The Gambling Law Review: Australia

Overview

i Definitions

Although it is difficult to provide an all-encompassing legal definition of gambling in Australia, generally speaking, gambling is defined as an activity that involves staking money or something of real-world value on the outcome of an event that is determined in full or in part by chance, such as a sporting event or a horse race, with the intent of winning a prize or something else of value.

Gambling regulation in Australia also extends to apply to 'trade promotions' (often referred to in other jurisdictions as 'sweepstakes'), being free-to-enter competitions for the promotion of trade. While these activities are generally permissible, subject to compliance with requirements concerning factors such as draw integrity, publication of results, eligible prize types and others, some Australian states and territories require the promoter to first obtain a permit from the relevant regulator.

ii Gambling policy

In Australia, there is a general prohibition in all jurisdictions on the conduct and promotion of gambling. Legislative exemptions exist for gambling activities that are conducted under a licence.

These activities include:

  1. lotteries (both in venue and online);
  2. wagering and sports betting (both in venues and online);
  3. electronic gaming machines, slot machines, or 'pokies' (just in venues); and
  4. land-based casinos where casino games, including poker, baccarat, and blackjack (among others), can be played.

The paternalistic approach to the regulation of gambling services by Australian federal and state governments is a response to the concerns that arise from the adverse social consequences associated with gambling. However, gambling has long been a part of Australia's culture and identity and, together with racing and sport, is well established in the national consciousness. State- and territory-based regulation of gambling in the early 20th century marked the beginning of the legislative regime in place today. With the introduction of online wagering in the late 20th century, the industry continues to flourish, despite the continuing conflict between the economic returns provided by the gambling sector to state and territory governments, and sporting and racing bodies and the pressure for governments to take action to minimise problem-gambling behaviour.

iii State control and private enterprise

Historically, lottery and totalisator operators in Australia were government-owned entities. Almost all states and territories (Western Australia being the exception in respect of its totalisator and lottery) have since privatised these gambling operators. Western Australia is currently progressing a potential sale of the Western Australian totalisator.

Totalisator sales and the retail (i.e., terrestrial other than on-course bookmaking) operations of the respective licence holders are conducted exclusively pursuant to a range of state and territory legislative and contractual arrangements.

The primary lottery licences on issue are largely held exclusively with exceptions in each state and territory relating to charitable lotteries and trade promotion lotteries.

Land-based casino licences are held exclusively in some states and territories with multiple licences issues in some jurisdictions (e.g., New South Wales, Queensland and the Northern Territory). The provision of online casino-type products to Australians is illegal under the Interactive Gambling Act 2001 (Cth) (IGA).

Gaming machines are operated in land-based casinos and in licensed clubs and hotels in all states and territories (other than in Western Australia where electronic gaming machines are only operated at Perth Casino).

All leading gambling businesses in Australia (many of whom are listed in Australia or overseas) conduct business under a licence granted by a state or territory government (or regulator). The principal licensed gambling operators are:

  1. Tabcorp Holdings Limited (Tabcorp), which, since combining with Tatts Group Limited (Tatts) (see Section VIII) holds licences to conduct both lotteries and totalisators (and off-course betting) through retail outlets in Queensland, Tasmania, New South Wales, Victoria, South Australia, the Australian Capital Territory and the Northern Territory with various exclusivity arrangements in place. Tabcorp has announced a demerger of its lotteries and wagering and gaming services businesses, which is expected to occur in mid-2022;
  2. the Star Entertainment Group Limited (The Star), which operates casinos in Sydney and Queensland;
  3. Crown Resorts Limited (Crown Resorts), which operates casinos in Melbourne and Perth (and Sydney; however, the gaming floor at Crown Sydney remains closed as at the start of March 2022) also conducts a betting exchange and Betfair Australia (licensed in the Northern Territory);
  4. Sportsbet Pty Limited (Sportsbet), a sports bookmaker licensed in the Northern Territory that is owned by Flutter Entertainment plc;
  5. Entain Group Pty Ltd, trading as Ladbrokes and Neds.com.au under Northern Territory sports bookmaking licences, which is part of the global Entain plc group; and
  6. Aristocrat Leisure Limited, Ainsworth Game Technology, Scientific Games Australia, Konami Australia, International Game Technology (IGT) and Aruze Australia (all suppliers of gaming machines).

