SEPTEMBER 2016
Gambling Law
& Regulation
Level 12
60 Carrington Street
SYDNEY NSW 2000
DX 262 SYDNEY
Tel +61 2 8915 1000
Fax +61 2 8916 2000
Gambling Law & Regulation
Overview
Welcome to a bumper issue of Addisons’ latest Gambling Law & Regulation Newsletter.
There have been a considerable number of significant issues affecting the gambling sector
that have occurred since our last newsletter and some of them are covered in this edition.
Highlighted in this newsletter are the following topics:
•
Amendments to the Interactive Gambling Act. Earlier this year, the Federal
Government released its response to the review conducted by the Hon. Barry
O’Farrell (the Review). Almost all of the recommendations made by the Review
were accepted by the Government, save for the recommendation made in the
Review that further consideration be given to liberalisation of the restriction on online
in-play betting on sports. Indeed, the Review, and the Government’s response,
focused on the activities of the onshore bookmakers, rather than activities of the
offshore gaming operators.
Now that the July 2016 Federal election has taken place (with a wafer thin majority
for the Coalition Government in the lower house of the Federal Parliament), it is
anticipated that a bill will be tabled soon proposing amendments to the Interactive
Gambling Act which are consistent with the Government’s responses to the Review.
The recommendations in the Review, and the Government’s responses, are
highlighted in our focus paper Australia – Release of Report on Illegal Offshore
Wagering – Another Missed Opportunity for Reform of Australia’s Prohibitions on
Online Gambling?
•
High Court’s decisions involving State of Victoria, Tabcorp and Tatts. It is rare
that disputes involving gambling issues reach the High Court of Australia, Australia’s
highest court of appeal. However, where the stakes are high, as they were in this
case which involved claims brought by each Tabcorp and Tattersalls for damages in
respect of the decision of the State of Victoria to change the method applying to the
licensing of the supply of gambling machines in Victoria, it is not surprising that the
High Court was prepared to exercise its jurisdiction. In this case, the High Court
confirmed the principle of sovereign immunity in respect of the grant of gambling
licences: Your Gambling Licence is a Privilege NOT a Right – the Australian Position
•
Gambling Advertising. Hardly a day passes without there being media comment
about the extent to which Australia’s licensed wagering operators engage in
1
promotional activity and the growth of sports betting . Due to the level of concern,
further regulatory measures are being considered continuously by State and Territory
2
regulators as well as through the introduction of the self-regulatory codes. For a
summary of the recently introduced AANA Code of Practice for Wagering and
Advertising Marketing: see: Self-Regulation for Australian Wagering Operators: the
3
AANA Code of Practice for Wagering Advertising and Marketing .
1
This is highlighted in the 2014-15 Australian Gambling Statistics released earlier this week. On the other hand, the proportion of
gambling revenue derived from sports betting (although growing) is small, when compared to the revenues derived from poker
machines.
2
For the most recent proposals in Victoria, see https://myviews.justice.vic.gov.au/static-betting-advertising. Submissions are due
on 12 September 2016.
3
2
The first decision under this Code was handed down on 10 August 2016: see ASB - William Hill Case Report
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Gambling Law & Regulation
•
Norfolk Island. Together with the Northern Territory, Norfolk Island has been the
leading licensing jurisdiction for online gambling in Australia. With the recent change
in status of Norfolk Island from a self-governing external territory of Australia to a
regional council of New South Wales, there has been considerable speculation about
the continuation of the Norfolk Island gambling licensing regime. These
developments are summarised in: Lights off or business as usual? – What is the
status of the Norfolk Island Gaming Authority?
•
Gambling Sector and Anti-Money Laundering and Counter-Terrorism Financing
Requirements. Australian licensed gambling operators are required to comply with
obligations set out in Australia’s anti-money laundering and counter-terrorism
financing legislation. Among the obligations imposed by the legislation is the
necessity to maintain an Anti-Money Laundering Program and comply with the
requirements set out in the relevant legislation. Last year, the regulator, AUSTRAC,
commenced proceedings claiming that Tabcorp entities failed to comply with their
obligations under the legislation. These proceedings are being watched closely by
all entities which are subject to the requirements of the AML/CTF legislation,
including gambling industry participants, particularly as these proceedings approach
a hearing, now due to take place in June 2017. See our summary in The Tabcorp
Files: An Update on the AUSTRAC v Tabcorp Proceedings
•
New Zealand. Last year saw the announcement of a review into New Zealand’s
legal framework dealing with online betting services provided by offshore operators
to persons in New Zealand. Since then, the Working Group responsible for
conducting the review has submitted its report to the responsible Minister; and more
recently, the Minister has released a Discussion Paper, outlining specific proposals
for legislative reform and calling for submissions. The proposals include imposing
‘consumption’ and ‘use of data’ fees on offshore gambling operators. The closing
date for submissions was 27 May 2016, however we are not aware of any
announcements relating to these proposals, nor of any proposed legislation to
implement them. Our article updates last year’s focus paper concerning the review’s
announcement to cover these, and associated, developments – see New Zealand Update on Review of Offshore Online Betting Regulation.
