There are a lot of people who are against gambling, and while the majority of people do so responsibly, it’s really not that hard to understand the anti-gambling stance. The problem is that there are so many ways that this can backfire.
Just take a look at prohibition in the US in the 1920s and all its negative effects. The law was too strict, and the overregulated industry always looked for other cracks.
Even in countries where online gambling is illegal, people find a way to avoid these restrictions, either by using offshore casinos or the use of VPNs.
This is just one of the many reasons why a former CEO of the ACIC warns against over-regulation and excessive taxation of this industry. Here are more of these caveats that a lot of people may have failed to consider.
Over-regulation doesn’t stop gambling
When the rules get too strict, people find ways around them. That’s exactly what’s happening in Australia’s gambling scene. With high taxes and heavy regulations, legal options become less appealing, and offshore casinos start looking like the better deal. The problem? The government gets no oversight, no taxes, and people still get to play as much as they want.
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Also, authorities lose track of the industry entirely. Techopedia’s research on Australian gambling laws highlights how excessive restrictions just make people play offshore. In other words, not regulating the industry will fail at its core intention and fail to yield any positive effect. Keeping the industry viable within the legal system is the only way to prevent a complete loss of oversight.
Taxing the industry to death creates a bigger problem
Governments love taxing industries that generate massive revenue, and gambling is no exception, but there’s a fine line between reasonable taxation and squeezing the industry until it collapses. Casinos and betting operators need to be viable businesses - if they aren’t, they shut down or raise prices, making gambling more expensive for the average person.
When the price of legal, local gambling options gets too high, players start looking for alternatives. Once that happens, the money is just going abroad, which is definitely a negative outcome for the tax system. We’re talking about a bigger financial loss than that caused by shop thefts plaguing Australia.
Visibility is key to keeping gambling safe
You can’t regulate what you can’t see. That’s the biggest issue with over-regulation - when you make it too hard for regulated operators to function, they disappear, and offshore markets thrive. Michael Phelan points out that law enforcement agencies need visibility in the gambling industry, but if betting moves offshore, there’s no visibility at all.
It’s not even about any illegal activity; it’s the basic rule of the market. People have a need for a specific service, and if they can’t find it locally, they look for it elsewhere. As for these offshore casinos, they see a lucrative market and want in. The players get what they want, the offshore casinos get access to the new market, and only the Australian government (legislature and taxes) loses.
Australia’s casino industry is already feeling the impact
Casinos across the country are struggling under the weight of new regulations. The Star Entertainment Group, one of Australia’s biggest operators, is on the brink of collapse. The reason? A combination of increased regulatory costs, declining player numbers, and strict new gambling policies.
Meanwhile, underground poker games are popping up in Victoria, and the number of offshore casinos on the market is rapidly increasing. These offshore casinos are actually quite well-regulated in their own country of origin, but not all of them and not all the time. Pretending that every single one of them is as reputable puts you in a dangerous position.
Learning from the tobacco industry’s mistakes
If there’s one industry that shows how over-regulation backfires, it’s tobacco. The Australian government heavily taxed cigarettes, thinking it would reduce consumption. Instead, it created a massive black market where shady parties took distribution. Now, illegal tobacco sales are booming, and law enforcement is struggling to keep up. A similar thing can happen with gambling.
When governments regulate and tax it to the extreme, the illegal industry shrinks, but gambling itself doesn’t stop - it just moves into unregulated spaces. Once that happens, bringing it back under control is a much bigger challenge than simply maintaining a balanced approach.
