Vanguard Overwatch Paper: Channelisation is Primary Test of Regulatory Success

A research paper published on 7 September 2026 by Australian advisory firm Vanguard Overwatch posits that the primary measure of a gambling regulator's effectiveness is its ability to channel activity into the licensed market. The paper, titled 'The Price of Losing Control: Channelisation and Regulatory Failure in Online Gambling', was authored by the firm's Principal, Paul Newson, who is also the founder of the annual Regulating the Game conference in Sydney.

According to the paper, governments should focus on channelisation as the central policy test, rather than debating the binary question of whether to regulate online gambling at all.

Contrasting Antipodean Approaches

The research highlights Australia as a jurisdiction where a prohibitionist stance has created challenges. The country continues to ban online casino and online poker, and has maintained its prohibition on online in-play sports betting. This approach, the paper suggests, leaves a significant market open to unlicensed offshore operators.

In contrast, New Zealand is moving in the opposite direction by preparing to establish a licensed market for online casino. The country's Department of Internal Affairs has framed the policy shift as a direct attempt to channel existing consumer spending with offshore sites into a regulated domestic framework. The first licences are anticipated to be issued later in 2026.

However, Newson's paper cautions that New Zealand's success will be contingent on execution. It identifies potential hurdles such as prohibitive licensing costs, a narrowly defined product scope, and asymmetric advertising rules, all of which could hamper the new regime's ability to compete with the black market.

Black Market Drivers and Recommendations

The paper argues that illegal offshore websites successfully attract gamblers by offering advantages in product access, pricing, and lower-friction participation. This problem is compounded by the use of cryptocurrency payment rails and unregulated promotion through social media channels, which complicates enforcement efforts.

To illustrate the potential scale of the issue, the research draws a parallel with Australia's illicit tobacco market, where illegal products now reportedly account for 80 per cent of consumption. It also contends that taxation revenue should be viewed as a secondary benefit of an effective legal market, not its primary justification.

To counter the black market, the paper recommends a suite of measures. These include real-time monitoring, stronger enforcement commitments, and specific action against alternative payment channels. It also calls for greater enforcement capacity, accountability for the entire commercial ecosystem that supports illegal operators, and regular reviews of what drives black-market demand, particularly how product prohibitions contribute to it.