Poker’s Black Friday: Coming to Australia?

There’s good news and bad news. The bad news is that Australia is on the cusp of banning online poker completely. The good news is there is a catch.

 

As every poker player knows, ‘Black Friday’ was the day in April 2011 when online poker was shut-down in the USA. The Department of Justice decided it would spend time and resources stopping US citizens playing a game of skill, and thus the livelihood of tens of thousands of players was crippled. The advertising revenue that flowed from poker sites into televisions shows and poker media – which in turn raised the profile of the game and helped to popularise it – was shut down. Poker shows were cancelled and star players were no longer sponsored.

This had consequences for Australian players. The sites suddenly became tougher with all the American players gone, the tournament prize pools smaller. Poker companies started to get nervous about Australia’s laws, which currently prohibit them from providing players with online poker under the Interactive Gaming Act (2001). This meant the poker sites withdrew advertising dollars from the Australian media, dramatically shrinking sources of revenue.

In the two years since sites were shut down in the US, Australian players have been in limbo; waiting to see whether the Australian government will let its own citizens play a game of skill, or will go the way of the USA.

The Bad News

Well, after years of reviews, reports and recommendations from parliamentary committees, the Department of Broadband, Communications and the Digital Economy has released its final recommendations on reforming the IGA. It also looks like the Government is willing to act on this report.

Of the 32 recommendations, several explore ways that the IGA can been effectively enforced. At the moment, it isn’t. At the moment, casino games and poker are offered to Australian consumers by overseas companies, and we play these games. While offering casino and poker games to Australians is prohibited by the IGA, it has never been actively enforced. In short, the position of the authorities up until this point is that it is too difficult to regulate the internet. For Aussies, it is perfectly legal for us to play online poker, and we have done so without much thought.

Unfortunately, the report draws direct lessons from ‘Black Friday’ in the US. It looks at the methods American authorities used to punish online poker companies, and advises what can be replicated here.

On the one hand, the report argues that blocking financial transactions between players and poker sites – as happens in the US – is too difficult to enforce in Australia.

On the other hand, it advises contacting directors of gambling companies resident in Australian and instructing them of their obligations under the law. If they fail to heed this, heavy civil penalties may follow. It also calls for take-down notices to be sent to operators and for the Federal Court to issue injunctions against websites failing to comply.

This means that the most credible poker sites – like PokerStars – would be driven out of Australia. The also means the less scrupulous sites operating from unregulated foreign jurisdictions would continue to offer services to Australians. We’d get the worst of both worlds.

The Catch

First, it’s not happening yet. The steps proposed by the report before cracking down on online sites will take many months. In particular, there is a proposal to develop a national ‘harm minimisation’ code with State governments for online gaming. This will take at least a year.

Second, tournament poker gets an exemption. In short, if poker sites implement the harm minimisation requirements proposed under in the report, tournament poker will become legal in Australia (the report rightly differentiaties poker from other casino games). The sites can then operate here under the full protection of the law, and Australians can have absolute certainty that their money is safe.

But this is tournament poker only, and for a period of five years. This five year period will supposedly enable Australian gambling experts to ‘test’ the negative effects of tournament poker. This trial would then be used to assess whether all online gaming can be legalised.

Stupid, really stupid. A year would be more than enough time to gather the relevant data. Plus, trying to use a trial of poker to test whether other forms of casino gambling should be allowed – like roulette – is beyond ridiculous. It’s like using paintball to test whether soldiers deployed to Iraq will experience negative post-combat effects.

Furthermore, cash games will not be available. Sure, it is easier to lose a bigger chunk of money in cash games. But if we are talking about problem gambling, cash games have far less associated problems compared to poker machines, sports betting and the horses. In fact, the evidence available shows the prevalence of problem gambling caused by cash games is miniscule.

The upside is that the poker sites can operate legally in Australia. It means they can advertise on poker shows, Australian poker magazine and websites. It means the Australia poker media will flourish, and events in Australia sponsored by the major sites will increase – bringing bigger prize pools and more players to the game in Australia.

It’s a mixed bag, it is far from perfect, but at least it brings some certainty to the Australian poker landscape.

The Politics

However, the two political parties have very different approaches to dealing with online gaming, and online poker in particular.

For Labor, their policy is pretty much the one outlined above. After the election, in the unlikely event of a Labor victory (Labor is about 7 dollars to win at the moment. In my view the price should be closer to 5. Either way, they are a longshot) the negotiations with the states will drag on for several months.

Tony Abbott’s Liberals have a very different position. As I have discussed in previous articles, Tony Abbott and Nick Xenophon are of the same view on this: they want online gaming, including online poker, banned. They want the laws enforced and the poker sites shut down. Tony Abbott has said “…every smartphone is a poker game and that's just not on as far as the Coalition is concerned. It is a dark cave into which people can so easily retreat and there they are beyond help”.

Now it is true that Abbott may be too busy after the election to worry about online poker reform. He’ll have bigger issues to contend with: tearing up the NBN, riding his bike in triathlons, watching Downton Abbey. But – and here’s the catch – the decision to enforce the IGA laws will be a relatively simple thing. A Coalition Government can simply point at the Government’s report, ask for the specific recommendations on banning poker be enforced, and ignore the rest. This is a long-standing practice of governments both Labor and Liberal.

The best case scenario with the Liberal Party in power is the status quo: providing online poker to Australians is illegal, but the laws are not enforced. The worst case is a Black Friday for Australian poker players.

Actually that is not the worst case scenario. The worst case scenario is if Tony Abbott is Prime Minister and Nick Xenophon holds the balance of power in the senate. If this happens online poker in Australia is dead and buried.

Here it is: you have 6 months until the election. So you have about 6 months of certainty as an online poker player. After that, things are starting to look grim.