OPINION: The economics of gambling advertising – what Australia’s regulators are getting wrong
By Dr Andrew Russell
The Australian Parliament recently passed the Interactive Gambling Amendment (Gambling Reform) Act 2026, which significantly tightens restrictions on gambling advertising.
Whilst many of the ruling Albanese government’s policy initiatives have been criticized for perceived excess, this particular initiative is either seen as appropriate, or insufficiently rigid. Proponents of this legislation are not wrong to point out that the explosive growth of online gambling does pose significant challenges that land-based gambling doesn’t (for example, land-based gambling is in defined premises, which makes it less accessible than online gambling in a world of smartphones and cryptocurrency). However, the implicit economics underlying this more restrictive legislation need to be criticized.
Gambling advertising may indeed be policy relating to gambling, however the relevant economic scholarship comes from the field of advertising studies. The most critically illuminating paper is Davis, Kay and Star’s “Is Advertising Rational?”
For context, the implicit understanding of advertising that many advertising regulations or bans (not just ones for gambling products) operate upon is one in which advertising manufactures synthetic demand by essentially brainwashing and manipulating potential customers. This understanding of advertising is favored by many on the political left (likely because it substantiates the leftist presumption of private business as a sinister force) and draws from the works of scholars like Thorstein Veblen and John Kenneth Galbraith.
Davis, Kay and Star contend that this understanding is inaccurate, because advertising can serve rational functions. Whilst the most obvious function advertising can be thought of as serving is that of remedying asymmetric information, Davis et. al. principally focus on advertising as a signaling mechanism. Lavish advertisements are expensive, and the fact a business can afford such a lavish advertisement proves the firm’s financial power and (in many cases) extensive track record of customer-pleasing business.
This is important in the online gambling space. Even in a regulated, legal gambling market, customers have a reason to worry about transferring their money to a gambling operator in order to gamble (such as buying chips in a casino or depositing money into an online casino), as there’s a risk of the operator not paying them out after they’ve finished gambling. As I detailed in my PhD thesis, a physical casino will build an opulent premises to demonstrate its financial firepower (and consequent reluctance to expropriate player’s bankrolls). Online gambling providers can’t do this.
From the gambler’s perspective, how can a player know if they’re depositing their money with a reputable online gambling provider? With the right amount of AI-powered coding, setting up a website is no longer expensive, and consequently a gambler can justifiably worry about falling for a “fly by night” operation (particularly in a world where online fraud has been widespread for decades). But an online gambling provider capable of affording lavish advertisements credibly demonstrates that they are a serious business. Restrict gambling advertisements and you restrict this flow of consumer-protective information.
To further press this point, the Australian Communications and Media Authority (ACMA) recently released guidance stating that it would ban any “notable person” from appearing in any gambling ad. Yet, as Davis et. al. correctly highlight, celebrity endorsements are very powerful tools for signaling. The celebrity puts some of their own personal status on the line, and consequently such endorsements do not come cheap. The costliness of such endorsements is precisely what provides them with their informational value. From the perspective of “advertising-as-brainwashing” these celebrity endorsements are just yet another tactic to hypnotize potential customers using star power, but as Davis et. al. demonstrated, such a perspective is highly contestable.
Never mind – the regulators have already made their decision and they clearly made it on the basis of a value judgment that people are gambling too much and that gambling advertisements are nothing more than a disease vector for a social pathology.
Of course problem gambling is a problem. Problem gambling causes significant misery, not just to problem gamblers but to people in their immediate social circles. But the regulatory approach being deployed here – a mixture of moralistic value judgments and principles from the public health sphere – is strikingly similar to another area of Australian “vice” policy that is currently in crisis.
I speak of tobacco control. Not only is tobacco advertising completely forbidden in Australia (this is notably stricter than the betting advertisement regulations), but the intellectual property of tobacco brands is expropriated through mandatory plain packaging (which is, by legal requirement, in the colour Pantone 448c – a colour deliberately selected to be revolting). On top of that, punitive taxes were imposed to essentially lock young people (who tend to be poorer) out of smoking – a generational smoking ban through fiscal means. These policies stopped short of outright state prohibition, yet the (completely predictable) outcome of them has been much the same – black markets have widely proliferated, as has the violence that organized crime syndicates tend to bring. Melbourne in particular has seen gang wars over the illicit tobacco trade.
We should be deeply concerned that Australian gambling regulation seems to be drifting more and more in this direction. The experience of the world during COVID-19 explicitly illustrated just how much economic damage (ranging from business failures to learning losses to impacts on mental health services) can be caused by heavy-handed public health policies. Yet despite the demonstrable failures of the public health approach both during the pandemic and with respect to tobacco control, this approach remains stubbornly entrenched within Australian regulators.