In Western Australia, the totalisator and lottery are conducted through state-owned corporations, respectively operated by Racing and Wagering Western Australia and LotteryWest. However, the Western Australian government has recently reinitiated a market process for the potential sale of the WA TAB. Separate exclusive licences are also issued in each state and territory in respect of the conduct of keno games in land-based retail venues and, in some cases, online.

iv Territorial issues

As mentioned above in Section I.iii, licences to conduct gambling are issued by the relevant state or territory government (or regulator) including those listed in Section I.ii. Traditionally, gambling was conducted solely in venues but, with the introduction of new technologies, is now widely conducted online and over the telephone (other than online casino-type products, which remain illegal).

It is generally understood under principles of Australian constitutional law and expressly provided for in some state and territory legislative regimes that certain gambling services provided under a licence issued in any state or territory of Australia can be promoted and provided to residents of other Australian states and territories. This principle was confirmed by the decision of the High Court of Australia in Betfair Pty Ltd and another v. Western Australia (2008) 244 ALR 32. Each licensing jurisdiction imposes different licence conditions on its licensed operators, by reference to the relevant legislation. Most online corporate bookmakers, for example, are licensed in the Northern Territory by the Northern Territory Racing Commission (NTRC). There have recently been some moves as part of the development of the Australian Sports Wagering Scheme to evaluate the potential harmonisation of regulation in so far as it relates to sports integrity.

The principal Federal legislation governing the supply of gambling products and services is the IGA and the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (Cth).

v Offshore gambling

In 2001, the federal government enacted the IGA, which prohibits the provision of 'interactive' (or online) gambling services with an 'Australian customer link'. The IGA is enforced by the Australian Communications and Media Authority (ACMA) and the Australian Federal Police. The ACMA is active in investigating complaints for breaches of the Act and reports each quarter on its enforcement activities, including in implementing website blocking of websites found to be in breach of the IGA.

In September 2017, the IGA was amended by the Interactive Gambling Amendment Act 2017 (Cth) (the IGA Amendment Act) in response to claims that the existing legislation was ineffective as a means of deterring unlicensed offshore gambling operators from providing services to Australian residents. The amendments, among other things, increased penalties, expanded existing aiding and abetting offences, clarified the prohibition on the use of VoIP technology by licensed wagering operators to facilitate in-play betting services, banned the provision of lines of credit by wagering operators and granted the ACMA greater investigative and enforcement powers, including the power to issue formal warnings and infringement notices. Broadly speaking, the IGA prohibits the provision of 'prohibited interactive gambling services' (the Section 15 offence) and 'regulated interactive gambling services' without an Australian licence (the Section 15AA offence), to persons present in Australia (together, the Operational Prohibitions). Regulated interactive gambling services include wagering services (except for online in-play sports betting services and betting on the outcome of lotteries, which are prohibited) and lottery services (except for online instant or scratch lotteries, which are also prohibited). In addition, the IGA prohibits the advertising in Australia of 'prohibited interactive gambling services' and, unless the relevant party is licensed in Australia, 'regulated interactive gambling services'.

The IGA targets the supply of online gambling to residents of Australia by offshore operators but does not prevent Australian residents from accessing those offshore services, or the provision of services by Australian operators to customers in other countries. A defence is available for an alleged breach of the IGA where the operator did not know, or could not reasonably have known, that the service had an 'Australian customer link', that is, that any or all the customers of the service were physically present in Australia.

Legal and regulatory framework

i Legislation and jurisprudence

In Australia, there is no single overarching statute regulating gambling activities, nor is there a single overarching gambling authority. Instead, gambling in Australia is regulated at state, territory, and federal levels. Each of Australia's eight mainland states and territories separately regulates gambling activities within each of their respective jurisdictions. In addition, a series of federal statutes also cover certain aspects of gambling activity throughout Australia.

The Interactive Gambling Act 2001 (Cth) for example, regulates interactive (or online) gambling services, while state and territory legislation regulates land-based and online gambling activities and sets out the regulatory frameworks for different types of gambling including casinos, sports betting, poker machines and lotteries. The Interactive Gambling Act 2001 (Cth) prevails over state and territory legislation to the extent there are inconsistencies.

