Wagering report calls on government to act and cease the growing black-market wagering trade

A report into the illegal offshore betting boom has drawn a stark parallel to Australia’s illicit tobacco trade, warning that enforcement alone won’t cease the black market once it has infiltrated the domestic wagering scene.

Such has been the dire consequences of the federal government’s excise on the tobacco industry, where it’s estimated 80 per cent of consumption now comes from illicit trades, a forecast $65bn tax shortfall is projected by 2030.

And a report commissioned by Entain Australia says that without meaningful government intervention, the Australian wagering industry is heading down the same perilous path.

“Modern black markets do not emerge simply because demand exists,” the report titled ‘The Price Of Losing Control’ says.

“They emerge when law, market design and enforcement fall out of alignment badly enough that illicit supply becomes the easier, more attractive or more profitable channel.

“The historical evidence across tobacco, alcohol and gambling consistently demonstrates that where legal supply is unavailable, over-frictional or uncompetitive, consumers do not stop consuming.

“They migrate to illegal supply. The practical priority for any government serious about reducing gambling harm is therefore not to eliminate demand but to minimise harm by regulating the legal market effectively and channelling consumers away from illegal operators.

“An effective legal market protects consumers, disrupts criminal enterprise and preserves the integrity of the regulatory perimeter. Taxation revenue is a secondary but material benefit.”

The Australian wagering landscape has undergone a seismic overhaul in recent years with new taxes, increased take-out rates and tighter regulatory controls all conspiring against a once flourishing industry.

And as a result of the far more testing conditions, an increasing number of punters continue to delve into unregulated offshore markets in an attempt to garner better value.

While these offshore markets proceed with no regulatory oversight, even more alarming is that they don’t invest back into the Australian racing economy.

It’s estimated that as much as $4bn was wagered in illegal offshore markets last financial year.

Kim Lindsay, the chief legal and risk officer at Entain Australia and New Zealand said the report “highlights the importance of getting the balance right”.

“Prohibition does not work – strong consumer protections, a viable regulated market and effective enforcement against illegal operators all need to work together,” Ms Lindsay said.

“When customers move to the black market, they move beyond the safeguards of Australia’s regulated system.

“That should concern everyone who wants regulation to work.”

In a bid to stem the growth of the alarming offshore market, the report calls for the government to abandon “simple prohibition and over-regulation”.

“Those measures fail to eliminate the demand – they instead push consumers to unlicensed offshore markets,” the report says.

“To stem this crisis, the priority must be channelisation – calibrating the regulatory regime so that the legal market remains competitive, credible, visible, and attractive enough to keep consumers within a safer, supervised environment.

“Without careful calibration, we risk surrendering practical control over product safety, revenue, and criminal infiltration.”

The wide-ranging report lists a raft of measures the government can adopt to help stem the bleeding.

Beyond making the domestic market more attractive, the report calls for an aggressive approach to the governance ecosystem to disarm the commercial infrastructure that keeps illegal betting operators accessible on Australian shores.

It also calls for better disruption to the borderless digital networks that facilitate offshore play and a strategy that holds major tech platforms, search engines, and advertising affiliates accountable for promoting illegal services.

The report also recommends introducing a real-time “governability” dashboard to track market health and a public “name and shame” registry to expose the third-party banks, payment processors, and web hosts enabling illicit operations.