Gambling Regulation and Licensing in the AU 2020
The Australia (UK) is one of the first countries with so-called “developed economy” that involves detailed regulation of the field of online gambling (games of chance). Currently, the AU is one of the most developed gambling markets in the world.
Let’s look closer at the activity of online casinos in the AU and discover how a player can make the right choice in the world of modern gambling websites.
- General Characteristics
- Regulating authorities
- Licenses in the AU
- Licenses for foreign companies
- What is the process of license issuance?
- Сheck the owner of the casino
- Deposits and withdrawals
- Storing and protecting the funds of the players
- Requirements to the players
- Additional protection from the state
- The forecast
1. General Characteristics of the Gambling Regulations in the AU (where to find the rules and where to appeal in case of a dispute)
It’s worth noting that regulations of gambling in the AU are the most sophisticated, clear and developed in the world these days. At the same time, it’s impossible to ignore administrative structure of the Australia, which allows each region having its own specific laws, and regulations, which can be different from the laws and regulations in other regions of the AU.
In the AU, the field of gambling is governed by a comprehensive complex of laws and regulations. First of all, there are two basic laws in this field:
- The Gambling Act 2005 – it was adopted in order to substitute the Gaming Act of 1968 and was the beginning of the new era in the field of gambling regulation. Despite the overall progressive character of the Act, it had several issues and problems for the players. First of all, it was applied only on players and companies physically located or directly connected with the AU (e.g. offline casinos or online ones with the equipment based in the AU).
- The Gambling (Licensing and Advertising) Act 2014 was created to solve the key issues of the Gambling Act 2005. The key difference between the act is the fact that the GLAA 2014 requires all the companies to obtain British license in order to work with the people from the AU (any activity of both legal entities and individuals is considered illegal in case if they provide gambling services and games of chance for the citizens of the AU without having a local license).
As a result, starting from the moment of the new Act adoption, the AU started to apply the “point of consumption” mode, which requires regulation of the company working in the field of gambling irrespectively to the formal jurisdiction of the business. The key factor is the profile of the company, i.e. working with the citizens and customers from the AU.
At the same time, in Northern Ireland all gambling activities (except lotteries) are regulated by the Betting, Gaming, Lotteries & Amusements (NI) Order 1985 (1985 Order), which is based on the provisions of the Gaming Act 1968 that was cancelled many years before. According to the authorities of the Northern Island, this type of legislation is seriously outdated and creates a lot of important problems, including an inability to solve the issue of gambling addiction. Local authorities plan to update the law in the nearest future.
Another important document is the LCCP (License conditions and codes of practice). This set of regulations was developed by the local authorities during the process of licensee regulation and aimed at such important aspects of their activity as social responsibility, transparency, fairness, responsive advertising and prevention of money laundering.
The key difference is the fact that the LCCP is constantly updated, while the companies working in the field of gambling are obliged to follow the latest version of the LCCP irrespectively to the date of their license issuance.
In addition to the LCCP, the Gambling Commission (local gambling regulating authority) creates additional requirements for the equipment and software of the casinos. Such requirements are called technical standards.
In addition, many statements of the Gambling Commission related to the activity of specific companies (which violated the rules and the current legislation) are also considered official regulations or so-called sanction acts. These acts contain a clear position of the authorities on various sanctions and prohibitions imposed by the regulating bodies. Such sanction acts are published as local news. One can find a detailed list of them here.
It’s worth noting that these are the main acts and we just wanted to attract your attention to them. There are many other laws and acts intended to regulate the activity of the companies in the specific area of gambling (for example, tax and financial regulations for the gambling companies can be found mainly in the British financial acts). If you want to get familiar with all the acts and laws, you can make it on the official website of the British regulating authorities.
2. Regulating authorities
The Gambling Commission is the central authority that solves all the issues related to the field of gambling (issuing the license, governing the activity of the companies and imposing sanctions for violations).[metaslider id=”2137″]
3. Licenses in the AU: types, requirements, and limitations
First of all, it’s worth noting that only companies with a local license are able to work in the field of gambling in the AU or attract local customers to their websites. Licenses issued in other jurisdictions are not valid in the territory of the AU.
Furthermore, the activity of both offline and online casinos in the AU is governed independently. As a result, having a license for a traditional casino is not enough to work in the field of online gambling (there is simply no unified license for both types of activities at the same time).
Types of gambling licenses in the AU
Generally, there are 3 main types of license depending on the profile of the applying company. All of them are strictly obligatory.
- The operating license is a license that allows the company to perform all types of activity (i.e. placing bets, paying the players and so on).
- In addition to the operating license, which is obligatory for the company that operates the casino, all the managers and directors of the company are obliged to have a personal license. The list of the members of the company, who are required to have a personal license, can be found in Section 2 of Article 1.2 of the LCCP.