Set out below is a list of the primary legislation governing gaming, betting, lotteries, and social/skill arrangements for each Australian state and territory, as well as at the federal level. For completeness, the authors note that the list of gambling-related legislation below is not an exhaustive list. There are many pieces of legislation that are incidental to gambling activity (for example, legislation setting the applicable gambling tax rates). There are also various subordinate legislative instruments, including regulations, which have not been included.

Victoria (Vic)

  1. Casino (Management Agreement) Act 1993 (Vic);
  2. Casino Control Act 1991 (Vic); and
  3. Gambling Regulation Act 2003 (Vic).

New South Wales (NSW)

  1. Betting and Racing Act 1998 (NSW);
  2. Casino Control Act 1992 (NSW);
  3. Community Gaming Act 2018 (NSW);
  4. Gaming Machines Act 2001 (NSW);
  5. Public Lotteries Act 1996 (NSW);
  6. Unlawful Gambling Act 1998 (NSW); and
  7. Totalizator Act 1997 (NSW).

Queensland (Qld)

  1. Breakwater Island Casino Agreement Act 1984 (Qld);
  2. Brisbane Casino Agreement Act 1992 (Qld);
  3. Cairns Casino Agreement Act 1993 (Qld);
  4. Casino Control Act 1982 (Qld);
  5. Charitable and Non-Profit Gaming Act 1999 (Qld);
  6. Gaming Machine Act 1991 (Qld);
  7. Interactive Gambling (Player Protection) Act 1998 (Qld);
  8. Jupiters Casino Agreement Act 1983 (Qld);
  9. Keno Act 1996 (Qld);
  10. Lotteries Act 1997 (Qld);
  11. Queen's Wharf Brisbane Act 2016 (Qld); and
  12. Wagering Act 1998 (Qld).

Australian Capital Territory (ACT)

  1. Casino Control Act 2006 (ACT);
  2. Gaming Machine Act 2004 (ACT);
  3. Interactive Gambling Act 1998 (ACT);
  4. Lotteries Act 1964 (ACT);
  5. Pool Betting Act 1964 (ACT);
  6. Race and Sports Bookmaking Act 2001 (ACT);
  7. Racing Act 1999 (ACT);
  8. Totalisator Act 2014 (ACT); and
  9. Unlawful Gambling Act 2009 (ACT).

South Australia (SA)

  1. Authorised Betting Operations Act 2000 (SA);
  2. Gambling Administration Act 2019 (SA);
  3. Casino Act 1997 (SA);
  4. Gaming Machines Act 1992 (SA);
  5. Lottery and Gaming Act 1936 (SA); and
  6. State Lotteries Act 1966 (SA).

Tasmania (Tas)

  1. Gaming Control Act 1993 (Tas).

Western Australia (WA)

  1. Betting Control Act 1954 (WA);
  2. Casino (Burswood Island) Agreement Act 1985 (WA);
  3. Casino Control Act 1984 (WA);
  4. Gaming and Betting (Contracts and Securities) Act 1985 (WA);
  5. Gaming and Wagering Commission Act 1987 (WA);
  6. Racing and Wagering Western Australia Act 2003 (WA); and
  7. Racing Bets Levy Act 2009 (WA).

Northern Territory (NT)

  1. Gaming Control Act 1993 (NT);
  2. Gaming Machine Act 1995 (NT);
  3. Racing and Betting Act 1983 (NT);
  4. Unlawful Betting Act 1989 (NT); and
  5. Totalisator Licensing and Regulation Act 2000 (NT).

Federal

  1. Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (Cth);
  2. Financial Transaction Reports Act 1988 (Cth); and
  3. Interactive Gambling Act 2001 (Cth).

ii The regulator

The key responsibilities assigned to the state and territory gambling regulators include granting licences, monitoring compliance of gambling operators and enforcement of legislation where necessary. Set out below are the regulators responsible for regulating gambling activity in each Australian state and territory:

Victoria (Vic)

The Victorian Gambling and Casino Control Commission is Vic's independent gambling authority responsible for licensing and compliance.

The Office of Liquor, Gaming and Racing is a division within Vic's Department of Justice and Regulation responsible for policy, legislation, regulation, and major licensing.

