Online Sports Betting Review Needs to have Wide Terms of Reference

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2/09/2015


 2nd September 2015 - Financial Counselling Australia welcomes the Government’s announcement today of a review of online betting legislation.

If the review is to be meaningful, it needs to have wide Terms of Reference, looking at the activities of legal onshore operators, as well as offshore bookmakers.

Financial counsellors, who work in community organisations and assist people in financial difficulty, are seeing a rise in the number of clients who have online sports betting debts.

On 17th August, FCA released its report “Duds, Mugs and the A-List: The Impact of Uncontrolled Sports Betting”.  The report included case studies illustrating the harm from so-called “free bets” inducements, the ease at which people could lose thousands of dollars in just a few sports betting sessions and how access to credit was fuelling the problems.

We did not include the names of the companies involved in the report, but confirm that they were all operating legally in Australia.

“Some commentators seem to be saying, ‘it’s not the companies operating legally in Australia, it’s the illegal overseas companies’ but financial counsellors are seeing clients with accounts with all the big players in Australia – all the ones who advertise heavily on TV. There are enormous problems in the way this industry operates”, said Lauren Levin, Manager, Policy for FCA.

As a result of FCA’s report, a number of sports betting clients have contacted FCA in the past few weeks.  Here are a few examples:

Example 1 - A person who told us he had lost $30,000 in two months with an online sports betting company operating legally in Australia. He was then telephoned and offered $20,000 in credit without any assessment of whether he could afford this amount. He said:

 “your report scripted what happened to me. This guy phoned me and they had all my details already although I had never bet with them, they gave me a $1,000 inducement to try them out. I lost heavily and they offered me credit. Then when I won, they closed my account and told me it was because I was not a losing punter. I tried to complain to the NSW regulator but they said they have no jurisdiction because I placed the bets interstate”.

Example 2 - “Yesterday, a 20 year old man rang and told us how he lost $40,000 – all of his hard earned life savings. He saw the TV advertisements and thought he’d give it a go as they were offering free money to bet with. He won the first time, so he signed up to 15 other companies who also offered free bets to induce new gamblers. He was shocked at how quickly he was hooked and betting $10,000 at a time. He explained how hard it is to stop gambling as the companies keep on sending emails with offers even when he tried to take control and self-exclude.”

Example 3 - Another man whose financial counsellor contacted us is on a pathway to bankruptcy.  He has $40,000 gambling-related debts to his three Australian credit card providers plus a $10,000 debt to an Australian-based sports betting company. His marriage is under strain and his mental health is poor. The financial counsellor is desperately trying to save his house.

Access to credit provided by online sports betting companies, credit card providers, and payday lenders is partly fuelling the online betting boom. There are also inadequate mechanisms for limiting losses, and losses are huge.

Senator Nick Xenophon is currently drafting a bill, which includes a ban on credit, strong harm minimisation measures, and a ban on gambling advertisements during games.

The report, ‘Duds, Mugs and the A-List: The Impact of Uncontrolled Sports Betting’ is available at http://www.financialcounsellingaustralia.org.au

Media Contact:
       LAUREN LEVIN 0411 050 035 or lauren.levin@financialcounsellingaustralia.org.au

       Some financial counsellors will also be available for media comment.
 
BACKGROUND - PROBLEM GAMBLING FACTS

 
THE ONLINE SPORTS BETTING STORY SO FAR
Remember when bookie Tom Waterhouse became a familiar face on your TV? That moment also coincided with a 2008 High Court judgment in the Betfair case, that radically changed the gambling landscape. The court said that s 92 of Australia’s constitution guarantees that trade and commerce among the States shall be free. This ruling was the green light for betting companies to operate nationally, but set up in jurisdictions, such as the Northern Territory, where there were fewer and less effective regulations around gambling and gambling credit.
Between 2011 – 2013, there were a number of inquiries into the gambling industry; a review of the Interactive Gambling Act 2001, a Productivity Commission Inquiry Report into Gambling in 2010, and a Parliamentary Joint Select Committee on Gambling Reform 2010 – 2013. All these reports made recommendations for change, but the recommendations have not been acted upon.