Poker.com.au domain sells for $100,000, but expert says price reduced by online gambling laws

The local domain name market has continued to heat up with Poker.com.au selling for $US100,000. But one industry expert says the site’s value may have been reduced because of Australia’s restrictions on online gambling.

Legislation released about a decade ago restricts the advertising of interactive gambling services in Australia. David Lye, who runs domain name auction house NetFleet, says the laws means Poker.com.au has sold for less than it would have otherwise.

“There is a Canadian equivalent, Poker.ca, that sold for $400,000 last year. Now, Canada has one-and-a-half times the population of Australia and that site commanded a price much, much higher.”

“One of the aspects involved in all of this is the legislation, and the legislation specifically prohibits the advertising of online interactive gambling. In theory, you cannot have an Australian website advertising these interactive gaming services, and the fines are large.”

The laws also state that it is illegal for any online gambling site to offer services to Australians located in the country – but the law does not make it a criminal act for Australians to engage in these services.

The Government has even restated last year that it would not lift the restrictions, despite a Productivity Commission report recommending the restrictions should end.

Lye says that if interactive gambling advertising were allowed in Australia, “you might see prices that were worth 10 times the amount… the legislation has obviously deflated the price”.

The site has been bought by sports gambling company 888.com, which operates various gambling sites internationally and counts Shane Warne as an ambassador. So far, the company hasn’t used Poker.com.au for any new service but the website claims that “a seriously exciting new poker revolution” is “coming soon”.

Lye points out that online gambling is one of the most lucrative practices on the internet, and that continued government opposition to liberalised gambling laws will keep prices down.

“There is huge money in online poker. Some of these poker rooms are bringing many thousands of dollars,” he says.

But the Government hasn’t moved from its position, with communications senator Stephen Conroy saying last year that the online aspects of the Interactive Gambling Act 2001 wouldn’t be changed, going against the Productivity Commission’s recommendations.

“The Australian Government does not agree with the Productivity Commission recommendation that the Australian Government amend the Interactive Gambling Act 2001 to allow for a liberalisation of online gambling, starting with allowing the provision of online poker games to Australians. The existing rules will continue to apply,” the senator said last year.

And some have called for even stricter regulations on the industry. Independent senator Nick Xenophon said in a submission to the Productivity Commission that the recent arrival of sites such as Betfair, which “allows for an expansion of gambling by virtue of the product that is offered”, highlights the need for a more “comprehensive regulatory approach”.

Senator Xenophon was contacted this morning by SmartCompany, but was unavailable for comment.

Lye says the issue is timely given the domain name industry is heating up.

Last month Woolworths bought Hardware.com.au for $33,000, and Nye expects Electricity.com.au – which just came back on the market – to sell for around $50,000.

“The theory of relaxing these laws is that you’re allowing access to poker rooms, you’re getting tax revenue which could be in the realms of hundreds of millions per year, and you can regulate the industry.”

“This is one of the most lucrative areas on the internet… but the legislation means the price is lower than it would have been overseas.”