Australia is planning an overhaul of its online gambling sector to stem the estimated A$700m (US$643m) the country’s residents bet on unregulated overseas internet poker and gaming sites.

Although Australia allows online wagering, which covers horse racing and sports betting, it prohibits local companies from setting up online gaming operations, which include casino games, such as blackjack and roulette, and poker. Australians spent A$18bn on gambling in 2006-07, roughly the same amount as alcohol sales. Although online gaming accounts for only 4 per cent of that, it has grown significantly in recent years.

A recent report from the Productivity Commission, the government-funded independent research and advisory body, said restrictions to the local online gaming industry should be relaxed so the sector could be better regulated. It noted that the Australian government had little power to ban foreign suppliers.

“In its unregulated form, online gaming is available 24 hours a day, allows credit betting, has no intrinsic restrictions on bet sizes, has no capacity for venue staff to observe and assist people in trouble, reaches new groups of people who may be vulnerable to the medium (including those under age), and may not have any regulatory oversight to ensure probity,” the commission said.

It said the local supplier ban had limited development of Australia’s online gaming sector.

Opening up the sector would “increase competition in gambling (with better outcomes for consumers), provide Australian businesses with greater commercial opportunities, and yield governments some additional tax revenue”, the commission said.