Harm reduction and externality mitigation remain valid goals for the regulation of gambling, including gambling advertisements. Yet these recent policy shifts in Australia suggest regulators have different goals in mind. Economics scholarship suggests that gambling advertisements serve rational, consumer-protective functions, yet these recent regulatory changes treat gambling advertisement as a memetic means of epidemic propagation. An inaccurate understanding of a phenomenon can only result in suboptimal policy towards it, yet unfortunately it seems suboptimal policy is an Australian norm.
Dig Deeper
Related stories
2026/08/25: Total Philippines gambling ad ban seen handing market back to illegal operators, data from five countries show
2026/06/30: Former NBA stars Malik Beasley and Ed Davis indicted in illegal betting scandal
2025/03/10: Bally’s bids to acquire Australia’s Star Entertainment Group
2026/09/09: “Channelization” of players into licensed sphere should be a top priority of any successful regulated gaming market: paper
2026/08/25: Total Philippines gambling ad ban seen handing market back to illegal operators, data from five countries show
2026/06/30: Former NBA stars Malik Beasley and Ed Davis indicted in illegal betting scandal
2025/03/10: Bally’s bids to acquire Australia’s Star Entertainment Group
2026/09/09: “Channelization” of players into licensed sphere should be a top priority of any successful regulated gaming market: paper
The Backstory
Advertising fight moves from morality to market design
Australia’s latest gambling advertising restrictions arrive amid a broader argument over how regulated markets keep players away from illegal operators. The public case for tougher limits is straightforward: online betting is always available, heavily promoted and capable of reaching vulnerable consumers through phones, social media and celebrity-led campaigns. The harder policy question is whether limiting licensed operators’ visibility reduces harm or weakens the legal market’s ability to compete with offshore rivals that ignore domestic rules.
That tension has become central to gambling policy across several jurisdictions. Regulators are no longer dealing only with casinos, bookmakers and broadcast ads. They are policing digital platforms, affiliates, influencers, cryptocurrency payments and offshore websites that can reappear after blocking orders. In that environment, advertising rules do more than shape consumer messaging. They determine whether players can identify lawful providers and whether licensed operators retain enough commercial value to stay inside the regulatory perimeter.
The debate in Australia echoes a wider policy shift from prohibition toward “channelization,” the term regulators and industry analysts use for moving gambling activity from illegal sites into licensed systems. A recent research paper covered by Complete iGaming argued that channelization should be a top priority for regulated gaming markets, because governments cannot eliminate demand by making legal products less visible, less competitive or more burdensome. The paper warned that when lawful operators face high friction while illegal operators offer easier access, the black market becomes the practical winner.
Australia’s restrictive instincts carry a tobacco warning
Australia has a long record of using public-health tools against vice markets, most notably tobacco. Advertising bans, plain packaging and high excise taxes were designed to reduce consumption by making the legal product less attractive and less affordable. The policy helped lower smoking rates, but it also contributed to a large illicit trade that has drawn organized crime into retail distribution and enforcement gaps.
That experience now shapes concern over gambling policy. Tobacco and gambling are not identical markets. But both show how governments can lose control when legal supply is made less competitive without a corresponding ability to suppress illegal supply. The Vanguard Overwatch paper drew that parallel directly, saying modern black markets emerge when law, market design and enforcement fall out of alignment. Australia’s illicit tobacco trade, it said, shows how a regime can keep the language of public protection while losing practical control of supply, revenue and compliance.
Online gambling adds further complications. Offshore operators can target Australians through search, social media, messaging apps and influencer channels. They do not need billboards or television slots. They can accept alternative payments, move domains and market products Australia prohibits, including online casino and in-play betting. If licensed operators face stricter advertising rules while illegal operators continue to promote through informal digital channels, regulators may reduce lawful visibility without reducing demand.
New Zealand is testing a different premise. Rather than pretend offshore online casino play does not exist, Wellington is preparing a licensing framework intended to move existing demand into a regulated space. New Zealand officials have described the goal as channeling black-market players toward licensed operators, an approach Inside Asian Gaming reported in its coverage of the regulator’s developing online casino framework at New Zealand’s channelization-focused regulatory plan. The model’s success will depend partly on whether licensed sites can be seen by consumers and compete on product, payments and trust.
Philippines case shows the cost of silencing legal brands
The Philippines has become a live test of the same question. A proposed total gambling advertising ban there would bar advertising and sponsorship across broadcast, print, outdoor, online and social media, while also banning celebrity and influencer endorsements. Supporters frame the bill as a youth-protection measure. Critics say it would reverse gains made by the Philippine regulator, PAGCOR, in moving online gambling from illegal offshore sites into licensed platforms.
A detailed analysis by Complete iGaming found that a total Philippines gambling ad ban could hand market share back to illegal operators. The article cited estimates showing the legal share of online gambling rose from a minority position in 2022 to more than half of the market by early 2026. That shift followed lower license fees, real-time monitoring, payment controls, supplier accreditation and stronger enforcement against illegal sites.
