Home | Databases | WorldLII | Search | Feedback Digital Technology Law Journal

Lambrick, John --- "And Now To Regulate Internet Gaming - A Gamble In Itself?" [1999] DigTechLawJl 17; (1999) 1(3) Digital Technology Law Journal 17

And Now To Regulate Internet Gaming - A Gamble In Itself?

John Lambrick
University Solicitor, RMIT University, Melbourne

Contents

• Introduction
• Will the legislation succeed?
• The jurisdiction issue
• Shortcomings in the legislation
• What should the role of government be in Internet regulation?
• Notes

Introduction

1. Enthusiasm for on-line gaming appears to be gaining significant momentum in Australia, and it is estimated that last year 86,000 Australians used the Internet to bet on sports and casino games.[1] This is hardly surprising given that gambling, and now Internet use, are firmly ingrained in Australian popular culture. It also comes as no surprise that Australian legislatures have rushed headlong into regulating Internet gaming activity.

2. With the exception of New South Wales and Western Australia, the remaining Australian states have passed or have indicated an intention to pass legislation to regulate on-line gaming. The Northern Territory has also enacted such legislation. For the purposes of this comment, I propose to make comparisons between the Queensland Interactive Gambling (Player Protection) Act 1998 and the Victorian Interactive Gaming (Player Protection) Act 1999.

   Will the legislation succeed?

3. Whether or not the legislation will succeed depends upon the purpose of the legislation. If the purpose of the legislation is to regulate Internet gaming activity in Australia, then it will be a dismal failure. Unfortunately, many politicians and lawyers have still not come to grips with the fact that it is impossible to effectively regulate Internet activity through legislation.[2] If, on the other hand, the purpose of the legislation is to facilitate Internet gaming and to give players a greater opportunity to gamble on-line with a solvent body and with a reasonable likelihood that any winnings will be paid, then I suggest that the legislation has some prospects of success.

   The jurisdiction issue

4. Legislation which attempts to regulate Internet activity must recognise the jurisdictional limitations involved in doing so. The legal issues relating to jurisdiction and the Internet have been extensively and well argued elsewhere[3] and it is the writer's opinion that for a government to effectively regulate any activity, the following are necessary criteria:
   • The government must have jurisdiction to regulate the activity. Jurisdiction is geographically determined, and ultimately the jurisdiction of a government depends upon its recognition by other governments. Therefore, attempts to assert jurisdiction need to be credible. A government will only have jurisdiction over persons and things which have some nexus or relationship with the relevant state or country administered by that government. Thus, for example, the Victorian state government would not be recognised by other governments as having jurisdiction to legislate with respect to kiwi breeding in New Zealand.
   • The government must also be in a position to exercise power over or control breaches of the activity which the government seeks to regulate. Law-making requires some mechanism for law-enforcement which in turn depends on the ability to exercise physical control over law violators.[4]

5. Attempts to create effective regulation of the Internet fail on both counts. The Internet is so geography-averse that in any instance it may be impossible to determine an Internet user's physical location or the location in which Internet activity occurred.[5] For example, I may register an address in the <.com.au> domain, but I do not need to have my operations based in Australia to enable me to do so. Furthermore, there is nothing to stop me transferring my host computer and my Internet address (or either of them) to any other location in the world. Persons dealing with me would have no idea that such transfers had taken place.

6. Just as it is impossible to confidently assert where an Internet operator is located, it is impossible to confidently assert where Internet activity has taken place at any given time. This is because of the protocols which determine the way the Internet works and the Internet's functionality, including:
   • packet-switching, whereby information is broken up into packets which can be routed through any number of nodes around the world until they reach the recipient;
   • the use of 'caching' copies of frequently accessed material to avoid continual reference back to the originating server;
   • in the case of the world wide web, the use of hyperlinking, in-lining links and framing by an Internet host such that the user may not be able to determine the source of origin of the original material.

7. The geography-averse nature of the Internet makes Internet activity impossible to effectively regulate. Internet activity can be anywhere and almost everywhere!

8. Whilst governments will lose credibility if they unrealistically attempt to regulate Internet activity, there is considerable merit in governments enacting legislation to facilitate Internet transactions. In the writer's opinion, both the Queensland and the Victorian legislation attempt to both facilitate and regulate Internet gaming. The Queensland legislation attempts to regulate more so than the Victorian legislation.

