Australian Research Paper Says Channelisation Should Measure Regulatory Success
A new research paper from Australian advisory firm Vanguard Overwatch argues that the success of any gambling regulatory system should be judged largely on channelisation, meaning how much gambling activity stays within, or moves into, the licensed market.
The paper says this measure, rather than the binary question of whether to regulate an industry at all, should become the central policy question for governments.
What The Paper Argues
The paper, titled The Price of Losing Control: Channelisation and Regulatory Failure in Online Gambling, was written by Paul Newson, principal of Vanguard Overwatch and founder of the annual Regulating the Game conference in Sydney.
It argues that the goal of any regulator cannot be to eliminate demand for gambling, but to minimise harm by regulating the legal market effectively and channelling consumers away from illegal operators.
"Prohibition does not work," the paper states. "The historical evidence across tobacco, alcohol and gambling consistently demonstrates that where legal supply is unavailable, over-regulated or uncompetitive, consumers do not stop consuming. They migrate to illegal supply."
Australia And New Zealand Compared
The paper points to two contrasting regulatory approaches.
Australia still prohibits online casinos and online poker, and maintains a ban on online in-play sports betting, while New Zealand is introducing a newly regulated market for online casino operations, with licenses due to be issued later this year.
Newson argues that Australia's continued prohibition of online in-play betting and online casino is under increasing pressure as offshore operators offer those same products to Australian consumers outside any regulatory perimeter.
New Zealand's approach, by contrast, is framed by its regulator as channelling an already-existing market into the licensed space rather than creating a new one.
Practical Challenges Facing New Zealand
The paper says a series of practical challenges will determine whether New Zealand's new regime succeeds in channelling consumers into the regulated online betting sites market.
These include the cost and burden of licensing, which, if set too high, could deter legitimate operators; the scope of permissible products; advertising and marketing restrictions applied asymmetrically between legal and illegal operators; and the enforcement capability of the Department of Internal Affairs, which the paper notes has no established track record in online casino regulation.
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Recommendations For Regulators
The paper does not argue that regulation itself creates a black market, but that gamblers are drawn to illegal offshore sites when those sites offer product access, pricing and lower-friction participation that the regulated market fails to match.
It recommends real-time monitoring, clearer enforcement commitments, stronger action against alternative payment channels, such as cryptocurrency, along with greater transparency in the commercial ecosystem that supports illegal operators, and regular reviews of the drivers of illegal gambling.
You can read the full report coverage via Inside Asian Gaming.