Similar proposals in South Australia to introduce a place of consumption fee regime
are being monitored closely. As we write this newsletter, these proposals are the
subject of considerable debate, and opposition by sports betting operators. We are
monitoring closely the progress of these proposals and will report on the outcome in
the next edition of our newsletter.
In the meantime, we trust you enjoy this edition of our Addisons Gambling Law &
Regulation newsletter. If you have any queries or wish to discuss, please do not hesitate to
contact any of Addisons Media and Gaming team.
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Gambling Law & Regulation
Contact Us
Jamie Nettleton
Partner
Telephone +61 2 8915 1030
Facsimile
+61 2 8916 2030
E-mail [email protected]
Justine Munsie
Partner
Telephone +61 2 8915 1011
Facsimile
+61 2 8916 2011
E-mail [email protected]
Richard Keegan
Special Counsel
Telephone +61 2 8915 1075
Facsimile
+61 2 8916 2075
E-mail [email protected]
Cate Sendall
Senior Associate
Telephone +61 2 8915 1027
Facsimile
+61 2 8916 2027
E-mail [email protected]
Steven Hailstone
Senior Associate
Telephone +61 2 8915 1083
Facsimile
+61 2 8916 2083
E-mail [email protected]
© ADDISONS. No part of this document may in any form or by any means be reproduced, stored in a retrieval system or transmitted without prior written
consent. This document is for general information only and cannot be relied upon as legal advice.
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Contents
5
THE TABCORP FILES: AN UPDATE ON THE AUSTRAC V
TABCORP PROCEEDINGS
6
SELF-REGULATION FOR AUSTRALIAN WAGERING
OPERATORS: THE AANA CODE OF PRACTICE FOR
WAGERING ADVERTISING AND MARKETING
9
LIGHTS OFF OR BUSINESS AS USUAL? – WHAT IS THE
STATUS OF THE NORFOLK ISLAND GAMING AUTHORITY?
11
YOUR GAMBLING LICENCE IS A PRIVILEGE NOT A RIGHT
– THE AUSTRALIAN POSITION
14
NEW ZEALAND – UPDATE ON REVIEW OF OFFSHORE
ONLINE BETTING REGULATION
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The Tabcorp Files: An Update on the AUSTRAC v
Tabcorp Proceedings
Author (s): Jamie Nettleton, Karina Chong, Mia Corbett
Overview
On 22 July 2015, the Australian Transaction Reports and Analysis Centre (AUSTRAC),
Australia’s anti-money laundering and counter-terrorism financing regulator and specialist
financial intelligence unit, commenced court proceedings (Tabcorp Proceedings) against
three Tabcorp group companies, TAB Limited, Tabcorp Holdings Limited and Tabcorp
1
Wagering (Vic) Pty Limited (together, Tabcorp).
We previously wrote about the Tabcorp Proceedings in our December 2015 Gambling
Newsletter Focus Paper: “Do you know your customer? An Australian online wagering
operator’s guide to the requirements under Australian anti-money laundering and counterterrorism financing laws.” - see here.
Subsequently, AUSTRAC has alleged that Tabcorp has committed a further 61 reporting
breaches of the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (Cth)
(the Act).
Enforcement of the Act in respect of the Gambling Sector before the Tabcorp
Proceedings
The proceedings against Tabcorp is the first time that AUSTRAC has initiated Federal
Court proceedings against an entity under sections 175 and 176 of the Act for breaches of
Australia's anti-money laundering and counter-terrorism financing (AML/CTF) legislation.
Prior to the Tabcorp Proceedings, AUSTRAC’s enforcement activity had involved primarily
the issuing of infringement notices and penalty fines for various breaches of the Act. For
example, in 2015 AUSTRAC issued a number of infringement notices.
In February 2015, AUSTRAC fined Australian online bookmaker ClassicBet Pty Ltd for
breaching Australia’s AML/CTF laws. AUSTRAC issued ClassicBet a $10,200 infringement
notice for failing to apply for its enrolment on AUSTRAC’s Reporting Entities Roll within the
timeframe required after commencing to operate. This failure was in breach of section 51B
of the Act which requires that all wagering operators be entered on the Reporting Entities
Roll within 28 days of commencing the provision of gambling services to customers.