The Philippine example illustrates why advertising is not only a demand driver. It is also a sorting mechanism. Licensed platforms must verify identity, enforce age controls, monitor wagers, provide exclusion tools and answer to regulators over disputes. Illegal platforms can use similar branding tactics without paying taxes, honoring self-exclusion lists or submitting to payout reviews. When legal advertising is removed, offshore promotion does not vanish. It becomes harder for consumers to distinguish regulated operators from unlicensed ones.
The same article pointed to Italy, Belgium, France, the Netherlands and the United Kingdom as comparative evidence. Countries that sharply restricted or banned legal advertising saw illegal market activity rise or channelization fall. The U.K., which permits gambling ads under strict content, placement and targeting rules, has kept most online play within the licensed market. The lesson is not that advertising should be unrestricted. It is that rules must preserve a visible, accountable legal alternative.
Sports integrity scandals raise pressure for harder rules
Regulators are also responding to integrity concerns in sports betting, where advertising growth has coincided with a surge in prop betting and player-specific markets. Those concerns intensified after federal prosecutors in New York indicted former NBA players Malik Beasley and Ed Davis in an alleged betting scheme tied to the 2023-24 season. Complete iGaming reported that Beasley and Davis were accused in an illegal betting scandal involving alleged manipulation of on-court statistics for prop bets.
The indictment did not focus on advertising, but it sharpened the political context. Sports leagues, sportsbooks and regulators have promoted legal betting as a transparent alternative to illicit wagering. When athletes or insiders are accused of manipulating outcomes or performance metrics, the argument for legalization comes under strain. Lawmakers often respond by tightening the visible parts of the market: ads, sponsorships, celebrity endorsements and broadcast integrations.
Yet integrity cases also show the need for regulated visibility and data. Suspicious betting patterns are more likely to be detected through licensed sportsbooks and monitored accounts than through offshore sites, informal bookmakers or cryptocurrency-led platforms. If tighter advertising rules push bettors toward unlicensed channels, regulators may lose the transaction records and operator cooperation needed to identify manipulation. That does not weaken the case for controls on inducements or youth-targeted promotions. It strengthens the case for precision.
Consumer trust remains a regulatory asset
Advertising debates are also tied to consumer confidence. Online gambling requires players to deposit funds before they know whether an operator will pay winnings promptly and fairly. In land-based casinos, physical premises, licensing displays and public reputation help signal reliability. Online, brand visibility, regulatory marks and mainstream advertising can serve a similar role, especially where illegal sites mimic legitimate products.
The dispute between a Michigan player and BetMGM underscores why trust matters even in mature regulated markets. Jacqueline Davis claimed she won more than $3.2 million playing an online roulette game before BetMGM suspended her account, arguing the winnings resulted from a malfunction. The Michigan Supreme Court revived her claim in a unanimous ruling, Complete iGaming reported in its article on the US$3.1 million BetMGM case. The court did not decide the payout dispute, but it allowed the claim to proceed in court rather than leaving the player only to the regulator.
The case shows that licensed markets create forums for disputes, even when operators and players sharply disagree. Regulators, courts and public accountability can force explanations. Illegal operators offer none of that. A player who wins on an offshore site and is denied payment may have no practical remedy. That distinction is one reason advertising restrictions can have consumer-protection costs if they make regulated brands harder to find.
Australia’s policy challenge is therefore not whether gambling ads can cause harm. They can, particularly when they normalize betting, target young audiences or promote risky inducements. The question is whether broad suppression of legal advertising reduces total harm once offshore alternatives are included. The evidence from other markets suggests visibility, licensing and enforcement must work together. If one is removed, the others carry more weight than they may be able to bear.
Regulated operators face tighter capital and compliance constraints
The advertising fight also lands at a difficult moment for casino operators and gaming investors. Compliance failures, debt pressure and tighter oversight have already reshaped Australia’s land-based sector. Star Entertainment Group’s financial distress showed how regulatory problems can become balance-sheet crises. Complete iGaming, citing Inside Asian Gaming reporting, said Bally’s made a late offer to acquire Star Entertainment Group after Star struck a deal to sell its Brisbane integrated-resort stake to Hong Kong partners.
That episode was not about advertising. But it demonstrated the cost of operating in a market where regulatory expectations, remediation spending and capital needs are rising together. For online operators, advertising restrictions add another pressure point. A license brings tax, monitoring, responsible-gaming obligations and enforcement exposure. Its commercial value depends partly on the right to reach customers lawfully.
That is why gambling advertising policy has moved beyond a simple argument over promotion. It now sits at the center of market design. Regulators must curb harmful content without making the licensed sector invisible. They must protect consumers without giving illegal operators the only effective path to attention. And they must preserve enough trust, transparency and commercial incentive for gambling activity that already exists to remain inside systems the state can supervise.
