Australian Senate to Ban ‘Fake Lotteries’ Such as Lottoland

Australian Communications Minister Mitch Fifield plans to introduce legislation on Wednesday that would ban betting on “fake” lottery websites. The ban would leave in place major lotteries like Tatts, Intralot, Oz Lotteries, and Netlotto, but would ban controversial lottery betting services like Lottoland.

The federal administration called for the Australian Parliament to prohibit what it calls “synthetic lotteries“ — in which Aussies bet on the outcome of foreign lottery draws instead of buying lottery tickets.

Lottoland CEO Luke Brill said the ban was “misguided and unnecessary”. Australian TV broadcasters said the move to ban Lottoland would have a “significant impact” on their operations, because Lottoland is a major advertiser for many programs.

A spokeswoman for Free TV Australia said, “We are disappointed at the total lack of consultation on this.”

Lottoland’s Gotta Go Campaign

Tatts and Australian media groups targeted Gibraltar-based Lottoland as the main offender in a public relations campaign called “Lottoland’s Gotta Go”. Those ads ran on television, in newspapers, and on large posters throughout Australia.

The PR campaign and related lobbying efforts portrayed Lottoland’s fake lottery serve as an attack on the livelihoods of Australian residents. According to “Lottoland’s Gotta Go”, the synthetic lottery costs various Australian states tens of millions of dollars in tax revenue each year. This in turn causes less tax revenues paid to schools, hospitals, and roads.

Luke Brill Voices Criticism

Luke Brill criticized the effort on Monday, saying his company does not offer odds on Australian lotteries anymore. Brill said Lottoland’s “offering does not have a direct impact on newsagents.”

The CEO of Lottoland, which has 650,000 Australian account owners, said, “On the contrary, we want to work with newsagents to provide customers with greater choice and even better services, which have the potential to be highly beneficial for individual newsagents. While we understand the concerns expressed by some newsagents, the proposed legislation is both misguided and unnecessary.”

Mitch Fifield on “Community Concern”

Mitch Fifield, on the other hand, argued that synthetic lotteries undermined “long-standing community acceptance of official lottery and keno products. These products enjoy community support as they generate an income stream for small retail businesses and make a significant contribution, through licence fees and taxation, to the provision of public services and infrastructure by state and territory government.”

Though Lottoland does not compete directly with Tatts, it does offer a product that Australians can choose instead of their lotteries. By the estimation of the Lottoland’s Gotta Go group, that still costs Aussie states and territories millions of dollars — and Australian lottery companies many times more than that.

Senator Fifield added, “Online service offering products that involve betting on lottery outcomes….have generated considerable community concern.”

A New Era for Aussie Lotteries?

How much concern they generate among everyday Australian residents is debatable. They cause significant concern on the part of Australian lottery companies. In many ways, the Lottoland’s Gotta Go campaign mirrors the 2016-17 campaign to rid Australian of offshore online poker operators.

After the Interactive Gambling Amendment 2016 was passed by the Senate in August 2017, big regulated competitors like PokerStars, 888 Poker, and Vera & John left the Australian market. Top Aussie gaming companies celebrated the departure, believing they had gotten rid of their biggest competition through lobbying efforts.

Now those same companies complain of declining revenues, because most Australian poker players moved to the private, unregulated online poker sites. Because the unregulated poker rooms do not have to pay Australian taxes and are beyond Australian authorities (unlike UK-licensed companies like PokerStars and 888), Australian operators now face competitors with higher margins than before.

15% Point-of-Consumption Tax

Even worse, three Australian states believed — now that they have pushed out the previous competition — that they deserve the right to impose an additional 15% point-of-consumption tax on the Australian online gaming companies. To the Australian gaming companies, it is out of the frying pan and into the fire — an expensive fire.

Whether the move to push out Lottoland has similar unintended consequences is left to the future. Lottoland’s revenues will be hurt. So will the revenues of Australian TV advertisers. Whether Tatts and Oz and other lotteries will profit is another matter. Many unlicensed lotteries exist in Oceania and Asia, though it is uncertain if those companies have the wherewithal or savvy to launch slick online lottery sites to take advantage of the void which has been created.