In May 2015, AUSTRAC issued an infringement notice on one of the world’s largest
remittance network providers, MoneyGram Payment Systems, Inc and imposed a record
fine of $336,000 for providing money remittance services through an unregistered
remittance business.
The Tabcorp Proceedings demonstrates the willingness of the Australian regulator to take
stronger steps to enforce the provisions of the Act by commencing legal proceedings.
Initial claims by AUSTRAC against Tabcorp
On 22 July 2015, AUSTRAC initiated court proceedings in the Federal Court against
Tabcorp for “extensive, significant and systemic non-compliance with Australia’s anti2
money laundering and counter-terrorism financing” .
In the Tabcorp Proceedings issued in July 2015 (the Initial Tabcorp Proceedings),
AUSTRAC alleged over 100 separate breaches of the Act by Tabcorp including:
•
1
The Tabcorp entities’ failure to provide timely reports to AUSTRAC of suspicious
matters that suggested credit betting, credit card fraud and other illegal activity. One
Chief Executive of the Australian Transaction Reports and Analysis Centre v TAB Ltd ACN 081 765 308 & Ors (NSD852/2015).
2
See AUSTRAC’s Media Release regarding the Tabcorp Proceedings at http://www.austrac.gov.au/media/mediareleases/austrac-takes-federal-court-action-against-three-tabcorp-companies.
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breach related to the alleged failure by Tabcorp to lodge a suspicious matter report with
AUSTRAC following the suspension of betting activity on a rugby league match in 2010
after receiving unusually large bets on that match.
•
Tabcorp’s failure to adopt and maintain the mandatory AML/CTF Program, as required
by section 81 of the Act.
•
Tabcorp’s failure to follow the required customer identification processes at the account
registration stage and providing betting services to customers without having
conducted the proper customer identification and verification procedures. 3
In the Initial Tabcorp Proceedings, AUSTRAC claimed penalties of $17 million, the
4
maximum civil penalty a Court may order in respect of a contravention of the Act at the
time the offences were allegedly committed.
On 13 October 2015, Tabcorp filed a 170-page defence in the Federal Court in respect of
AUSTRAC’s claims. Tabcorp claimed in its defence that it had reported suspicious betting
transactions and breaches to the relevant gambling regulators and police authorities at the
5
time of the offences, but did not necessarily notify AUSTRAC of the same issues.
A four week hearing was originally scheduled to commence on 5 September 2016 before
Perram J in the Federal Court.
Amended claims by AUSTRAC against Tabcorp
On 27 April 2016, AUSTRAC filed an amended claim against Tabcorp alleging a further 61
contraventions of the Act (Amended Claim), bringing the total number of alleged
6
contraventions of the Act to 236. In a Media Release, AUSTRAC CEO Paul Jevtovic
indicated that these additional alleged contraventions related to information that came to its
knowledge after the Initial Tabcorp Proceedings were commenced and that these
allegations “while similar to those filed by AUSTRAC last year, are serious and reflect a
7
systemic pattern of non-compliance over a number of years.”
These additional contraventions address, among other things, Tabcorp’s failure to report to
AUSTRAC the fact that a large number of TAB betting accounts were opened under false
8
names and used to filter fraudulent credit card funds for organised crime figures.
AUSTRAC has also requested that the Federal Court apply the increased maximum civil
penalty of $18 million per contravention in respect of those new claims.
Tabcorp’s Defence to Amended Claims
In response to these further claims, Tabcorp filed an amended defence in which it
acknowledged deficiencies both in its AML/CTF Program and reporting procedures, and the
oversight of its obligations under AML/CTF law by key personnel (Amended Defence).
This represents a more conciliatory approach by Tabcorp with respect to the charges laid.
In a media release issued by Tabcorp on 23 June 2016, Tabcorp admitted that it had:
•
Failed to enrol as a reporting entity within the required time period,
•
Failed to report some suspicious matter reports to AUSTRAC relating to credit betting,
•
Not maintained a sufficient AML/CTF Program, and
3
'Tabcorp working to resolve AUSTRAC concern', SBS News (online), 24 July 2015.
<http://www.sbs.com.au/news/article/2015/07/24/tabcorp-working-resolve-austrac-concern>.
Since 31 July 2015, the maximum penalty has been increased to $18 million due changes in the Commonwealth penalty unit
rates.
5
Perry Williams, 'Tabcorp to battle 'dirty money' claims', The Sydney Morning Herald (online), 14 October 2015
<http://www.smh.com.au/business/tabcorp-to-battle-dirty-money-claims-20151014-gk8xnd.html>.