- The software operating license – this type of license is required for all the employees of the company involved in the process of software development and updates.
In fact, there are two different types of personal licenses: the personal management license (which is obligatory for the managers of the company that was mentioned above) and the personal functional license. The latter one is required only for specific workers on traditional casinos (cashiers, hosts or security workers).
As a result, there are 3 different licenses required for a company in order to work in the field of gambling in the AU: the operating license for the company; the personal license for all key managers; and the software operating license for the company that created and supports the full range of software solutions for the casino.
At the same time, one license of the casino may include several different types of activities and games (e.g. betting and casino) or include various software solutions (thus acting as the software operating license).
Requirements to the licensees
There is a wide range of requirements to the licensees in the AU:
- Starting from the set of complex requirements to software solutions and technologies, which have to correspond with the different standards (more information can be found here). Furthermore, it has to be confirmed and approved by one of the testing companies included into the list of organizations approved by the Gambling Commission (one of them is eCOGRA, which was mentioned in our report about the gambling regulation in the world (check here).
- And going to the field of social responsibility and obligatory participation in various social programs intended to eliminate the issue of addiction. Furthermore, companies are required to publish detailed information about their activities.
There’s a wide range of such requirements and there’s no real sense to talk about them because the detailed list of requirements can be found on the official website of the Gambling Commission.
Financial requirements to the licensee
It’s worth noting that there are no formal requirements for the financial state and the funds of the company in the AU. At the same time, the company has to be financially stable and work according to a business plan. The sustainability of the mentioned documents can be assessed only by the Gambling Commission.
4. How a foreign company can obtain the license
All the companies irrespectively to their location and location of their equipment and assets are allowed to apply for a local license. This is the official position of the Gambling Commission.
At the same time, all the applicants are obliged to follow a strict set of rules intended to provide the highest level of control over the offered games of chance (e.g. the equipment had to be located only in a jurisdiction, where a local player would be considered a legal person, while the Gambling Commission has to be able to check if the equipment is used in accordance with the requirements of the license. Furthermore, the LCCP contains a list of requirements related to the recommended location of the basic equipment of the company.
In addition, all the companies willing to obtain a local license, are required to provide a legal address in the AU in order to receive the license from the Gambling Commission (Section 69 of the Gambling Act 2005). As a result, we can see that a gambling company willing to work in the AU has to have at least an office or a representative in the AU.
5. What is the process of license issuance and how to check if the license is valid?
All the licenses are registered in the Gambling Commission on the request of the applicant and after performing the detailed examination of the provided documents in order to make sure that the company is fully compliant with the requirements and limitations.
In the conditions of the real world, the process of the application processing takes up to 16 weeks (only in case if it corresponds to the wide range of requirements and the Gambling Commission has no grounds to reject it or assign additional procedures). This is one of the additional factors that shows the serious approach of the Gambling Commission to the license issuance process.
Term of the license is usually unlimited, but the Gambling Commission reserves the right to apply different sanctions and limitations depending on the specific conditions of the case.
One can check the validity of the license using official registries of the issued licenses:
- casinos (operating licenses)
- personal licenses
Please note the following: the profile of each licensee includes detailed information about the types of gambling activities allowed by the licensee (Licensed activities) as well as the list of domain names covered by the license.
In order to search, one needs to enter the name of the company or provide a link to the website. We recommend entering the name of the casino taken from the website address (e.g. enter ‘casino’ if the full address is ‘www.casino.com’) in order to get required results (sometimes one additional space of a special character may affect search results in a bad way).
Here one can also find all information about the companies and individuals with expired, revoked, lost, cancelled or void licenses (for the last three years).
6. How to check the owner of the casino
If the company is officially registered in the AU, one can use the special service on the official website of the local government.
You can also find detailed information about how to find all the data about the companies registered in other countries using national websites and international online services on our website (LINK).
7. Deposits and withdrawals: which payment systems can be used? Is it allowed to use cryptocurrencies?
According to the general rules, which can be found in the Schedule 1 Part 1 of the Payment Services Regulations 2009 (SI 2009 No 209), companies are allowed to use all types of payment solutions and systems.
In other words, one can use all types of payment tools and services while working with the online casino: bank cards, e-wallets (e.g. ecoPayz, Skrill or PayPal), immediate payment services, direct bank transfers and so on. These days, players are allowed to pay from their mobile accounts and this method becomes more and more popular.
Currently, one is allowed to use loans and borrowed funds to play in the online casinos, but the Gambling Commission is trying to limit such operations and transactions in order to minimize the amount of negative financial losses for the players. Starting from the beginning of 2020, the AU government is planning to limit the usage of borrowed funds (including credit cards) in the field of gambling. Currently, about 20% of all deposits are made with credit cards (according to the British authorities).
