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Australian Government Proposes Scheme to Block Illegal Offshore Wagering Websites
Date : 13 December 2018
Author/s : Jamie Nettleton, Karina Chong, Despina Bouletos
Type : Focus Paper
 

 

Overview

 

The Australian Federal Government is reviewing the possibility of introducing an Internet filtering scheme which would result in participating internet service providers (ISPs) blocking illegal offshore wagering websites which have been referred to the ISPs by the Australian Communications and Media Authority (ACMA). 

 

Under the Interactive Gambling Act 2001 (Cth) (IGA), the provision of unlicensed wagering services (including overseas-based interactive gambling services) to Australians is prohibited. It is intended that the proposed scheme for blocking illegal offshore wagering websites (the Proposed Scheme) would be part of a raft of additional measures to be implemented to minimise the provision of illegal offshore wagering to Australian residents and to deter Australian consumers from accessing those websites.

 

The Proposed Scheme is a further response to the Federal Government’s 2018 Black Economy Taskforce Final Paper1 and the 2015 O’Farrell Review into Illegal Offshore Wagering2.

 

At present, a confidential consultation in respect of the Proposed Scheme is underway and a consultation paper has been released to selected communications industry and online gambling stakeholders but has not been released for public consideration.   Among the industry stakeholders which have provided a submission is the Communications Alliance (CA). CA's submission in response to the consultation has been released publicly3

 

In its submission, CA indicates that its members (principally the leading ISPs) have expressed "in-principle agreement" to the Proposed Scheme, with some reservations and concerns.

 

Outline of the Proposed Scheme

 

Addisons understands that the Proposed Scheme will seek only to target offshore online wagering websites and would not, at this stage, target websites which provide other online gambling services (such as online casinos), although those services are prohibited under the IGA. 

 

The Proposed Scheme will rely primarily on the major Australia ISPs participating voluntarily.  It is expected that this participation would result in the Proposed Scheme capturing at least 75% of Australia’s Internet users4.  However, one concern raised by the CA submission is that it is unclear how the participating ISPs will be determined and whether the Proposed Scheme will extend to mobile internet users.5

  

In terms of the operation of the Proposed Scheme, the CA submission suggests that it is proposed that the ACMA will investigate the legality of offshore wagering websites on a case-by-case basis, based on complaints it receives or on its own initiative. If ACMA determines that a website is in breach of the IGA, it may direct a participating ISP to block the infringing website.

 

The CA submission indicates that it is proposed there would be a grace period permitted before participating ISPs would be required to block a specified offshore wagering website to allow any Australian customers to raise concerns or complaints about the blocking of that website and to enable those customers to claim any funds held in accounts with the offshore wagering operator. 

 

The CA submission indicates that, where a website is blocked, pop-up pages will be displayed when that website is accessed or viewed to alert customers of the imminent blocking of the website to ensure that the customer is adequately informed.

 

The CA submission also notes that it is proposed that, once a website has been blocked, this block will remain in place for two years before a determination is made as to whether it can be lifted. When Australian customers seek to access a blocked website, pages will be displayed containing information on why the website has been blocked and to assist users with potential gambling issues, including for example, links to Gambling Help and other problem gambling assistance materials.

 

The CA submission also indicates that, in order to give effect to the Proposed Scheme, the CA would replace the existing Interactive Gambling Industry Code (the Code) which is registered with the ACMA.  The current Code was originally developed by the Internet Industry Association (the predecessor to the CA) to meet the requirements of the original IGA in 2001.  The Code set out obligations on ISPs to provide Internet subscribers with access to filtering software or services in order to block overseas gambling sites. 

 

Potential Problems

 

Despite its overarching support for the Proposed Scheme, the CA, in its published submission, flagged a number of potential issues and concerns for consideration. 

 

One of the key criticisms mentioned is that the proposal to display pop-up pages alerting customers to the blocking of a website will be of limited benefit.7 In particular, the CA suggests that this feature would not be technically feasible for all ISPs to implement and also may be ineffective to prevent potential on or off-shore court action if a user’s funds become irretrievable. The CA submission contends that customers are likely to already have the contact details for the website operator and may be able to request a refund of any funds directly (although, if denied, the customer may be left with no recourse other than legal action).  

