Free Cash to Gamble
9 February 2009
In recent months Australia has been flooded with advertisements offering free cash to gamble with online bookmakers and sports betting agencies. A glance at the internet brings further offers of free cash from online casinos based offshore in the Caribbean and other places.
Free cash is a powerful inducement to gamble online or on the telephone. The only Australian online casino, Lasseters Online, ceased operating on 3rd October 2008. Whilst some blamed US restrictions on online gambling, these apply to other online casinos that are making a profit. A major reason why Lasseters Online failed was because of regulatory restrictions preventing it offering the same inducements to gamble that were available from less reputable operators.
In Australia, online bookmakers are offering free cash as an inducement to sign up new customers. In March 2008, BetFair successfully sued the Western Australian government, overcoming restrictions on interstate advertising. This means that bookmakers licensed in Tasmania and the Northern Territory can advertise their services in the major States. This has resulted in an unprecedented advertising blitz by bookmakers and sports betting operators, all offering attractive inducements to sign up. For example, Sportingbet offers $100 credit when you open a new account and deposit $30.
The State and Territory governments are struggling to formulate a response to this interstate barrage of advertising and local bookmakers and totalisators have been hit hard. The Federal Government may provide the answer, but not until after the Productivity Commission delivers its report in late 2009. In the meanwhile, Tabcorp has followed the old adage "if you can't beat them, join them" and acquired a Northern Territory bookmaking licence called Luxbet.
Registered clubs and hotels are prohibited from offering free credits to gamble on machines and totalisators also have restrictions on providing free credit. So why is it that bookmakers are allowed to offer free cash?
Essentially, the provision of credit by bookmakers is an historical anachronism, from the days when racing was the sport of kings and gentleman who considered it inconvenient to cart a large amount of cash to the races. Instead, gambling debts were paid in a gentlemanly fashion on "settling day". Failure to pay was considered disgraceful and would typically result in the punter being spurned by all the bookmakers at the track.
Now the provision of credit works on a different principle - greed. So it takes little effort for anyone to open an account with a bookmaker thousands of kilometres from home. And the credit available may be substantial. In the recently reported case of Sportsbet Pty Ltd v Moraitis, a Northern Territory bookmaker is suing a New South Wales punter for a wagering debt of $3.8 million. The punter claims to be a problem gambler and alleges the bookmaker broke its own code of conduct by allowing him to re-register after he had voluntarily excluded him from betting.
Internationally, the prevalence of problem gambling is 3 to 4 times higher in Internet gamblers compared to non-internet gamblers. It is likely that the provision of free cash is the biggest attraction in getting problem gamblers to start on the internet. Of course, you don't get something for nothing, so what the internet bookmakers and casinos give to get people started, they will recoup later.