6
See AUSTRAC's Media Release dated 27 April 2016 at http://www.austrac.gov.au/media/media-releases/austrac-expands-itsfederal-court-action-against-three-tabcorp-companies.
7
Ibid.
8
Perry Williams, 'Gaming giant Tabcorp faces new 'dirty money' claims from government regulator', The Sydney Morning Herald
(online), 20 April 2016 <http://www.smh.com.au/business/gaming-giant-tabcorp-faces-new-dirty-money-claims-from-governmentregulator-20160420-goarbe.html>.
4
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Gambling Law & Regulation
•
Not appropriately verified some of its customers.
9
Next Steps
As result of the Amended Claim and the Amended Defence, the court hearing has now
been delayed until 6 June 2017, giving both Tabcorp and AUSTRAC an additional 9
months to prepare their cases.
What does this mean for gambling operators?
The Tabcorp Proceedings are significant as they are the first time that AUSTRAC has
commenced court proceedings in respect of contraventions of Australia’s AML/CTF laws.
While there is no doubt that AUSTRAC will continue to issue infringement notices and
penalty fines for smaller infringements, the Tabcorp Proceedings demonstrate AUSTRAC’s
willingness to enforce Australian AML/CTF laws by commencing legal court proceedings
and seeking more significant penalties.
This is demonstrated by AUSTRAC’s Media Release on 27 April 2016 relating to the
Tabcorp Proceedings which stated that “this case is a timely reminder that all reporting
entities – big and small – must meet their compliance requirements, in order to protect the
10
Australia community.”
Given AUSTRAC’s willingness and the hefty penalties that may be imposed for a breach,
reported in a recent article in the Sydney Morning Herald as involving a theoretical
11
maximum fine of $4.2 billion , all Australian licensed wagering operators should ensure
that they are aware of, and comply with, their obligations under Australia’s AML/CTF laws.
This is particularly relevant given that Australia’s gambling industry has long been
considered by the Australian government and AUSTRAC to be a high-risk sector for money
laundering due to the high cash turnover and large volume of transactions conducted online
which gives rise to greater risks that illegitimate transactions are being hidden among
legitimate betting transactions.
9
See AUSTRAC’s Media Release dated 23 June 2016 at https://www.tabcorp.com.au/news_mediareleases_detail.aspx?view=957.
10
Above n 6.
11
Lucy Battersby and John Stensholt, ‘Tabcorp’s legal costs rise in fight against money – laundering allegations’, The Sydney
Morning Herald (online), 4 August 2016 < http://www.smh.com.au/business/tabcorp-legal-costs-rise-in-fight-against-moneylaundering-allegations-20160804-gql3jr.html>.
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Self-Regulation for Australian Wagering Operators: the
AANA Code of Practice for Wagering Advertising and
Marketing
Author (s): Jamie Nettleton, Mia Corbett
From 1 July 2016, all Australian licensed wagering operators have been required to
comply with the new AANA Code of Practice for Wagering Advertising and Marketing
(Code).
Developed by the Australian Association of National Advertisers (AANA) in association with
the Australian Wagering Council, the Code will be administered by the Advertising
Standards Bureau (ASB).
The Code reflects similar measures relating to the wagering sector that exist in the UK, and
supplement obligations relating to advertising generally that exist in the AANA Code of
Ethics.
What types of advertising does the Code regulate?
The Code seems to address community concerns that relate to sports betting
advertisements, particularly those that appear to normalise problem gambling behaviour
and will require all Australian licensed wagering operators to conduct advertising in a
manner that meets community standards.
The Code will apply to all material which is published or broadcast by any Australian
licensed wagering operator including affiliates, fantasy sports operators, odds compilation
and tipping service providers, where those providers are licensed by a regulatory authority
in any Australian State or Territory (Operators). (The Code does not apply to licensed
providers of gaming, casino services, keno, lotteries or trade promotions.)
The Code applies to advertising across all platforms and channels including traditional
media and, in some cases, communications facilitated by new and emerging technological
media, such as user generated content, in-app and push notifications, direct marketing
materials, editorial blog posts and public relations communications.
How does the Code fit within the existing regulatory framework?
The Code acknowledges that Operators may already be required to comply with similar
restrictions on advertising that exist, in various forms, under licensing conditions,
responsible gambling codes of practice and State and Territory legislation.
However, the Code broadens the application of the existing restrictions by:
•
Clarifying that the restrictions in the Code extend to advertising conducted through
emerging marketing channels, and marketing channels that may be developed in the
future as a result of new technologies;
•
Applying the Code to advertising conducted by direct marketing and through social
media;
•
Providing an avenue of complaint for individual consumers that is efficient and cost
effective;
•
Extending the restrictions on advertising to prevent, for example, advertising that
encourages excessive participation in wagering activities; and
•
Providing a nationally applicable and consistent framework to ensure that advertising
by wagering operators complies with community standards.
