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Huge tax windfall from online gambling heads overseas

Australians spent over $790 million on overseas gambling sites in 2008, sending with it any possibility to earn tax revenue for Australia due to laws restricting online gambling in Australia.

Tax Australia GamblingThe KPMG report Online Gaming: A Gamble or a Sure Bet? projected the global market for online gambling (such as online poker) was likely almost double to $32 billion by 2012, with Australian increases expected to be slightly lower than the international average.

KPMG’s Australian gaming industry practice, Anthony Travers, said Australia needed to seriously consider the upside of deregulation.

“With the potential for growth in the sector increasing, the market we see now could be just the tip of the iceberg,” he said.

If Australia can get the policy on online gambling right, there is the potential for significant tax windfalls, as well as attracting tax revenue from international gamblers, especially as online gaming on mobile phones takes off.

“It is an underground economy that could become authorised with a sustained period of re-regulation and expand significantly,” KPMG’s Anthony Travers said.

According to the Australian Productivity Commission,  online gamblng, while hard to examine due to its underground nature, is definitely a growing part of the gambling landscape.

”While illegal and invisible in official records, online gaming appears to have grown very rapidly, and could amount to 4 per cent of gambling expenditure,” The Productivity Commission said in their draft report on the issue.

Independent Senator Nick Xenophon was concerned over the potential that greater access to online gambling in Australia has to increase problem gambling in the country.

‘If you open the floodgates to online gambling you will see a new tidal wave of problem gamblers, particularly younger people,” Senator Xenophon said to The SMH.

KPMG’s Anthony Travers countered Nick Xenophon’s argument, suggesting that a regulated industry based in Australia opened up more opportunities to identify problem online gamblers and refer them to treatment.

“You would have to think that, longer term, a regulated market with support for problem gamblers would be a better way to go for the governments,” Mr Travers said.

The Productivity Commission’s draft report recommended the government consider regulated access to local gambling sites, rather than all-out prohibition as exists for some gambling verticals like online poker. However many consider it unlikely that Kevin Rudd would risk such an emotive issue in an election year, with the Government unlikely to act on the report until after the election.

David Olsen

David Olsen

An undercover economist and a not so undercover geek. Politics, business and psychology nerd and anti-bandwagon jumper. Can be found on Twitter: <a href="http://www.twitter.com/DDsD">David Olsen - DDsD</a>

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