Australia is facing unprecedented pressure from offshore gambling companies that have been encroaching on local operators’ turf. As the country does not regulate online casinos, there has been a vacuum filled by unlicensed casinos, which have been deemed illegal by local regulators.
Yet, limiting reach has proven an uphill struggle that has mostly resulted in the Australian Communications and Media Authority producing a fastidious list of blocked domains. With more than 1,000 websites blocked manually through an ISP restriction, however, the number of offshore websites unscathed by this measure is still too high, estimates H2 Gambling Capital, a research firm that focuses on the gambling industry.
According to a recent report by the firm, the unregulated market has doubled its size since 2019, and accounts for a third of all online gambling activity in the country, with the market on track to hit $3.25bn (AU$5bn) by 2029.
It is not just a matter of how much is spent with offshore and unregulated companies, however, as there are financial costs of this trend, and they affect the taxes and uncollected product fees that local governments and sports bodies will fail to collect.
Based on the report, commissioned by Responsible Wagering Australia, the number now sits at $1.76bn (AU2.7bn) unrealized economic opportunities. As the report clarifies, "one in every five dollars spent on Australian sport wagering is spent with illegal operators."
The reason for this is not just a lack of market competitiveness, but also blanket bans that are simply leading consumers to alternative options, such as online casino games. Another glaringly absent product form is in-play betting. With both product verticals restructured, offshore gambling websites are the only opportunity for players to experience them.
Online casinos are a major pain point for Australian regulators
Online casinos, for example, account for 26% of the total online gambling spending, even though the product is not allowed locally. Another issue, the report notes, is still rooted in the competitiveness of the market.
Offshore operators are simply better at offering better odds – they are not beholden to local guidelines nor paying tax, and can afford to use extra money to offer more tempting selections to players, even though they are not technically legal and carry risks, including the leaking of personal and financial data.
This is indeed the case, and it works for many people. Based on the report’s findings, 48% of consumers cited better odds as the reason to explore such alternative markets. Another 44% said that bonuses are tempting as well.