Paying with cryptocurrencies
The status of the cryptocurrencies is still unclear in the AU. Officially, cryptocurrencies are not considered a legal payment instrument. At the same time, the authorities of the AU accept the importance of the cryptocurrencies in the modern financial system, thus de facto accepting the ability to use it (without imposing legal restrictions, while taxing all the incomes obtained in the cryptocurrencies). As a result, many casinos accept cryptocurrencies in the AU (mostly working with Bitcoin).
Please note the following: More detailed information about transactions and accepted payment methods, depositing tools, ways of withdrawal and security measures can be found in the Terms and Conditions of the chosen company.
8. Storing and protecting the funds of the players. Payout warranties
According to Section 4 of the LCCP, the companies and casinos are obliged to store the funds of the players on special independent accounts without mixing them with their own funds. The company is not allowed to use the funds of the players in their business activities. As a result, the player can be sure that the casino won’t use their money until the moment when they start playing online (at least theoretically).
Payout warranties in case of bankruptcy or other financial problems of the operator
All the money in the accounts of casinos is not protected by law in the same way as deposits in the banks. As a result, there are no payout warranties on the state level, which can be used in case of financial problems of the casino.
Only the casino itself is able to provide such warranties. According to the regulating authorities, there are three possible levels of funds protection:
- not protected (no additional security measures)
- medium protection (several specific protection methods, e.g. insurance)
- high protection (the highest level of funds protection, including the independent audit of the account with the funds of the players).
At the same time, casinos are obliged to add information about implemented protection measures in the Terms and Conditions in order to allow players getting familiar with them and making their own decisions during the process of casino choosing.
Please note the following: always check the specific measures implemented by the casino in order to protect the payouts and funds of the player because the information about the current level of protection indicated by the casino is not controlled by the Gambling Commission.
Furthermore, according to the requirements of the Gambling Commission, companies are obliged to keep information about the transactions and financial credentials of the players strictly confidential. The companies are obliged to perform annual safety audit in accordance with specific sections of ISO / IEC 27001: 2013.
Likewise, one of the additional requirements demand all casinos to perform monitoring and the calculation of the return to player (RTP) amount in the live mode. Companies are obliged to send such information to the Gambling Commission on its request in order to confirm the compliance of software solutions with such requirements.
9. Requirements to the players
In general, only legally capable of at least 18 years old are allowed to play (in some cases the required age can be lowered to 16 years; however, it happens only in case with traditional games, such as the National Lottery). Companies are obliged to verify the data of the player before making a deposit or before the game starts (including the games with the bonus currencies).
10. Additional protection from the state and special organizations
- There are several non-governmental companies in the AU, which provide help to players: GamCare, GambleAware, and others.
- There’s also a so-called self-exclusion registry in the AU that allows players to limit themselves from playing games of chance and gambling. All the companies are obliged to use the registry and integrate it to their software solutions in order not to allow the people from the list playing on their websites. This requirement can be found in the LCCP.
- Furthermore, the operators of the casinos are obliged to offer the limitation tools for the players (in order to choose time or the overall amount of bets).
- In addition, all the casinos have to control the activities of the players. In case if they see that the player shows clear signs of addiction, the casino has to make everything to limit the losses of the player.
- In case of disputes between the casino and the player, both of them have to address them to special mediating companies in the AU, which were created to make the process of dispute settlement clear and fast. Such a tool is called Alternative Dispute Resolution (ADR) and has to be implemented by the licensees by entering into an agreement with at least one of the mediating companies.
- The Gambling Commission is allowed to process complaints and information about the violations of the casinos related to the rules and principles of their operation. The Gambling Commission is allowed to revoke or terminate the license of the casino, but they prefer to apply financial sanctions in the majority of cases. The information about the imposed sanctions is available for the public audience.
What other features should be considered choosing a gambling operator? One can learn from our article about the common approach to gambling regulation in the world (LINK).
11. The forecast
Online gambling is the largest sector of the AU gambling market in terms of gross income. According to official statistics, this sector produces AU$ 5.6bn, which represents 38.8% of the total AU gambling market. At the same time, online gambling continues to grow (the growth value was approximately 1.2% for the last year).
This shows that online gambling is widely developed and popular in the AU and at the moment there is no reason to doubt that it will continue develop. This is facilitated by the legal side as well: the smart regulatory framework and activities of the AU authorities provide modern ways of interaction and communication between the participants of the gambling industry.
At the same time, such numbers prove the local population’s enthusiasm for gambling, which is addressed as an issue by the national authorities. Since the Gambling Act 2005, the rules and requirements become more precise and strictl; more amendments and the regulator’s actions are connected with new restrictions in order to prevent gambling addiction issues and potential financial problems of players.
In our opinion, the national authorities will gradually and gently adhere to this policy (as this sector brings a large income to the budget). Most likely, the authorities will “push through” the widely discussed ban on the use of credit funds in gambling soon.Chloe Taylor Expert