What must wagering operators do to comply with the Code?
To comply with the Code, Operators must ensure that any advertising or marketing material
over which they have “reasonable control” does NOT:
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Gambling Law & Regulation
•
having regard to the theme, visuals and language used, direct itself primarily to children
under the age of 18;
•
depict a person under the age of 18 except in an incidental role in a natural situation
where there is no implication they will engage in wagering activities;
•
depict a person 18 – 24 years of age engaging in wagering activities;
•
depict a person placing a wager in combination with the consumption of alcohol;
•
state or imply a promise of winning;
•
portray, condone or encourage participation in wagering as a means for relieving a
person’s financial or personal difficulties;
•
state or imply a link between wagering and sexual success or enhanced attractiveness;
•
portray, condone or encourage excessive participation in wagering activities; or
•
portray, condone or encourage peer pressure to wager or disparage abstention from
wagering.
What are the consequences for non-compliance with the Code?
Where the ASB investigates a consumer complaint under the Code, and makes a finding
against an Operator, the Operator will be required to remove the offending advertisements
from circulation.
Failure by a wagering operator to comply with a request to remove an advertisement at the
request of the ASB is likely to give rise to a breach of their licence conditions or the relevant
State or Territory legislation. In any event, media outlets are also unlikely to run
advertisements by a wagering operator which are deemed to be non-compliant with the
Code.
What does the Code mean for wagering operators?
In many cases, the obligations in the Code reflect statutory requirements relating to
advertising under State or Territory law and/or conditions of the licence under which the
operator conducts sports betting.
We strongly suggest that all Operators review any materials used for promotional purposes
in any media to check compliance with the Code. This review should be conducted prior to
developing the relevant collateral or booking media slots.
It is also important to note that obligations set out in the AANA Code of Ethics remain
applicable.
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Lights off or business as usual? – What is the status of
the Norfolk Island Gaming Authority?
Author (s): Jamie Nettleton, Nicola Austin
1 July 2016 has passed, leaving one question unanswered; is it ‘lights off’ or ‘business as
usual’ for the Norfolk Island Gaming Authority (Authority)?
Background to the Authority
Until recently, Norfolk Island enjoyed a reputation as one of the two leading Australian
licensing jurisdictions for online gambling, alongside Northern Territory, with a significant
number of licences granted extending from sports bookmaking to online gaming.
The Authority exercises its functions pursuant to the powers granted by legislation duly
enacted by the Norfolk Island Legislative Assembly, including the Gaming Supervision Act
1998, Gaming Act 1998 and Bookmakers and Betting Exchange Act 1998 (Norfolk Island
Gaming Laws).
The Norfolk Island Gaming Laws offer licensees a relatively flexible regulatory regime. This
flexibility has attracted a number of gambling operators and in particular, has allowed startups to offer various forms of online gambling including new categories such as fantasy
sports and affiliates.
An end to autonomy
At the beginning of July, Norfolk Island ceded its status as a self-governing external territory
of Australia and became, in effect, a regional council of New South Wales.
This governance reform was brought into effect by the Norfolk Island Amendment Act 2015
(Cth) (Amendment Act) which introduced a number of sweeping changes to the
administration and autonomy of Norfolk Island. The Amendment Act provided for, among
other matters, the disbanding of the Legislative Assembly of Norfolk Island and the repeal
of a substantial number of statutes which had been enacted in Norfolk Island.
The effect of the Amendment Act was monitored closely by Norfolk Island’s licensed
gambling sector, with many industry stakeholders speculating as to the role of the Authority
as a consequence of the changes brought into effect by the Amendment Act.
To date, the Norfolk Island Gaming Laws have not been repealed and, in the absence of
express legislative decree by the Federal Government, the Norfolk Island Laws and existing
gambling licences remain in full force and effect.
Notwithstanding the continuance of the Norfolk Island Gaming Laws, events occurring in
the period up to 1 July are relevant in considering the powers and functions of the Authority
and the validity of Norfolk Island gaming licences.
Audit of the Authority
In February 2016, the Federal Government commissioned a performance review audit of
the Authority (Audit). Although the Audit overlapped with the timing of the Amendment Act,
the Audit had in fact been planned for over a year.
A final report containing various findings and recommendations was provided to the
Minister for Major Projects, Territories and Local Government (Minister) in late June 2016
At the time of writing, it remains unclear what, if any, effect the outcome of the Audit will
have on existing licences granted by the Authority or on the powers and functions bestowed
upon the Authority under the Norfolk Island Gaming Laws.
