The online gambling industry is reeling from the federal government's 12-month moratorium on new gaming licences. Many operators, angry that their operations may now be curtailed, are seeking legal advice on compensation.
"The repercussions of this are far more than the Federal Government thinks," Jamie Nettleton, a pre-eminent spokesperson for the legalities of online gambling, told ZDNet Australia.
"People will be looking very closely at compensation to see if they're entitled to it."
The 12-month moratorium on the introduction of new online interactive gambling services, which bombed out of the Senate in October only to be amended and passed yesterday, threatens to take the bottom out of businesses that were issued with licenses after the May 19 deadline.
The amended legislation may also affect those operators who obtained licenses before May 19, but who have upgraded technology and expanded services since then.
Online operators could sue the Federal Government "on the basis that property (licences) have been seized as a result of the legislation or take action against State Governments because they can no longer operate business in accordance to the licence, as had been promised," Nettleton said.
The cost of an online gambling licence is about AU$200,000 for the first year of operation, plus a AU$20,000 application fee.
Advisor to ACT Attorney General Gary Humphries said the entire cost of a licence was non-refundable. Nettleton however, said operators could get some part of the application fee back if they withdraw a licence.
However, Nettleton said it would be easier for operators to prove damage on the basis of ceasing operations.
One person speaking to lawyers is Lasseters Online CEO Peter Bridge, who claims AU$4 million in site development will be lost to the legislation.
"We have to take the site back to what it was in May," Bridge said. "We're currently going through the legislation to see if those things [we've added to the site] are covered or exempt," he added.
Tasmania's Federal Group, which obtained its licence in July 1998 but didn't commence online operations until after May 19, has since invested AU$20 million in an online business that will consequently have close.
Online casino GoCorp, which obtained its licence in June 1999 and launhed gaming operations on May 16 this year, said its lawyers, directors and advisors were currently "pouring over the fine print" to ascertain the exact effect of the legislation and its amendments.
On the issue of compensation, a spokesperson for the Minister for Communications, Information Technology and the Arts, Senator Alston, said, "companies are entitled to pursue that avenue if they want to".
However, companies would need to turn to the State Governments that issued the licence, he said. "The Commonwealth does not issue licences."
Although the Commonwealth has always said there would be no question of compensation being paid, "that's an argument for the courts," the ACT's Dunne said.
However it's unlikely to get to the courts because of the "bluntness of the instrument," Dunne said. "It's effectively now a five-month moratorium, therefore a pretty ineffective device. The Democrats have already said they won't support a ban [on interactive gambling], therefore in many ways the moratorium is a waste of time," Dunne added.
Nettleton also believes the bill will be ineffective.
"The government's primary objective is to try to minimalise problem gambling among Australians," Nettleton said. "However, the bill is only addressing interactive gambling being provided by Australian companies after May 19, 2000," he added.
The fact that Australians can still gamble at online casinos set up before this deadline and at overseas sites - which are completely beyond the control of the Federal Government - makes the bill an impotent method of dealing with the problem, Nettleton said.
Companies will be fined up to AU$1.1 million a day for breaching the terms of the legislation when it becomes law.