 

Concerns have also been raised about the cost of blocking websites which, as proposed currently, would be incurred by ISPs.  The CA has proposed that ISPs be reimbursed the direct cost of blocking individual websites as well as any additional costs incurred in implementing the Proposed Scheme.  It is the authors’ understanding that, to the extent that those costs are reimbursed, the Government would seek reimbursement from those parties likely to benefit most from the Proposed Scheme (e.g. Australian licensed wagering operators).

 

The CA submission proposes that guidance can be taken from the reimbursement structure and process that has been established under the Copyright Act 1968 (Cth) in relation to Federal Court orders for ISPs to block websites in the context of online copyright infringement (pursuant to section 115A of the Copyright Act).  These cases have established that the costs involved with blocking copyright infringing websites are about $50 per block.8  
 
A third concern raised in the CA submission is the risk of affecting legitimate internet content. Poorly targeted blocking requests may extend beyond the intended wagering website and impact legitimate sites or content, to the disadvantage of consumers. To mitigate this risk, the CA submission recommends that any request to block a website must specify the website’s Domain Name, IP Address and URL9. Further, the block page that will appear once a website has been blocked should contain information on a complaints mechanism which the website owner can use if they believe the website was blocked without due cause.

 

Finally, the CA submission notes that it must be recognised that, despite the efforts of ISPs to block offending websites, this may not prevent users who are determined to access offshore wagering sites to do so by circumventing the blocks put in place by the ISPs. A variety of methods exist for circumventing blocked websites, including VPNs, Tor networks and browsers, anonymous proxies, HTTPS access, SSH tunnels, remote desktop clients and purpose-built programs.

 

Can guidance be taken from the Copyright Act?

 

As noted, the CA submission suggests that guidance can be taken from Federal Court orders and injunctions which have been delivered to date under section 115A of the Copyright Act.  

 

This site-blocking regime has been utilised successfully by major entertainment companies including Village Roadshow, Foxtel and Universal Music to obtain injunctions which require Australia's major telcos and ISPs to block customers from accessing various domains and websites which provide copyright infringing content and materials. 

 

Further guidance may be provided if the proposed provisions to extend the existing internet blocking provisions under section 115A are passed by the Australian parliament. 

 

The Copyright Amendment (Online Infringement) Bill 2018 (Cth) (Copyright Bill) received Royal Assent on 10 December 2018 and came into effect on 11 December 2018.  The entire Bill will come into effect the day after receiving assent. The Copyright Bill proposes notable amendments to the internet blocking regime in s115A of the Copyright Act.

 

Prior to being passed, the Copyright Bill was subject to an inquiry by the Senate Standing Committee on Environment and Communications (the Senate Committee), which published its findings on 26 November 2018.10  The Senate Committee recommended that the amendments be reviewed two years after their enactment. Both major parties have accepted this recommendation.

 

The primary purpose of the Copyright Bill is to enable copyright owners to enforce more effectively their rights by disrupting the supply to Australians of material that infringes copyright, or facilitates the infringement of copyright.11

 

The Copyright Bill contains three key changes. First, the Copyright Bill proposes to widen the threshold requirement for an injunction to be issued from websites whose primary purpose is to infringe copyright, to websites whose primary purpose or primary effect is to infringe copyright.12 This expanded threshold is designed to capture file hosting sites such as “cyber lockers”, which enable users to share files via password-protected online hard drive spaces. Such sites may not meet the “primary purpose” test, but would meet the new “primary effect” test.

 

However, the Copyright Bill offers no guidance on the criteria which would be considered to determine whether a website is in breach of the “primary effect” test. This may lead to uncertainty, particularly for websites that provide access to infringing content but also have a variety of other functions.

 

The second amendment proposed by the Copyright Bill is to extend the targets of injunctions for copyright infringement under section 115A of the Copyright Act to online search engines.13 That is, in addition to orders being made against ISPs to block copyright infringing websites, orders could be made against online search engines to take steps to block search results that refer users to the infringing online content. While “online search engine provider” is not defined in the Copyright Bill, it is intended to apply to major search engines such as Google, Yahoo and Bing.

