Home > Casino & games > Affiliates count the cost of looming Australia shutdown

Affiliates count the cost of looming Australia shutdown

| By Joanne Christie | Reading Time: 5 minutes

Australia’s Parliament reopens today and the countdown to the passing of the country’s new anti-gambling legislation has well and truly started, with some operators already withdrawing from the market.

Casino operator Vera&John pulled out in late December, while 888poker followed suit a couple of weeks later. Many predict PokerStars will be next big operator to pull the plug Down Under.

Indeed, in a recent guidance announcement on January 20, Rafi Ashkenazi, chief executive of PokerStars' parent company Amaya, said the group was facing a number of headwinds this year, including the “potential cessation of our real-money online poker offering in Australia”.

Asked specifically about the company’s plans in Australia by iGaming Business, Eric Hollreiser, vice president of corporate communications for Amaya and PokerStars, said: “While Amaya currently offers poker to Australian customers through PokerStars under its Isle of Man global gaming licence, if proposed legislation passes into law players located in Australia would likely be blocked from playing on our sites.”

Knock-on effect for affiliates
For operators the shutdown is undoubtedly bad news, but it is also set to have a big impact on affiliates, with Australia the third most targeted region by affiliates, according to an exclusive survey carried out recently for iGaming Business. Of the 270 affiliates we surveyed, 36% said they targeted Australia.

Unusually, the legislation, which was introduced to Parliament in November, will allow Australian authorities to penalise third party suppliers such as affiliates, as well as offshore operators taking bets illegally from Australians.

“Affiliates are panicking because they are in the firing line for the first time ever,” a UK-based operator with some Australian traffic said, speaking about the market only on the condition of anonymity. “Regulators have always practically ignored them. But this time it looks like they are going to go after them.”

Thus far the Australian Communications and Media Authority (ACMA) has not said how it intends to pursue any action against affiliates

An ACMA spokesperson told iGaming Business it had “not at this stage engaged with any affiliates regarding the proposed amendments to the Interactive Gambling Act 2001 (the IGA)”, but that the planned changes “include proposed provisions which extend the new civil penalty provisions to any person who aids, abets, counsels or procures a contravention of the IGA. These civil penalties are expected to apply to affiliates, agents and the like if the IGA Bill becomes law in its current form”.

The spokesperson added, however, that the proposed bill would permit ACMA to issue formal warnings and infringement notices; apply to the Federal Court of Australia for injunctive relief; seek civil penalty orders in the Federal Court; and refer matters to the Australian Federal Police.

The UK-based operator said: “A lot of Australian affiliates actually live in Australia so they are going to have to change their plans pretty quick.” He also pointed out that these Australia-based affiliates will be pretty easy for officials to track down as many have used their home addresses to register their sites.

Even those who don’t live in Australia are worried enough to have already started changing tack – one UK affiliate who estimates Australia currently accounts for about 30% of his business said: “We are still promoting the brands but we are pulling back and diverting our attention to other areas.”

It is widely expected within the industry that once operators with European licences withdraw from the market unlicensed operators will jump in. “The unregulated guys are just going to go flying in – your Bodog, your RTG, your Rival — and they are going to clean up,” said the operator.

However, with affiliates also on the hook if they promote sites illegal in Australia, there may be too much risk in affiliates taking on their business if they do, as predicted, look to capitalise on the void. And that isn’t the only worry when it comes to these sites. “It is tricky as because they have no licence they could end up not paying you. So say, for example, the government shuts them down, you end up not getting paid,” said the affiliate.

The move won’t affect all affiliates with Australian interests, however, as sports betting and racing operators with local licences are largely unaffected by the legislation, apart from the fact that the bill currently being pushed through clarifies the fact that the ‘click-to-call’ function that some operators had been using to get around a ban on in-play betting is illegal.

Oddschecker’s head of international Andy Lulham said it is business as usual for the odds comparison site. “Oddschecker’s Australian site doesn’t feature gaming and is instead focused on racing and sports betting. We do not have any specific site changes planned around this new legislation.

“We only feature operators on site who are fully licensed in Australia and would therefore expect all partners to cooperate fully with any new legislation. We would also not feature any promotions that appear to be tailored to in-play betting (though we wouldn’t expect any of our partners to supply this sort of offer anyway).”

Nothing is set in stone… yet
Jamie Nettleton, a partner specialising in gaming law at Sydney law firm Addisons, said the Interactive Gambling Amendment Bill 2016 could be passed imminently.

“Parliament resumes on 7 February and sits for two weeks. It is quite possible that the bill will be debated further in Parliament (and pass) during this two week period.  However, this will very much depend on the parliamentary agenda during this period including the Government’s priorities.”

He added that only once the bill passes can we expect greater clarity on what action will be taken against operators that fail to comply with new legislation. “ACMA has not been public about the steps which it is taking. I would expect that, once the law is passed by Parliament (if this occurs), the ACMA website will be updated with materials indicating the manner in which the updated law will operate in practice and guidance will be given by ACMA as to the manner in which enforcement action may take place.”

The UK-based operator said he felt it was therefore premature to pull out before the new legislation becomes official, and that he and many others are adopting a “wait-and-see” approach.

“The law hasn’t actually been passed yet. What we are hearing from some lobbyists is that there is a sliver of hope that it may not be as bad as everyone thinks. Even if it does happen, there is at least 28 days once a law is passed before it actually becomes law because it has to go through a Royal Assent process.

“During that period they are expected to outline how they are going to go after people who are in breach. If they go the cease and desist route, I would guess there would be quite a few people who would sit there and wait.”

Rev share model compounds woes
The fact that many operators are taking a wait and see approach will be welcomed by affiliates as the UK affiliate said in the Australian market, igaming firms typically pay affiliates on a revenue share model, not cost per acquisition model. This effectively means affiliates will lose their share of all players they’ve signed up once an operator pulls out of the market.

“We’ve got about 40,000 players on revenue share and we will lose all of them. For all of the affiliates that are on revenue share this is going to have a big impact.” To make matters worse, he said early indications suggest that affiliates will not get their players back if down the line, the operators closing down now reopen their doors if the bill is watered down or they eventually become licensed in Australia.

“888 emailed affiliates on 9 January to advise it would be pulling out of the Australian market. We asked what they were doing with the old players. They said they would get their money back and be logged out. Normally when they license a new territory they merge the players. But in this case, they are not going to merge the players.

“If you’ve sent 1,000 players to 888poker or casino, when they get licensed those players, even though they are on a 888 database, they will not be moved to the new platform.” This means that even if 888 reopened in Australia and the same players signed up again to play on the site, the affiliate that sent them to 888 would not regain the share of revenue it had before 888 pulled out.

Although this is just one operator, the affiliate said there were worries in the affiliate industry that others would take a similar approach. In any case, if the bill passes in its current form, the distinction will not matter much – for all intents and purposes the online casino and games market will simply be closed indefinitely and affiliates will need to focus their attention elsewhere.

Subscribe to the iGaming newsletter