Further, pending the outcome of Audit, the Minister, through his delegate, issued on 6 April
2016 the Gaming Supervision Direction 2016 (Direction). This Direction restricted the
ability of the Authority to grant and renew licences. . On the other hand, all existing licences
remain in force and the ability of the Authority to conduct everyday supervision of these
licences has not been restricted.
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Resignations and Interim Arrangements
In the weeks leading up to 1 July 2016, both the longstanding Director of the Authority, Mr
Roderick McAlpine, and the Board of the Authority announced their resignations. It was
initially considered that these resignations might impact the ability of the Authority to
continue to perform its functions.
However, this concern was alleviated by a media release on 30 June 2016, which made
various announcements relating to the Authority, Mr Ian Hall of KPMG was appointed as
the Director of the Authority with Ms Robyn Fleming, executive Director of the Department
of Infrastructure and Regional Development, and Mr Carl Murphy, Chief Executive Officer
of the Department of Infrastructure and Regional Development, being appointed on an
interim basis to the board of the Authority.
With these interim appointments, it would appear that the Authority has the ability to
continue to operate in its capacity as the Norfolk Island gambling regulator.
Further, on 7 June 2016, the New South Wales Parliament assented to the Norfolk Island
Administration Bill 2016 which, in effect, authorises New South Wales to provide services
and exercise functions associated with the administration of Norfolk Island.
It would appear open for an arrangement to be entered into in the future between the
Commonwealth Minister and the NSW Government for the powers and functions currently
exercised by the Authority to be administered by Liquor & Gaming NSW. However, at
present, there has been no announcement to this effect.
Australian Racing Bodies
Like all Australian licensed wagering operators, wagering operators licensed by the
Authority are required to have in place product fee approvals/agreements with Australian
racing and sports control bodies. In May 2016, it came to the attention of Racing Victoria
(the racing control body for thoroughbred racing in Victoria) that BetHQ, a licensee of the
Authority, had an arrangement with Citibet (an Asian betting operator not approved by RVL)
under which bets relating to Victorian thoroughbred racing made with BetHQ were being
managed and accepted by Citibet which, in RVL’s view, threatened the integrity of Victoria
thoroughbred racing. This caused significant concern to RVL which questioned the efficacy
of the Norfolk Island licensing regime in allowing an arrangement of the type entered into by
BetHQ with Citibet to come into effect.
As a result, Racing Victoria and Racing New South Wales (the New South Wales
controlling body of thoroughbred racing) issued a policy specific to Norfolk Island gambling
licensees in connection with their race fields approvals for 2016/2017 which stated that a
lesser period would be in place for Norfolk Island licensees. As at the date of this article,
the Authority has requested that RVL and RNSW extend this period to enable the Authority
to put in place stricter licensing requirements.
Whether this will be sufficient for the racing bodies is unclear and it is quite possible that a
number of the existing Norfolk Island licensees which conduct wagering in relation to racing
1
will seek sports betting licences in the Northern Territory (which may mean that the
concerns of the racing bodies relating to the integrity of the licensing regime would be
overcome).
A glimmer of hope?
These most recent developments in the unfolding story of Norfolk Island gambling
regulation provide a strong basis for confidence in the continuance of the Authority into the
future. However, the events of the coming months are likely to provide further clarity as to
whether it is ‘lights off’ or ‘business as usual’ for the Authority.
We will continue to monitor the status of Norfolk Island and the Authority. If you have any
concerns regarding the status of your licence or if you are looking to enter the Australian
1
This is evidenced by the announcement to the ASX made by TopBetta Holdings Limited on 12 August 2016 that its subsidiary
TopBetta Pty Ltd had been granted a sports bookmaking licence by the Northern Territory Racing Commission.
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Gambling Law & Regulation
online gaming market, please do not hesitate to get in touch with a member of the Addisons
Media and Gaming Team for assistance.
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Gambling Law & Regulation
Your Gambling Licence is a Privilege NOT a Right – the
Australian Position
Author (s): Jamie Nettleton, Mia Corbett, Annabelle Green
In early March, the High Court of Australia (Australia’s highest court) rendered decisions in
favour of the Victorian Government in claims brought by Tatts Group Ltd (Tatts) and
Tabcorp Holdings Limited (Tabcorp). These claims were brought following the decision of
the Victorian Government to bring an end to the duopoly held by Tatts and Tabcorp in the
supply of gaming markets in Victoria.
Had the High Court found in favour of Tatts and Tabcorp, the Victorian Government would
have been obliged to pay in excess of $500 million to Tatts and in excess of $690 million to
Tabcorp.