New South Wales (NSW)

Liquor and Gaming New South Wales (L&GNSW) sits within the NSW Department of Customer Service and is responsible for policy, licensing and compliance. Separately, the Independent Liquor and Gaming Authority (ILGA) is an independent statutory decision-maker responsible for a range of casino, liquor, registered club, and gaming machine regulatory functions. A number of the ILGA's routine licensing functions are delegated to L&GNSW.

Queensland (Qld)

The Queensland Office of Liquor and Gaming Regulation (QOLGR) is responsible for licensing and compliance, and the Office of Regulatory Policy (QORP) is responsible for policy and legislative development for the regulation of liquor, gaming, and fair trading, as well as harm minimisation programmes for the liquor and gambling industries. The QOLGR and QORP sit within the state's Department of Justice and Attorney-General.

Australian Capital Territory (ACT)

The Gambling and Racing Commission sits within the portfolio of the Minister for Regulatory Services and is the ACT's independent gambling authority responsible for licensing, compliance and education.

South Australia (SA)

Consumer and Business Services sits within the Attorney-General's Department and is responsible for policy, licensing and compliance in relation to betting, casinos, gaming machines and lotteries.

The Lotteries Commission of South Australia sits within the Auditor General's Department and has the primary function of promoting and conducting lotteries in SA. It has appointed a master agent to operate the Commission's brands and products.

Tasmania (Tas)

The Tasmanian Liquor and Gaming Commission sits within the Department of Treasury and Finance and is Tas' independent gambling authority responsible for licensing and compliance.

Western Australia (WA)

The Western Australian Department of Racing, Gaming and Liquor sits within the portfolio of the Minister for Racing and Gaming and is responsible for policy, licensing, and compliance matters.

Northern Territory (NT)

The NTRC is largely responsible for compliance matters.

Licensing NT is responsible for licensing matters affecting all gambling activities in the NT.

The NTRC and Licensing NT sit within the NT Department of the Attorney-General and Justice.

For completeness, it is worth noting that, to a lesser extent, local government bodies in most states and territories also regulate gambling from a local government and town planning perspective, but typically only as it relates to gaming machines and their operation within the relevant municipal district.

Federal

The Australian Constitution provides the federal government with powers to regulate and govern, among other things, telecommunications, money and trade amongst the states and territories.

Using these powers, the federal government has enacted legislation regulating, amongst other things, interactive gambling, anti-money laundering and counter-terrorism financing (AML/CTF) and consumer and competition protections (also known as antitrust matters in some other jurisdictions).

Set out below are the relevant regulatory bodies and a brief description of how they regulate gambling.

Interactive gambling

The ACMA is the body responsible for media and communications regulation throughout Australia, including monitoring and enforcing the regulation of gambling online and over the telephone (referred to as the interactive gambling laws).

The ACMA monitors compliance with and enforces the interactive gambling laws.

Australia's federal interactive gambling laws prohibit certain activities, such as:

  1. online casinos, slot machines and poker;
  2. online wagering services that accept 'in-play' betting on live sports events;
  3. online wagering services provided without a licence issued by an Australian state or territory;
  4. online instant lotteries; and
  5. providing or facilitating the provision of credit by certain interactive wagering service providers to their customers.

The ACMA has the power to instigate civil proceedings in Australia, notify border protection agencies of the names of directors and principals of offending illegal offshore operators (who may then be placed on a 'movement alert list', thereby disrupting any travel to Australia) and liaise with foreign regulators to stop alleged offenders.

AML/CTF regulation

The Australian Transaction Reports and Analysis Centre (AUSTRAC) is the regulator responsible for detecting, deterring, and disrupting criminal abuse of the financial system, including money laundering and terrorism financing.

Under the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (Cth) (the AML/CTF Act), certain gambling activities are classified as 'designated services' with providers of these services being 'reporting entities' required to, amongst other things, register with AUSTRAC, develop, and maintain a compliant AML/CTF programme and to report certain transactions to AUSTRAC, including by way of threshold transaction reports (TTRs) and suspicious matter reports (SMRs).

Failure to comply with the AML/CTF Act, including not maintaining a compliant AML/CTF programme and not filing TTRs or SMRs (or filing them late), can result in large civil penalties and possible criminal exposure. For example, in 2017 a large Australian gambling company paid an A$45 million civil penalty to AUSTRAC for failing to comply with certain requirements under the AML/CTF Act.

