Australia's Interactive Gambling Act 2001 prohibits advertising of gambling services on Web sites where "it is likely that the majority of that site's users are physically present in Australia". Banned services include online casino-style gaming services such as roulette, poker, craps, online poker machines and blackjack.
Breaching the Act carries a maximum penalty of AU$220,000 per day for individuals and AU$1.1 million per day for corporations.
Alexandra Mason, spokesperson for the Department of Communications, Information Technology and the Arts, told ZDNet Australia the alleged illegal practice by Google and other search engine operators was being looked into.
Google Australia displays advertising links to online gambling sites when certain keywords are misspelt. But the Internet giant isn't alone -- little-known Melbourne-based search engine company Web Wombat has admitted to such activities.
Justine Munsie, senior associate at leading Asia-Pacific law firm Mallesons Stephen Jaques, told ZDNet Australia that she found "a lot of potential breaches of the Act" on sites such as Google Australia and Web Wombat.
According to Munsie, any gambling advertisement which appears on an Australian Web site is considered published in Australia.
"If a Web site that is targeting Australian users publishes an advert for a Web site offering online gambling services, regardless of where that gambling site is located, because the advert is published in Australia, the law is broken," she said.
Michael Tancredi, Web Wombat managing director, confessed that his Web site contains links that are illegal. However, he claims the company is "fire fighting" all the time in order to keep the site above board.
"What we are trying to do is fire fight, we know it is illegal and we are trying to get rid of them as they come out," said Tancredi.
Tancredi said the problem stems from an automated feature on Web Wombat which online gambling sites have abused. "This feature was originally designed for companies outside Australia to sponsor links on our site and attract Australian eyeballs.
"People register, pay their fee with a credit card and the process is automated. We have been manually checking as we go and blocking them, but there are some that have carried over. As soon as we see them we try and get them out but they keep getting back in," he explained.
Web Wombat's Tancredi said the company faces similar challenges when dealing with prescription drugs advertisements.
"The other problem is pharmaceuticals. In America they can be advertised openly but if they are prescription drugs they can't be advertised in Australia," he said.
While looking into potential breaches, Munsie discovered that although Google Australia did not display any sponsored links to gambling Web sites when results for terms such as "online casino" were displayed, such companies had managed to sponsor links for misspellings.
"Obviously Google is thinking it is doing the right thing and not accepting any sponsored links from these online casinos but somehow it has forgotten to close off the loop of the spelling error," said Munsie, who pointed out that it was probably an oversight. "It is most likely an accident and if it was brought to [Google's] attention I'm sure they would fix it," said Munsie.
However, Google spokesperson Debbie Frost said the company will not comment on the issue.
Mallesons' Munsie said she was surprised that there had been no prosecutions to date, especially as the Act is technically breached even by listing online casino sites in search results. However, she said this was probably "not a priority".
"If you are building no more than basic listings ... it is probably an offence that nobody will be interested in prosecuting. It is probably going to be a different story for taking sponsored links -- essentially receiving money for the publication of those adverts," said Munsie.
Since the Interactive Gambling Act came into effect, the Department of Communications, Information Technology and the Arts has only received five complaints for potential breaches. The only complaint still under investigation is about an e-mail that contained "promotion and links to an interactive gambling service offering betting exchange products." The complaint was lodged in March 2003 and is still under investigation.
Peter Coroneos, chief executive of the Internet Industry Association, told ZDNet Australia that he believes the law is generally being adhered to.
"This is the first time this has come to our attention. The law is largely being adhered to. I am not aware of any interactive casino sites in Australia that are offering services to Australians," said Coroneos.
Google's closest competitor in Australia, Yahoo.com.au, displays search results for gambling sites but not advertisements.
"Although our Directory site does include links to gambling-related sites, our legal department has said that they are "editorial links" and "fall under the exemptions" provided by the Act," said Tamsin Smith, Yahoo Australia and New Zealand spokesperson.