Offshore online gambling sites will be reviewed as part of an investigation ordered by the federal government.
Social Services Minister Scott Morrison on Monday announced the review into online wagering operators, to be undertaken by former NSW premier Barry O'Farrell.
There are about 30 operators running legal sites in Australia.
But almost 60 per cent of the $1.6 billion online gambling industry is going offshore to more than 2000 sites beyond the control of Australian regulators, Mr Morrison said.
"For the vast majority of Australians having a punt is part of a recreational pass time for many generations and it's part of who we are," he told reporters in Canberra.
However for two per cent gambling is a big problem and it impacts their families.
Mr Morrison hopes the review will recommend measures to protect consumers who can fall prey to offshore, illegal websites.
Its terms of reference include the economic impacts of illegal sites on legal Australian businesses, international measures and options to educate the public - including warnings and campaigns.
Representatives from the racing industry, professional sports, wagering organisations and state and territory governments will be consulted in coming weeks, with the public to also get a chance to have its say.
Recommendations will be given to the federal government by December 18.
When asked if he planned to legislate changes before the next election, Mr Morrison said he would not pre-judge the review.