 

Finally, the Copyright Bill proposes to introduce an adaptive style of injunction.14 This would allow ISPs and online search engine providers to include additional domain names, URLs, IP addresses and search results to an injunction for blocking which has already been granted by the Court without Court approval or otherwise requiring a fresh injunction to be made by the Court.

 

This amendment will remove the need for parties to return to Court to vary existing orders where the copyright owner and the ISP or search engine provider agree that a new domain name, URL or IP address has begun to provide access to online infringing content mentioned in the initial order.

 

Where to From Here?

 

Both the Proposed Scheme and the changes to the Copyright Act, if implemented, will have a significant impact for a range of stakeholders, particularly overseas online betting operators providing services to Australia, as well as intermediaries, such as ISPs and online search engine providers. Affected parties will need to ensure that they are aware of, and in compliance with, the new requirements to avoid any potential action against them.


As noted, the Proposed Scheme has only been the subject of a confidential consultation between the Australian government and selected industry stakeholders.  If the Proposed Scheme is to be progressed, we anticipate that a full public consultation process would be conducted before any formal scheme or framework is implemented.  


Certainly, any proposed amendments to the Code or any replacement code would need to be drafted and subject to public consultation before being registered by the ACMA.  In both cases, interested stakeholders and parties would have the opportunity to make submissions. 


Changes to the underlying legislation (the IGA), is likely to be required.  This would require a Bill to be proposed and passed in Australian Parliament. 


Importantly, while it is proposed that the Proposed Scheme will apply initially only to offshore wagering websites, we would anticipate that it will later be expanded to apply to online casino and gaming websites if the Proposed Scheme is implemented and proves successful.


Commentary


Australia’s online gambling regulatory regime has objectives that correspond with the objectives in other countries, namely to protect Australians from overseas gambling operators.

 

Traditionally, Australia’s approach was unsophisticated and ineffective.  This has changed with the approach taken by the ACMA since the introduction of the IGA amendments in 2017 and the targeting of offshore operators and intermediaries. 

 

The Proposed Scheme is a further illustration of this approach, ultimately to target the means by which Australians can access offshore gambling sites, namely through ISPs.  This is consistent with the approach that has been taken in other countries (e.g. Norway, France and Belgium).15  What is also clear, at least from the experience in Norway, is that blocking measures are not necessarily effective in causing access to the offshore sites to cease completely (as is pointed out in the CA Submission), but more a means of making that access less available.

 

We will be monitoring these issues with interest and will report on developments in further newsletters.

 

For further information about how either the Proposed Scheme or the Bill may affect your business, please contact the Addisons Media and Gaming Team.

 


 

1. Black Economy Taskforce, Final Report (2017) <https://static.treasury.gov.au/uploads/sites/1/2018/05/Black-Economy-Taskforce_Final-Report.pdf >.

2. Please see our previous Focus Paper, Australia – Release of Report on Illegal Offshore Wagering – Another Missed Opportunity for Reform of Australia’s Prohibitions on Online Gambling?

3. Communications Alliance, Submission to Department of Communication and the Arts,  Possible Scheme for blocking Illegal Offshore Wagering Websites, 21 September 2018 <https://www.commsalliance.com.au/__data/assets/pdf_file/0013/61411/180921_CA-submission_Blocking-Illegal-Offshore-Wagering-Websites_SUBMITTED.pdf >.

4. Martin John-Williams, ‘Australian Offshore Wagering Blocking Scheme Secures Telco Support’, Gambling Compliance (online), 12 October 2018 <https://gamblingcompliance.com/premium-content/insights_analysis/australian-offshore-wagering-blocking-scheme-secures-telco-support >.

5. Communications Alliance, above n 3, 1.

6. Williams, above n 4.

7. Communications Alliance, above n 3, 2.

8. Communications Alliance, above n 3, 3.

9. Communications Alliance, above n 3, 5.

10. Further information about the Senate Committee's inquiry into the Bill can be found at: https://www.aph.gov.au/Parliamentary_Business/Committees/Senate/Environment_and_Communications/OnlineInfringementBill

11. Ibid.

12. Copyright Amendment (Online Infringement) Bill 2018 (Cth) Sch 1 item 2.

13. Ibid item 3.

14. Ibid item 2.

15. See ACMA October 2018 quarterly report .

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