Digital Economy

Virtual currency & gambling: Australia case

Gambling in Australia is currently under close scrutiny, lots of media and government activity and discussions are focusing on the jurisdictions and effects that online gambling are having on the Australian people after a report on the Interactive Gambling Act 2001 (IGA) by the Department of Broadband, Communications and Digital Economy.

The IGA is the main piece of legislation concerning gambling online and is applicable to both Australian and offshore providers of online gaming to Australia, the report on the IGA focused on games that are using virtual currency in online casino and gambling style games. Concern for the welfare of problem gamblers and protecting those likely to become problem gamblers is one of the IGA’s priorities and basis for a lot of the legislation that it encompasses, the report made suggests that there should be more discussions about the IGA being amended to include games that work with virtual currency.

Virtual currency is what you can win in an online game that works as currency within that game (coins, mana, jewels etc) and has no monetary or material value outside of the game in the real world. The Department of Broadband, Communications and Digital Economy raised issues in their report regarding the effect that this virtual currency is having on players and whether online games with a virtual currency that are casino or gambling based games should fall into the category of ‘gambling service’. Part of the description of a gambling service is that the game is played for money or anything of value.

Arguably some virtual currency games could be classed as playing with something of value if players purchase currency to play with, many games have in-game buying options structured into the game play where players can buy power-ups, and currency and such like that still have no value outside of the game even though they were bought with real money, hence players are playing with something that has value. The wording of the description of a ‘gambling service’ and whether playing with currency bought in the game but impossible to cash out of the game have to be discussed in detail before any sort of conclusion can be reached and even then there will be many who dispute the final outcome.

As the debates continue about whether these virtual gambling games are dangerous in encouraging problem gamblers and those with a high risk of becoming a problem gambler, points are being made that these games are being played in high numbers by children. The worry here is that these children will become desensitized to the issues that gambling can create and begin to create an unrealistic vision of the success rates of these games in a real life situation. Winning in the online universe is often easier than in real life and can ‘pay out’ in much greater sums of (virtual) money. The worry is that these children playing online gambling and casino games are at a great risk of becoming problem gamblers in the future.

Prohibiting games that are potentially dangerous for children and problem gamblers will be problematic for Australia however. As it stands the definition of a gambling service is so vague a more precise and accurate description is needed, it must include the type of games intended to be included in this category so that games that are not a risk to anyone do not become ensnared in unnecessary legal bindings. Once this has been agreed upon introducing restrictions and penalties for breaking laws would be another obstacle to overcome.

Because the IGA encompasses offshore and Australian gaming companies appropriating a penalty for an infraction of the law is complicated because of the jurisdictions in foreign countries, gathering enough evidence from overseas and getting enough support to justify pursing a case in Australia is incredibly difficult, hence these foreign companies are less likely to face heavy sanctions than an Australian based company. This would obviously be bad for the Australian economy as the iGaming market in Australia would become inundated with offshore companies.

More research and thought needs to be channeled into this area before any substantial plan is implemented but we can see that it will not be too far into the future before we see some changes take Australia’s gaming market.

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