Tough choices ahead for Australia-facing affiliates

The looming shutdown next month of the country’s casino and poker market will leave a big hole on the balance sheets of many affiliates. Will they risk staying put?

Joanne Christie

With Australia’s draconian new online gambling laws having last week received Royal Assent, the last legitimate casino and poker operators in the country are admitting defeat and preparing to shut up shop.

Everybody knew it was coming — indeed the Interactive Gambling Amendment Bill 2017 was introduced to Parliament last November — but the long delay before it passed the Australian Parliament on 9 August had given rise to hopes there could be a softening in the government’s stance, particularly on the poker front.

Unfortunately, that was not to be and with the Australian Communications and Media Authority (ACMA), the government body now responsible for enforcing the new Act, announcing fines of more than AU$5m (£3.06m/€3.37m) per day for unlicensed operators, the risk to operators of sticking it out is simply too high.

Even putting aside the whopping financial penalties, ACMA has made it clear that it is working with overseas regulators to ensure compliance – the implication being that anyone flouting the Australian law would be putting their foreign licence at risk as many regulators stipulate licensees must not operate where their activities are actually illegal rather than simply grey.

But while the legitimate operators are preparing to pull out, the grey and black market operators are doing the opposite.

US-facing Ignition Casino launched into the market in July and affiliates told iGB that Bodog, Rival and RTG are all preparing new offerings to cash in on the pullout of the licensed operators.

What next for affiliates?
This leaves affiliates with a tricky dilemma as Australia is a big market for them. The lucky country is the third most targeted region by affiliates, according to a recent iGaming Business survey. Of the 270 affiliates participating in our poll, 36% said they targeted Australia.

“It’s quite big for us, it’s big for a lot of affiliates,” says one UK affiliate, who wanted to remain anonymous. “Australia is about 30% of our business. We are trying to diversify into different territories and different markets but I don’t see us getting the sort of volume that we were getting in Australia so it is going to be tough.”

And while it’s not an option for operators to stay due to their overseas licence conditions, affiliates could switch from the licensed operators to the illegal sites, and indeed the affiliates we spoke to had already been approached to do so.

“I’ve already seen a tonne of sites prepped and ready for this from RTG and Rival,” says another UK-based operator with some Australian traffic, also speaking anonymously. “They are ready to go charging in once this happens. They have been approaching affiliates.”

But the risks are high, he adds. “The affiliates for your Bodogs and RTGs, they are happy to go to US markets and there are affiliates out there who still advertise American sites.

They would happily do this in the past because the American government doesn’t care about going after them, they go after the operators or the payment processing sites.

“This is where Australia is different — affiliates are going to be in the proper firing line over this. If they advertise Australian casinos they can get the same punishment an operator or payment provider can get.”

Unusually, the new Act imposes penalties on affiliates of unlicensed operators, with fines of almost AU$190,000 per day for advertising a prohibited or unlicensed site.

So far, the affiliates iGB has spoken with haven’t had any contact from the ACMA, but when we asked the regulator about its plan now the Act has passed and the official date it comes into force has been set at September 13, it was clear that although it didn’t yet have an enforcement plan in place specifically aimed at affiliates, it had been doing its homework.

“We have commissioned research into how Australian customers are accessing prohibited offshore gambling services. Through this research we are becoming aware of specific affiliate websites which drive Australian customers to offshore providers,” a spokesperson says.

First or last in the firing line?
Jamie Nettleton, a partner specialising in gaming law at Sydney law firm Addisons, says he thinks regulators are likely to focus on operators first, then Australia-based affiliates.

“The Australian affiliates are the ones who should really be shaking in their shoes. So far as the overseas affiliates are concerned I think there are two points with that. There may be an argument available that they are not going to fall foul of the law and that is going to need to be checked by reference to the law itself.

“There are still some arguments available for the affiliates who are offshore which won’t necessarily be available for those that are onshore. Then, I think they are more likely to try to look through the affiliates to the operators offshore.”

The first UK affiliate, however, says: “For me 100% it would be too much risk. The offshore operators have been targeting Australia and they make a lot of money.

“But the tricky thing is we don’t know if we can promote them because if the authorities can get to us then you are in a bit of trouble. For us and other affiliates we are preparing to pull everything.”

The second affiliate says the main consideration for affiliates is whether or not they ever need to travel to Australia, as among the ACMA’s new powers is the ability to place travel bans on directors or principals of offshore companies.

“If you’re not living in Australia and you’re never planning on travelling to Australia it is very unlikely they can do anything to you. They are not going to extradite. They might try and do IP blocks. Affiliates can probably get away with it but they can never travel to Australia,” he says.

But he adds that the risks involved in promoting offshore sites are not just of being caught by lawmakers, but also of getting into business with companies that are unreliable at paying affiliates.

“Bodog is reliable. Bodog has been around for a good long time and has a good reputation and is trustworthy in that sense. But there are lots who are not. Remember you are dealing in a market where people are willing to break the law quite openly and blatantly so how trustworthy can they be?”

Affiliates with a significant portion of their income coming from Australia are stuck between a rock and a hard place, with one choice being to take the financial hit and shut up shot Down Under and the other to risk the wrath of the Australian government.

Until September 12 it’s business as usual but it’s fair to assume that the following day a Google search for the words ‘Australia’ and ‘casino’ is going to produce some very different results than it does today.

Related articles: PokerStars to exit Australia by mid-September
Australia introduces new online gambling legislation 
Australia faces regulatory overhaul as Senate passes bill 
Affiliates count the cost of looming Australia shutdown (paywall)