This week, an Australian gaming giant found its way into the finance pages of our major newspapers.
And no, it wasn't the well-known casino company you're thinking.
It was the virtually-unknown Virtual Gaming Worlds.
More profitable than the highly-regard Canva and Atlassian, Virtual Gaming Worlds has a valuation of $3.38 billion. VGW is now being touted by some as Australia's most successful "unicorn", and is reportedly considering a North American IPO.
For its predominantly North American customers, VGW mimics the casino experience by providing online poker machines, online poker and online blackjack, online scratchies and online sports wagering.
Real money buys virtual coins. After winning, those virtual coins can be redeemed for cash - the same way chips work at a bricks-and-mortar casino.
In 2021, VGW's profitability grew 300 per cent to $294 million. Revenue grew 200 per cent to $2.22 billion.
This phenomenal growth demonstrates just how favourable the coronavirus-induced lockdowns and restrictions have been for online gaming companies all over the world. While their bricks-and-mortar competitors have been forcibly closed by government decree, online gambling has boomed.
Closer to home, we need only look at wagering giant Sportsbet's recent self-congratulatory Investor Day to see evidence of this impact being replicated. Sportsbet - owned by Dublin-based Flutter Entertainment - made more profit in the past six months than throughout all of 2019. It made a whopping $710 million in profit in the last year. Together, foreign-owned online bookmakers such as Neds, Ladbrokes and Sportsbet shipped $1 billion in super-profits overseas during 2020.
The online bookmakers have an intimidating advertising war-chest with which to bombard us, spending $271 million in the last year to convince Australians to bet online. We all know the ads; blokey, jocular, unrelenting, and strategically targeted at 18- to 34-year-old males - the demographic proven to be most at risk from online gambling harm.
The online bookmakers' insidious use of this war-chest to target customers of pubs, clubs and TABs who couldn't place a bet on the sport or horses because of lockdown has paid off. According to the Australian Gambling Research Centre, one in three survey participants had signed up for a new online betting account during COVID-19.
Unlike your local pub, online betting apps have no closing time, no prohibition on betting with credit cards and no trained staff checking in on punters in real time.
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This means online gambling harm in the ACT is happening around the clock, on borrowed money, and in secret.
Most Australians understand how damaging online gambling can be. Polling shows 50 per cent of Australians loathe online gambling, and 70 per cent of Australians think the online gambling giants should be taxed more.
Gambling taxes, along with beer taxes and cigarette taxes, are part of the suite of "sin taxes" governments have at their disposal to nourish their increasingly stressed budgets. Government budgets across the country (perhaps excluding Western Australia) have been seriously whacked by funding the health and economic responses to the COVID-19 pandemic.
A stubby of beer is taxed at about 40 per cent. A packet of cigarettes is taxed higher than 40 per cent. By comparison, online gambling is only taxed at 15 per cent.
A progressive taxation system demands those who can afford to pay more, do pay more, especially when business is booming. The online gambling giants can afford to pay more tax; Sportsbet's chief financial officer Nathan Arundell has admitted profitability didn't skip a beat when online betting taxes were first levied in 2019.
We shouldn't tolerate foreign companies extracting super profits from our communities by inflicting online gambling harm, meanwhile blasting the rest of us (and our children) with irritating advertising. The Commonwealth should urgently change the advertising laws to prohibit online gambling advertising, just as tobacco advertising has been banned for decades.
In the meantime, the ACT government - as well as state governments around the country - should also step up in the next mid-year economic and fiscal outlook and increase the betting operations tax to 20 per cent. It's only a gentle increase, but a sensible first step that would increase the return to the territory government by $5 million annually.
If not, the online gambling giants will continue to pump this money into unyielding advertising campaigns. Canberrans will continue to miss out on their fair share, as will regional communities in NSW, Victoria, Queensland and South Australia, because governments around the country refuse to appropriately tax the super-profits of foreign-owned online gambling behemoths.
- Anthony Brierley is general manager of the Australian Hotels Association (ACT branch).