Competition

The Australian Consumer and Competition Commission (ACCC) is responsible, under the Competition and Consumer Act 2010 (Cth) (CCA), for, amongst other things, enforcing Australian consumer protection laws. From a gambling perspective, the ACCC monitors compliance by gambling service providers of their obligations under the CCA, including gambling advertising (to ensure the consumer is not being treated unconscionably or unfairly, in breach of the CCA). It also takes appropriate enforcement action where it deems necessary.

iii Remote and land-based gambling

There is no single overarching statute regulating gambling activities in Australia, nor is there one overarching regulator. Instead, gambling in Australia is regulated at the state, territory and federal levels. Each of Australia's eight states and territories separately regulates both brick-and-mortar (land-based) and remote (online) gambling activities. For instance, each state and territory has a relevant Casino Control Act (or similar legislation) under which land-based casino licences have been issued. Separately, state and territory legislation generally allows those entities that hold a licence to operate online.

In addition, at the federal level, there are statutes that cover certain aspects of some gambling activities, such as the protection of personal information and obligations surrounding anti-money laundering and counter-terrorism financing.

In relation to online gambling, the federal government has enacted the IGA. The IGA prohibits overseas-based operators, who do not hold a relevant state or territory licence, to provide online gambling to Australian residents. The IGA also prohibits certain forms of online gambling such as casinos, poker and bingo.

iv Land-based gambling

Land-based gambling is regulated predominately through state and territory legislation. Although there are some exceptions, such as the Anti-Money Laundering and Counter Terrorism Financing Act 2001 (Cth) (AML/CTF Act), which is a federal piece of legislation that also applies to land-based gambling operators. Land-based gambling can be understood through the various licences generally available under state and territory legislation.

Off-course betting in retail venues (retail wagering)

Retail wagering includes offering pari-mutuel (totalisator) bets on racing (thoroughbred, greyhound, and harness) and some sports as well as fixed-odds betting on racing, virtual/simulated racing, sports and other approved events. Generally, retail wagering is offered by the state and territory totalisator agency boards (TABs) pursuant to a sole licence, thereby providing the TABs with a form of retail exclusivity. The TABs offer their land-based retail wagering in dedicated retail venues, racecourses, or terminals in hotels and clubs.

Lottery products

Like retail wagering, an exclusive licence has been granted to provide land-based lottery products in each state or territory. These products are generally available for purchase by consumers from retailers, with the most prevalent location being newsagents.

Licensed gaming machine operators (i.e., slot or poker machines)

Generally, gaming machines such as slot or poker machines (colloquially referred to as 'pokie' machines) are permitted under the various state and territory licensing regimes in casinos, hotels, and clubs (except for Western Australia where gaming machines are only permitted in casinos). The regulation (including the total number of gaming machines available) differs in each state and territory. For example, in New South Wales, the socioeconomic impact on the venue/area is considered during any application to raise the number of gaming machines.2 Additionally in Victoria, couples a venue, area, and jurisdiction cap on the number of gaming machines with a mandatory pre-commitment system (which players can opt-out of).

Land-based casinos

The number of casino licences available is limited. Typically, there is only one per state and territory, except in the case of current casino licences held in Queensland and Northern Territory. In NSW, there is one casino licence issued to The Star. Recent legislative changes relaxed the limit, and Crown Resorts gained a restricted gaming licence for its development in Barangaroo.

This licence was subject to an inquiry (known locally as The Bergin Inquiry) under Section 143 of the Casino Control Act 1992 (NSW), and it was found not be a suitable person to hold such a licence. Crown Resorts is currently consulting with the Independent Liquor and Gaming Authority to seek to address these issues.

v Remote gambling

As stated previously, online gambling is regulated at a state, territory, and federal level. To offer remote (online) gambling services to Australians is a two-step process. First, the type of online gambling must not be prohibited under the IGA. As stated previously, some of the unlawful kinds of online gambling include online casinos, bingo, and poker. Second, to offer lawful types of online gambling, there is a requirement to hold a state or territory-issued licence that enables online gambling.

