online sportsbooks in Australia wield a great deal of power, even over the government. They are capable of swaying government decisions to their own benefit in order to control how much they pay in taxes.

Australia flag
The Australian flag has invited plenty of gambling operations. Some, however, have been able to use their influence to sway government action, according to claims revealed by a media outlet. (Image: Shutterstock)

Online sportsbooks in Australia have the ability to control the government, forcing it to bend to its will. This is the premise of a revealing report by ABC News. It shows that the sportsbooks forced the government of the Northern Territory (NT) to change its mind as it sought to introduce higher operator tax rates and other conditions for licensing.

The information surfaced following the media outlet’s Freedom of Information request to the government. At least three sportsbooks intervened and stopped the government in its tracks as NT was reviewing its Racing and Betting Act two years ago,

No New Taxes

NT is home to the majority of Australia’s online sportsbooks, which means they have the power of collectivity. In return, the state gets a boost in jobs, which benefits the local economy. That trade-off comes at a cost, though, that favors the sportsbooks.

ABC News discovered that, following an industry review from 2018, NT began considering changes in 2020. Among these were recommendations that the “existing fees and taxes” would increase substantially. In addition, new taxes would arrive to boost the local government. There was also a suggestion that operators maintain 20% of their staff costs in NT.

The recommendations didn’t go over well with the operators, whose names were redacted in the Freedom of Information request. They fought back, threatening to move to another state or leave Australia completely. Australia is home to over 85 online sportsbooks, so the impact of their departure would be real.

Neither was a welcome option, and the NT government relented. This is because sportsbooks supply AU$1 billion (US$711.2 million) in tax revenue to Australia and around AU$10 million (US$7.11 million) to NT. The economic losses as a result of the departure of a strong workforce were another mitigating factor.

Review Kept Under Wraps

The industry review from 2018, which law firm HWL Ebsworth conducted, is part of a larger, ongoing mission. The subsequent consultation by the government and the sportsbooks is part of that process as well.

The NT government and the Minister for Racing, Gaming and Licensing, Natasha Fyles, continue to work on updating the state’s sports betting and online gaming frameworks. Over the past few months, they have been consulting on the updated measures. However, most of the work is not made public.

That’s not the right way to go about making changes to an important industry, according to gambling researcher Matthew Stevens. He, almost by accident, came across the consultation but believes the process should have invited wider participation.

Stevens, a member of Menzies School of Health Research, pointed out that virtually all of the input was from industry players. However, it should have included social services experts, gamblers, academic scholars, and others.

It’s possible the government decided to intentionally avoid the public eye in order to avoid too much scrutiny. This past February, ABC News uncovered similar data that showed how the online sports betting industry influenced decisions on sports integrity. That also involved a 2018 independent review. But the industry forced decision-makers to tone down the measures.

Online Gambling Grows in Australia

Australia’s online gambling industry continues to grow rapidly, and lawmakers apparently have a hard time keeping up. Since 2015, there has been a steady development of the online space, but not of its corresponding regulations.

In 2019, the industry was worth around AU$225 billion (US$159.72 billion) and grew by 78% over the next two years. In terms of overall gambling productivity, Western Australia ranks among the top, as do New South Wales and Victoria.

NT is up there as well. It heads the list for the highest online gambling expenditure of all Australian states, according to Statista.