SYDNEY, Australia - At one extreme is the United States, where Congress is considering a bill that would ban online gambling and punish both bettors and those who take their wagers. At the other: lightly taxed, lightly regulated locales such as the former British colony Antigua, a Caribbean island already home to a number of real-money Net gambling operations.
In the middle are countries like Australia, New Zealand, and Canada - all of which are looking at some form of legalization for online gaming.
In Australia, gambling has long been legal, with casinos in every Australian state and territory. In addition, nearly every sizable social club has at least a few electronic gaming machines, known affectionately at "pokies," says Brian Farrell, gambling operations and auditing manager with the Victorian Casinos and Gaming Authority in Melbourne.
"We've historically combated the crime associated with unlicensed gambling by legalizing it and providing well-regulated and controlled outlets for the same activity," he said. Internet gambling "would be just a continuance of that."
Against this backdrop, Victoria state Gaming Minister Roger Hallam plans to submit legislation next year aimed at legalizing, regulating, and taxing Net gambling. Hallam plans to base the legislation on a draft drawn up by Australia's states earlier this year.
Under the unique draft framework, a Net gambling operator would be responsible for collecting taxes on bettors' winnings. The plan calls for state pacts to share tax revenues between bettors' home states and the states that host gambling sites. That provision aims to prevent states from fighting each other to host online gambling sites, Farrell said.
"This is a very footloose industry; you can move your site around from place to place easily," Farrell said. "If there were tax incentives to do that, the end result would be no taxation, and that doesn't seem to be in the public interest."
It's unclear how or whether the tax system would work internationally, Farrell acknowledged. Nonetheless, he says he hopes the Victorian model will be a starting point for a global system for sharing taxes derived from cross-border gambling. The incentive for other nations to sign up, as he sees it, is simple: revenue.
Sue Schneider, editor of Rolling Good Times Online, a site devoted to monitoring gambling developments worldwide, agrees that Australia is taking the lead in addressing some complicated problems.
"We clearly find them to be the most proactive and progressive countries to tackle the topic of Internet gambling," she said. "If it's counterproductive to attempt to block this new form of entertainment, why not find ways to license, regulate, and tax it?" she asks.
For regulators like Farrell, legalizing and regulating online gambling also will help build trust among bettors by providing an alternative to underground sites that may not play fair.
"In a game of virtual roulette, for instance, you are trusting a gambling operation after they've got your money and know what you've bet on," Farrell said. "If you're prudent, you'd want some assurance the outcome is not made deliberately against you, and to be paid if you win."
A government stamp of approval might well provide that assurance. Outside Australia, other governments are studying legalization, too:
-In New Zealand, legalization legislation could be introduced into Parliament sometime next year, said John Markland, gaming and racing manager for the country's Internal Affairs Department.
-In Canada, a bill to legalize Net gambling passed two readings in Parliament earlier this year. The legislation died, though, when national elections were called for early June. Sponsors plan to try again next year.
Such efforts contrast with proceedings in the United States.
On 23 October, the Senate Judiciary Committee approved a bill by Arizona Republican Jon Kyl that would punish both online gambling services and the bettors who patronize them. Penalties for an operator could include up to four years jail and a $20,000 fine, while gamblers themselves could face up to six months jail and a $2,500 fine. Similar legislation is awaiting action in the House.
For Sydney attorney Jamie Nettleton, who serves as secretary of the International Bar Association's sports and gaming laws committees, Internet gambling is an inevitability. The only question is to what extent it will be regulated, and Australia has made a good start.
"It's all about competition to attract business, and by promoting operations in Australia as having integrity, the country will benefit from increased taxation."
"The above-board participants won't mind being taxed if it gives them a [credible government] seal of approval," he said.