   Shortcomings in the legislation

9. There are a number of provisions in the legislation which lack credibility in that they create jurisdictional uncertainty. Sections 7(1) and (2) of the Victorian Act and sections 8(1) and (2) of the Queensland Act in essence provide that the legislation applies both within and outside the state and 'to the full extent of the extraterritorial legislative power of the Parliament'. This seems to be an acknowledgment by the states that they will push the limits of their jurisdiction as far as they can in order to regulate Internet gaming. State and federal legislatures must exercise extreme caution when attempting to regulate activity beyond their boundaries, as such attempts can raise grave questions regarding sovereignty and jurisdiction.[6]

10. Section 16(1) of the Queensland Act provides that a person must not conduct an interactive game wholly or partly in Queensland or allow another person to do so unless the game is authorised and the person is authorised under the Act to conduct the game. What exactly does this mean? If I was legitimately conducting an on-line gaming business in the Netherlands Antilles and my web page and service were accessed by a Queensland resident, I would no doubt be considered to be at least 'partly' carrying on an interactive game in Queensland. Would I be arrested if I subsequently happened to set foot in Queensland? The scenario is not as unlikely as may first appear. In April this year an Adelaide-based holocaust revisionist, Dr Frederick Toben, was arrested in Mannheim, Germany over material posted on his Adelaide Institute website.[7] Because the material was accessed in Germany, it was treated as a German publication and one that breached German laws prohibiting denial of the holocaust.

11. The Victorian Act renders such a scenario equally likely through its prohibition on advertising of interactive games by unlicensed providers. Section 9(1)(c) provides that a person must not offer or advertise in Victoria the playing of interactive games. The web page of the provider who operates an Internet gaming business substantially outside Victoria would certainly contain such an 'offer' or 'advertisement' and would be readily accessible in Victoria. (Technically, the provider could endeavour to deny access to Victorians by programming its server to refuse requests originating at the <.au> domain, but of course there will be Victorians with Internet addresses which are not in the <.au> domain). A similar prohibition exists in Queensland under section 164 of the Queensland Act.

12. Section 17(2) of the Queensland Act prohibits a person from participating as a player in an authorised game unless that person is registered with the authorised provider. If I, as a Victorian, failed to register as a player and participated in an authorised Queensland interactive game, would I risk extradition or risk arrest when I next set foot in Queensland? At least the Victorian Act recognises the absurdity of imposing sanctions upon players, whether resident in Victoria or otherwise, and contains no corresponding provision.

    What should the role of government be in Internet regulation?

13. Whilst Internet activity is difficult to effectively regulate, attempts at regulation can result in serious and often unintended consequences. In the case of Internet gaming, the writer has no doubt that the governments of Queensland and Victoria are well-intentioned in imposing certain prohibitions in respect of Internet gaming activity. But those governments have failed to recognise the consequences of purporting to regulate the activities of persons located outside their geographical borders. (Of course, it is not only legislation specifically enacted to regulate Internet activity which can create jurisdictional uncertainty. Such problems can arise where any regulated activity takes place in an on-line environment).

14. Sensible legal opinion advocates a system of self regulation in respect of Internet activity rather than attempting to overcome jurisdictional problems through the establishment of international laws.[8] However, in view of the problems which arise when a government purports to regulate the activities of persons located beyond the geographical borders of that government, some attempt needs to be made to reach an international consensus on the extent to which governments can do so.[9] This will be no easy task given the glacial speed of the international treaty process,[10] but it is a task which must be undertaken as the Internet will be with us forever in one form or another. The urgency of this task will become more acute if, as seems likely, governments of other Australian states and of other countries continue to attempt regulation of Internet activity.

    Notes

    [1] 'Net betting set to soar', The Age (Melbourne) 20 July 1999.

    [2] See Fraser, S, 'The Copyright Battle: Emerging International Rules and Roadblocks on the Global Information Infrastructure' (1997) 15 John Marshall Journal of Computer & Information Law 759, 808-809, who comments that a lack of understanding of the Internet leads to the assumption that it can be regulated.

    [3] Jew, B, 'Cyber Jurisdiction - Emerging Issues & Conflicts of Law When Overseas Courts Challenge Your Web' (1998) 37 Computers & Law 24.

    [4] See Johnson, D R & Post, D G, 'Law and Borders - The Rise of Law in Cyberspace' <http://www.cli.org/X0025_LBFIN.html>.

    [5] See also Anil, S, 'Heralding a New Jurisprudence in Cyberspace' (1999) 1(3) Digital Technology Law Journal at <http://wwwlaw.murdoch.edu.au/dtlj/>, para 14.

    [6] Burk, D, 'Jurisdiction in a World Without borders' <http://vjolt.student.virginia.edu/graphics/vol1/vol1_art3.html>, para 5. See also Jones, R, 'Legal Pluralism and the Adjudication of Internet Disputes', (1999) 13(1) International Review of Law, Computers & Technology 49, who cautions against Western courts assuming jurisdiction and applying their own law too readily, thus imposing their own values on Internet activity and undermining legal pluralism in resolving Internet disputes.

    [7] 'Holocaust Web site in legal debate', The Age (Melbourne ) 17 April 1999.

    [8] Jew, above n 3.

    [9] See the approach of Anil, above n 5.

    [10] Long, D E, 'The Protection of Information Technology in a Culturally Diverse Marketplace', (1996) 25(1) John Marshall Journal of Computer & Information Law 129, 154, argues that much of the difficulty in establishing international consensus comes from the diverse cultural, philosophical and economic backgrounds of international players, but maintains that these diversities must be accommodated and absorbed into in any international standard that is achieved.