The federal regulator, the ACMA, administers the IGA. Recently the ACMA has become more proactive in its enforcement of the IGA and regularly requests internet service providers block websites that breach the IGA or are for unlicensed operators operating in or offering services into Australia. A key focus of the ACMA has been combating illegal online casinos from being offered into Australia. More recently, the focus has expanded to target affiliate advertising websites that drive traffic towards illegal gambling websites.

vi Ancillary matters

Depending on the gambling service, ancillary licences may be required in addition to the principal licence granted to the operator to conduct the gambling business. For example, in addition to licences granted to operators that conduct gambling activities in a casino or other land-based venue, separate licences are required to be held by manufacturers and suppliers of poker machines, as well as testing agents. In most cases, key employees or close associates of licensed operators are required to hold a separate licence, or at least be approved by the regulator prior to commencing their role.

vii Financial payment mechanisms

Currently, Australians cannot use credit cards when gambling in land-based licensed venues, casinos, and TAB retail wagering outlets. However, the same cannot be said for online gambling. Credit card use is currently permitted for online gambling because the IGA contains an independently issued credit card exception in the general prohibition on licensed operators from providing credit (or otherwise facilitating it through third parties). Over recent years, the use of credit cards in online gambling and this exception in the IGA has been debated. Most recently, the Parliamentary Joint Committee on Corporations and Financial Services (Committee) recommended that the federal government should develop and implement legislation to ban online gambling service providers of wagering, gaming and other gambling services (but not lotteries) from accepting payment by credit cards (including via digital wallets). The Committee also recommended that when implementing this ban, the federal government should ensure that it does not have any adverse consequences for lotteries, including the activities of not-for-profits, charities and newsagents. It is unclear if the federal government will adopt these recommendations.

In addition, virtual currencies (i.e., cryptocurrencies) are not currently used as a real-money alternative for gambling in Australia by any of the major licence holders. The use of virtual currencies is the subject of consideration by the various state and territory gambling regulators. In 2018 a bookmaker, proposing to be Australia's first bookmaker to accept cryptocurrencies, was prevented from doing so by the Northern Territory regulator, the NTRC. The NTRC issued a declaration prohibiting the acceptance cryptocurrencies as a payment method by those entities it licensed. Notwithstanding this ongoing consideration by gambling regulators, Australia's financial regulator the AUSTRAC regulates virtual currencies.

The licensing process

i Application and renewal

Online and land-based betting is regulated at a state, territory and federal level. Given that most new entrants to the market who wish to offer betting will need to apply for a Northern Territory sports bookmaker licence, the key legislation that is relevant is the Racing and Betting Act 1983 (NT). There is no limit on the number of licences that may be granted to a Northern Territory licensed bookmaker (Corporate Bookmaker) and the licence will permit the offering of fixed odds product into all Australian states and territories, as well as overseas jurisdictions in which it is lawful to do so.

Domestic licence types

Apart from exclusive land-based licences (which also permit online sales), the only licence types available are for a corporate bookmaker licence or an on-course bookmaker licence (with an approval to take bets over the internet).

Application process

A licence application may be submitted to Licensing NT for a sports bookmaker licence by a locally incorporated entity (generally a proprietary limited company) or an overseas entity which is registered in Australia as a foreign body.

An application for a corporate bookmaker licence is completed utilising a paper-based form or alternatively online. The application form itself is a relatively brief document; however, the supporting documentation required is substantial. As part of the application process, the applicant is required to provide information in respect of all persons who are on the board of directors of the applicant, shareholders (with probity conducted on those who hold at least 10 per cent of the shareholding) and key management who will be associated with the business.

In determining whether to grant or refuse a licence, Licensing NT must have regard to whether the applicant:

  1. is of good repute, having regard to character, honesty, and integrity;
  2. is of sound and stable financial background;
  3. has or has arranged a satisfactory ownership, trust, or corporate structure;
  4. has or is able to obtain financial resources that are adequate to ensure the financial viability of the business proposed to be conducted and to obtain the services of persons who have sufficient experience in the management and operation of the business;
  5. has sufficient business ability to establish and maintain the business proposed to be conducted; and
  6. has any association with any person, body, or association who or which, in the opinion of Licensing NT, is not of good repute having regard to character, honesty and integrity or has undesirable or unsatisfactory financial resources. This also applies to any person involved in the management or operation of the proposed business.