Addisons have previously summarised the factual background to these cases, as well as
the decisions of the Supreme Court of Victoria in our focus paper entitled Gambling
Licences. With One Hand a Licence May be Given By Government, with the Other Hand,
the Licence May Be Taken Away, which can be viewed at:
http://www.addisonslawyers.com.au/knowledge/Gambling_Licences_With_One_Hand_a_Licence_May_Be_Given_By_Government__with_the_Other
_Hand__the_Licence_May_Be_Taken_Away674.aspx
Readers will recall that, in each of these decisions, the Supreme Court of Victoria and the
Court of Appeal had found:
•
in favour of Tatts in its claim;
•
in favour of the State of Victoria in its claim.
The reasons of the High Court were similar in both of the appeals, but it is necessary to ask
first: how did the Supreme Court of Victoria and the Court of Appeal come to a different
conclusion in the Tatts case… twice!
The Decisions
In its decision, the High Court held that Tatts and Tabcorp were only entitled to
compensation had the duopoly licensing regime for the supply and operation of gaming
machines continued with new parties being granted licences in their place on substantially
similar terms. In other words, any right to a payment ceased upon the abolition of the
duopoly in favour of a new regime for the provision of “gaming machine entitlements”
(GMEs) to licensed venue operators.
The Court held that the new regime for the provision of GMEs was substantially different to
the existing duopoly, such that the issue of new licences did not constitute “new” licences
on the same terms as the existing licences held by Tatts and Tabcorp.
Further, the Court held that there was a commercially appreciable risk, accepted by Tatts
and Tabcorp, that the Government would decide not to continue the duopoly upon
expiration of their licences and that, in those circumstances, it was contemplated that no
compensation would be payable to either company. As a result, the Court did not consider
that it was appropriate to confer on Tatts and Tabcorp broader rights than had been
envisaged initially; accordingly, the Court found in favour of the State of Victoria.
Unlike the Court of Appeal, the High Court did not comment on the trustworthiness (or
otherwise) of the Government of Victoria: it only commented on the entitlement of any
government to act in a manner, particularly in the gambling sector, that reflects public policy
at the relevant time.
Consequences for Gambling Operators
The decisions of the High Court have significant consequences for Australian gambling
operators.
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•
•
Any gambling licence issued under statute or a contractual arrangement with a
Government body is subject to change or cancellation at any time where a Government
changes legislation to:
-
reflect changes in policy resulting from a change in public opinion, Government, or
otherwise, and/or
-
maximise monetary compensation that may be paid to the Government under the
gambling licensing regime.
Statutory entitlements may be repealed by subsequent legislation. This may result in
the loss of any entitlement (whether or not contained in the statute) that is specific to
the legislative regime created by the repealed legislation.
Despite the above, the Court appeared to recognise the possibility that licensees may be
entitled to compensation in certain circumstances (whether under the legislation or a
separate contractual entitlement). The existence and continuation of these rights would be
determined in accordance with normal principles of contractual reasonableness.
But in general terms, the decisions reflect the principle of sovereign risk in the gambling
sector, namely that any right held by a licensee is generally subject to limits (and loss) that
may be exercised by government at its discretion.
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New Zealand – Update on Review of Offshore Online
Betting Regulation
Author (s): Jamie Nettleton, Alexander Latu
In April 2015, New Zealand’s Minister for Racing announced a review of New Zealand’s
legal framework dealing with online betting services provided by offshore operators to
persons in New Zealand.
By way of background (as noted in our June 2015 Focus Paper concerning the
announcement), New Zealand’s regulatory regime concerning gambling is largely set out in
the Gambling Act 2003 and the Racing Act 2003 (the Acts). It has the following key
features:
•
Gambling is prohibited generally unless authorised under the Acts.
•
The Gambling Act prohibits “remote interactive gambling”. This includes gambling by a
person at a distance through a communications device (which would cover gambling
online).
•
The New Zealand Racing Board (NZRB), to the extent it provides gambling services
authorised under the Racing Act, is exempt from this prohibition. The NZRB is
statutorily obliged to use betting profits to benefit the racing industry and sporting
organisations.
•
Exempt from the prohibition in the Gambling Act are gambling providers located
overseas. This is because the definition of “remote interactive gambling” excludes
“gambling by a person in New Zealand conducted by a gambling operator located
outside of New Zealand”.
•
Advertising to New Zealanders by these gambling providers, by “publish[ing] or
arrang[ing] to publish, in New Zealand, an overseas gambling advertisement”, is
prohibited.
The overall effect of the Acts is that the NZRB has something of a monopoly on providing
wagering services to persons in New Zealand – being the only New Zealand based entity
entitled to conduct sports and racing wagering. The NZRB runs the TAB - this is the
customer-facing portal for wagering, which provides services both online and through
bricks-and-mortar outlets. However, the TAB faces competition from online wageringproviders located outside of New Zealand but providing betting services to New Zealandbased customers – which has, in part, prompted the Review.
