PARLIAMENT HOUSE, CANBERRA: I would like to raise an issue that I have recently had brought to my attention that I believe needs to be addressed by the Northern Territory parliament or, if it fails to do so, then by this parliament. The issue relates to online gambling and specifically the ability of online gambling companies to provide credit to their customers for the purposes of betting. Providing credit is prohibited in most jurisdictions in Australia, but it is not in the Northern Territory, where most internet gambling companies are licensed. It should be prohibited in the Northern Territory also, as their laws in this area affect all Australian residents.
The matter was brought to my attention through a tragic case involving a local constituent, who I will call ‘H’, and his mother, who I will refer to as ‘B’. They came to see me in early March to see if I could assist them. H is a self-professed problem gambler and, according to his doctor, suffers from depression, anxiety and obsessive compulsive disorder. Over the course of May 2010, H was offered $80,000 in credit by Sportsbet. According to H, he was initially given $5,000 in free bets and when he lost this he was given $10,000 in credit, which was followed by a further $30,000 and then a further $40,000. He was eventually unable to pay for the credit issued to him. Sportsbet consequently took H to the Magistrates Court to get an order for payment and then subsequently to the Federal Court to get a bankruptcy notice, which allows court appointed trustees to handle his affairs.
H’s and B’s family home is now in jeopardy, and this is when they came to see me. It is clear that H is in the wrong from a legal perspective. He clearly has a gambling problem and there is no dispute that he took the credit and gambled it away. There is no indication that Sportsbet has broken the law. This episode, however, should not have occurred and I am determined to see that cases like this do not happen again. Sportsbet was only able to provide credit to H due to regulations in the NT which are more lenient than in other jurisdictions in Australia.
All jurisdictions except the NT and ACT expressly prohibit extending credit to these customers or only allow it in exceptional circumstances. In Victoria, where H resides, it is prohibited.
Sportsbet is headquartered in Melbourne but licensed in the NT. By being licensed there, it is covered by the Northern Territory laws, despite its online presence being Australia wide. Further, online gambling companies do not fall under the National Credit Code.
This loophole in the Northern Territory law needs to be closed and I am determined to see this occur. Online gambling companies should be prohibited from extending credit to their customers or, at the very least, they should be covered by the National Credit Code. Online gambling companies providing credit is particularly egregious because they take no risk when they issue the credit. There is no cash on the line for the gambling companies, yet they can seize the gambler’s assets when the gambler loses the money. This creates a massive moral hazard that should be regulated against.
These companies are unlike any other credit provider. Providing credit for the express purpose of gambling is not something that we should be supporting in any case. As the Productivity Commission points out in its recent report, gambling with credit is primarily an activity undertaken by problem gamblers only. Lowrisk or moderate-risk gamblers very rarely use credit for gambling.
The Productivity Commission goes as far as saying:
using credit to gamble differentiates well between recreational and problem gambling.
Many in the gambling sector, including Clubs New South Wales, support a blanket prohibition on gambling companies providing credit, including internet gambling companies.
I have written to the Northern Territory Chief Minister and asked him to change the NT laws. His laws affect all Australians, including my constituents. If he fails to change the laws then I will be seeking to get the Australian parliament to address the matter.
There are a number of avenues that I will be considering:
(a) putting the matter to the Joint Select Committee on Gambling Reform for their consideration;
(b) seeking to incorporate internet gambling credit provision under the National Credit Code; or
(c) seeking to override the Northern Territory laws and prohibit online gambling companies providing credit to their customers.
In H’s case, I have asked Sportsbet to show compassion to H and his mother, B. They do not deserve to lose their house over this. Sportsbet would have suffered very little cash loss. I know that addressing this loophole in the law as I have outlined will not stop problem gambling altogether, but it would make a difference and provide one additional layer of protection.
CLICK HERE to watch a video version of Alan’s speech.