In addition, Licensing NT will have regard to whether each director, partner, trustee, executive officer and secretary and any other officer or person determined by Licensing NT to be associated or connected with the ownership, administration or management of the operations or business of the applicant is a suitable person to act in that capacity.

The detailed information required of applicants includes all typical probity information, as well as at least three years' audited financials. Where the applicant is a start-up up company, Licensing NT will require evidence that adequate financial resources are available as required.

As a requirement of being issued the licence, Licensing NT will require the applicant to (amongst other things):

  1. establish a place of business in the Northern Territory (often licensees often have a second office in another jurisdiction (typically Melbourne or Victoria)).
  2. demonstrate that they will provide a 'net economic benefit' to the Northern Territory.
  3. provide a bank guarantee of generally A$200,000; and
  4. obtain full systems approvals.

The application process typically takes six to nine months and can sometimes take longer.

ii Sanctions for non-compliance

Gambling businesses can incur sanctions for breaching their licence conditions or breaching legislation, or both. This will often vary depending on three factors:

  1. the licensing body – some states and territories have multiple bodies that can issue licences. The possible sanctions imposed would depend on the framework these bodies operate in and the rules that they impose on bookmakers. For example, in New South Wales there is both Racing NSW and the Greyhound Welfare Integrity Commission who can issue bookmaking licences;
  2. conditions of licence – generally, regulators impose a set of general conditions on their licensees. However, provisions generally exist allowing the regulating body to impose additional licence conditions where they see fit; and
  3. jurisdiction – the jurisdiction in which a bookmaker is licensed is also relevant to possible sanctions and the types of conduct that give rise to sanctions can differ depending on the laws of that jurisdiction.

For the sake of brevity, we have not itemised each of the eight state and territory jurisdictions and how sanctions can be applied.

At the federal level, breaches of the IGA carry significant penalties. For example, breaches of certain provisions can result in a civil penalty of up to 7,500 penalty units for individuals (A$1.665 million) or five times that amount for corporations (A$8.325 million).

It is important to note that the IGA is stated expressly to have extraterritorial effect (i.e., it applies to overseas operators who breach the IGA by offering to prohibit gambling services into Australia). The ACMA has the power to notify international regulators of contraventions of the IGA by their licensees.

Individuals

Generally, liability is placed on the gambling provider to comply with the various legislative requirements, rather than the customer. However, in some limited circumstances, a customer can also be held liable. For example, in Western Australia, individuals can be penalised if they are a minor who places a bet3 or if they place a bet on an Australian race with an operator who is unlicensed.4

Directors and officers

There are some situations where the criminal conduct of the gambling entity is extended to the directors or officers of the company. For example, under Section 53 of the Unlawful Gambling Act 1998 (NSW), directors or officials also commit an offence if they aided, abetted, counselled, procured, incited or conspired with others to commit the criminal offence of the gambling entity.

At the federal level, an example is that the ACMA can notify border protection agencies of the names of directors, principals and officers of operators acting in contravention of the IGA. These names may then be placed on a 'movement alert list' thereby disrupting any travel to and from Australia. In addition, there are ancillary liability provisions, which mean that in certain circumstances those individuals who aid, abet, counsel, procure, incite or conspire with others to breach the IGA will incur a civil penalty as if they had breached the IGA themselves.

Agents

There are certain situations whereby persons who aid or abet criminal activities also commit a criminal offence. At the federal level, the ACMA's compliance priorities for 2021–22 indicate a focus on affiliate services – websites that advertise or promote online gambling services and provide links to them. This focus means that the ACMA will target affiliate services that are breaking advertising laws or helping to provide illegal gambling services in Australia. The discussion above relating to ancillary liability provisions would also likely capture directors, officers, and principals of these affiliate services. At the state or territory level, some advertising restrictions also capture the publication of advertisements by marketing affiliates utilised by licensed operators.

Payment processors and internet service providers

As stated above, there are certain situations whereby persons who aid or abet criminal activity are at risk of committing an offence themselves. This also extends to those involved in money transfers in certain situations. There are currently no legislative requirements placed on internet service providers (ISPs) to implement geo-blocking or other similar measures to prevent Australians from accessing illegal or unlicensed gambling content.