Working Group Report
Since the Review’s announcement, the Working Group completed the Review and
submitted its report to the Racing Minister, the Hon. Nathan Guy, in October 2015. On 24
November 2015, in conjunction with a speech to the NZRB’s AGM, the Minister released
the Report (both the speech and Report may be accessed here).
Overall, the Working Group’s Report made four recommendations to address the perceived
concerns about the TAB’s competitiveness in the face of offshore online bookmakers:
1.
Enhancing the New Zealand TAB’s competitiveness by allowing it to offer a broader
range of products and services (including ‘in-play’ betting for racing as well as sports).
2.
Introducing an “Offshore Bookmaker Fee”, comprised of two elements:
i. A fee similar to Australian race-fields fees whereby bookmakers would be levied a
fee when they accept bets on New Zealand racing and sports events that take
place within New Zealand; and
ii. A fee levied on bookmakers when they accept bets originating from NZ. The Report
appears to envisage this limb as being similar to various ‘point of consumption’ fees
and taxes that have been introduced in the wagering sector. The focus of this limb
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appears to be on funding New Zealand’s harm-minimisation regime, rather than
seeking payment for use of intellectual property that underpins limb (i).
3.
Basing the Offshore Bookmaker Fee on betting turnover, initially envisaged to be in
the range of 2-3% of turnover. The Western Australian race-fields regime was referred
to as an example of the preferred model.
4.
Using the revenue from the Offshore Bookmaker Fee to develop racing and sport in
New Zealand (seemingly along the same or similar lines to which the NZRB’s betting
profits are applied).
The Working Group considered that up to $16.6 million (NZD) could be raised through the
proposed Offshore Bookmaker Fee (compared to official estimates of around $58
million/year being ‘lost’ to offshore bookmakers).
Discussion Paper and call for submissions
More recently, in April 2016, the responsible Minister released a Discussion Paper outlining
five specific proposals to reform the Racing Act 2003 – having taken into account the
Working Group’s recommendations. Submissions on those proposals to the responsible
Department (the Department of Internal Affairs – DIA) were called for, by 27 May 2016.
(The relevant documents may be accessed here).
The proposals fall into two types: enhancing the competitiveness of the TAB (see proposals
1-3); and protecting the TAB’s revenue stream (see proposals 4-5).
The latter proposals envisage charging two types of fees to offshore gambling operators in
certain circumstances. First, those who accept bets from New Zealand gamblers are
proposed to be charged a ‘consumption fee’ (proposal 4). The relevant Terms of Reference
for the Working Group Report were limited to considering the issue of “New Zealanders
betting on racing and sports with offshore providers”, and the tenor of the Report and
discussion paper suggests that the proposed consumption fee will be limited accordingly,
rather than extending to gaming. Secondly, it is proposed that those who use “New Zealand
race and sport data” will to be charged a ‘use of data’ fee (proposal 5 – once more
Australian race fields legislation is referred to as exemplifying this approach). Presumably,
in keeping with the Working Group’s Report, both fees will be capable of applying at the
same time.
The proposals are not set out in great detail in the Discussion Paper. For example the
amount of the consumption fee is not specified (although 2% of turnover is referred to,
which was also the figure mentioned by the Working Group in its Report). As well, the
precise scope of the concept of intellectual property comprising “New Zealand racing or
sports data/information” is not defined – although the Working Group appeared to operate
on the basis that any use-of-data fee would be limited to “events held on New Zealand soil”.
The first type of proposals allow the TAB to take racing bets after the beginning of an event;
offer bets on sports that are not controlled by “National Sporting Organisations”; and offer
‘novelty’ bets. All of these actions cannot occur under the current legislative regime.
1
Interestingly, recent press reports have suggested that the TAB may be considering
partnering with offshore bookmakers, or outsourcing business to them, in order to provide
more options to its customers.
Upcoming developments
We are not aware of any developments in the reform process since the deadline for
submissions has closed. Any submissions provided to the DIA may be susceptible to
disclosure pursuant to freedom of information legislation; and the DIA has indicated that it
may make all submissions publicly available on its website.
Given the details which remain to be worked out in implementing proposals along the lines
of the Discussion Paper and their potential effect on the TAB’s offshore competitors (as well
1
See, for example, Tom Pullar-Strecker, “Fancy a punt on NZ's next PM? TAB deal could mean more betting options”, 7 August
2016, www.stuff.co.nz.
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as other online operators offering gaming services); further announcements from the
Minister for Racing on this issue will be watched with interest.
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