The debate began in 2001, when the jurisdiction's top phone betting company, the Number One Betting Shop, decided to relocate to Australia when it was purchased by UK operator Sportingbet.com. It was widely thought that the move came as a result of tough new legislation introduced in New South Wales and Victoria, which imposed large fines and custodial sentences on anyone caught betting through Vanuatu.

However, the Australian government recently got behind the campaign to outlaw offshore betting. Speaking last week, Racing and Gaming Minister, Nick Griffiths, announced his support for the Western Australian authorities on this issue, and observed that the country's racing industry 'needs protection' from the current situation, whereby 10% of all betting turnover goes to offshore operators.

Speaking to the ABC news service, Vanuatu's Finance Minister, Joe Carlo, said that his government would do everything in its power to protect the offshore betting industry. However, the sector has been further compromised by rumours that several operators will follow Number One Betting Shop's lead, in the face of growing pressure from Australia, unless they are given a further tax deal.

Mr Carlo said that the objections to the tax levels on the betting operators, which have increased slightly, are a 'concern' for the Vanuatu government, as 'we believe that they are making considerable revenue from the business.' However, he added that the government is not considering reducing taxes in order to persuade the offshore bookies to stay.