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Radio Australia PACIFIC BEAT April 15, 2002 Melbourne, Australia

Phone betting on Australian sporting events is an important source of income for the Vanuatu government.

The next time you're at an Australian racecourse, don't be surprised if you see people reaching for their mobile phones and dialing Vanuatu.

For years now, local legislation has allowed companies to set up shop in the capital, Port Vila, to accept bets from Australian punters at Australian racetracks. It's an arrangement that enables betting shops to avoid Australia's higher levels of taxation while offering substantial amounts to Vanuatu's government coffers.

Other international gambling schemes, like Crown Casino’s proposal for on-line casinos in Vanuatu, are potential revenue spinners for small island states.

Not surprisingly, not everyone is happy with Vanuatu's phone-betting set-up, and some companies prefer to leave the country rather than incur the wrath of Australian authorities.

PACIFIC BEAT’s James Panichi reports.

Vanuatu's top phone betting company, the Number One Betting Shop, last year decided to take the money and run -- back to Australia.

When the profitable company was bought by British public company, its management agreed to move to Darwin.

The decision was largely regarded as the result of tough legislation introduced by state governments in New South Wales and Victoria.

The laws include a (AUD)$ 5,000 fine or a jail terms for anyone in those two states caught betting through Vanuatu. These laws were a bid to protect the millions of dollars of gaming revenue on which Australian state governments have come to rely.

This meant that although the Vanuatu betting companies were not breaking any law when turning over (AUD)$ 500 million in 2001, most of their Australian clients were.

Michael Sullivan from explains that when The Betting Shop was purchased in Vanuatu, it was always the intention to move it back to Australia.

"Australia does have a very good commercial name in gaming and wagering around the world. It is a strictly regulated jurisdiction, which we respect being a part of. Certainly there are some image benefits there. And it's also an easier country to do corporate business than, say, Vanuatu is.

"It's also becoming very difficult for us, as far as legislation from New South Wales and Victoria is concerned, to continue betting in Vanuatu. So we realized we had to come to Australia to be a part of what is a very well regulated regime."

Laws to stop betting?

Sullivan doubts that Victorian and New South Wales legislation is preventing people from betting.

"Given that the Number One Betting Shop turned over (AUD)$ 525 million a year, I'd say very ineffective. But nevertheless, we need to grow our business to the next level, and we thought that the most effective way for us to do that was from Australia."

Australian laws may have done little to stop local punters placing bets with Vanuatu phone betting companies, but the laws have limited the ability of the betting companies to promote their services.

When Alan Tripp's Number One Betting Shop left town in 2001, it became impossible for competitors to advertise and fill the void.

John McDonald from the Port Vila-based Dial-a-bet, says that while over 50 percent of his business comes from Australia, changes to state laws have made business harder to come by.

"I think people are certainly aware of it. We could probably market it a little bit differently. But we don't really market. Alan had a very good, strong marketing team. We don't have a team. Ours is mainly word-of-mouth. And we generate a few clients over a period. But they had a big marketing team, a big push, and they were certainly turning over big money, which everyone's aware of, and they were able to take on bigger players."

Vanuatu’s reaction

If the tough Australian laws are designed to protect the government's gaming revenue from international competition, Vanuatu is also keen to safeguard arrangements with both phone and internet betting companies. Vanuatu's Finance Minister, Joe Carlo, says his government is keen to do everything in its power to keep the betting companies in Vanuatu.

Mr. Carlo reacted with caution to claims by some operators who suggest they will follow the lead of the Number One Betting Shop unless they are given a better taxation deal.

"That's a concern for the government, because we believe that they are making considerable revenue from the business. The tax rate has been increased slightly."

Carlo states that the government is not considering lowering the tax rate to give them an added incentive to stay in Vanuatu.

For additional reports from Radio Australia/Pacific Beat, go to PACIFIC ISLANDS REPORT News/Information Links: Radio/TV News/Radio Australia/Pacific Beat.

For additional reports from Radio Australia, go to PACIFIC ISLANDS REPORT News/Information Links: Radio/TV News/Radio Australia.

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