However, the ACMA has the power to request ISPs block access to offshore online gambling operators it considers to be operating illegally in Australia.5 The ACMA also maintains a list of the illegal websites it has blocked and publishes this on its website. As of 14 December 2021, there have been 368 websites that have been blocked by the ACMA. Additionally, the ACMA also publishes a list of approved operators that hold an Australian licence to assist Australian consumers who are gambling online to make informed decisions.

Wrongdoing

i Money-laundering

Under the Anti-Money Laundering and Counter-Terrorism Financing Act (Cth) (2006) and corresponding rules (collectively the AML/CTF Law), gambling operators in Australia are required to comply with several strict reporting and procedural obligations, including, but not limited to:

  1. verification and ongoing due diligence of the identity of all customers who open an account with the operator.
  2. maintaining an anti-money laundering and counter-terrorism financing programme (the AML/CTF programme), which outlines how they will comply with their obligations under the AML/CTF Law;
  3. regular reporting to the AUSTRAC, the body responsible for enforcing the AML/CTF Law, of all suspicious matters, threshold transactions, compliance reports and international fund transfers; and
  4. keeping records of all transactions, electronic funds transfers, customer identification procedures, AML/CTF programmes and due diligence assessments.

Penalties for non-compliance with the AML/CTF Law are significant. In 2015, AUSTRAC filed an action in the Federal Court against three Tabcorp Group companies for 'extensive, significant and systemic non-compliance' with the AML/CTF Law. In March 2017, the Federal Court approved a settlement agreement under which Tabcorp agreed to pay to AUSTRAC a A$45 million penalty (and costs) for contravention of the AML/CTF Law. In 2019, various allegations that Crown Resorts and its associates had engaged in money laundering, and possible links to organised crime, were raised by various media outlets. As a result, the ILGA convened an inquiry to consider the suitability of Crown Resorts and its NSW subsidiary to hold a casino licence. The inquiry ultimately decided that Crown Resorts was not suitable and recommended in respect of Crown Resorts and its NSW subsidiary that several measures that should be implemented to achieve suitability (see Section VII). Additionally, in October 2020, AUSTRAC also identified potential non-compliance with AML/CTF Laws by Crown Resorts in relation to its casino in Melbourne. This included concerns over customer due diligence and adopting, maintaining, and complying with an anti-money laundering and counter-terrorism financing program. AUSTRAC has commenced civil proceedings for numerous alleged breaches of the AML/CTF Laws.

ii Organised crime and match-fixing

In Australia, match-fixing is dealt with under relevant criminal legislation in most jurisdictions, (e.g., in New South Wales, Part 4ACA of the Crimes Act 1900 (NSW)). Under legislation in most Australian jurisdictions, wagering operators are required to enter into integrity agreements with each relevant racing controlling body and the leading sporting bodies on which they offer betting products. These agreements allow the operator to use the statistical information relating to the sporting or racing events (and participants) in return for a fee and on the condition that they agree to cooperate with these bodies by providing information about their customers' betting patterns and behaviour to assist in the investigation of match-fixing. In August 2017, the federal Minister for Sports, the Honourable Greg Hunt, announced a review of Australia's sports integrity arrangements to be led by the Honourable James Wood AO QC (the Wood Review). As part of the federal government's response to the recommendations that arose from the Wood Review, the Department of Health was given the responsibility of developing a federal regulatory framework for sports integrity. This is known as the Australian Sports Wagering Scheme (ASWS). The purpose of the ASWS is to safeguard the integrity of Australian sport and provide a sports integrity framework for sports wagering regulation at the federal level.

Taxation

The state and territory taxes that apply to gambling products depend upon the relevant licence under which the product is being offered, the type of product and the jurisdiction in which the product is offered.

State and territory taxation on casinos is determined on a case-by-case basis (typically during negotiations with the relevant state or territory government at the time). By way of example, putting aside a federal company tax of either 25 per cent or 30 per cent on profits and a goods and services tax (GST) of 10 per cent on gross revenue, the sole casino licensee in Victoria paid a multi-million-dollar licence fee to the state for the right to operate the only casino. In addition, that licensee currently pays the state a tax of 21.25 per cent of its gross gaming revenue from table games and 31.57 per cent of its gross gaming revenue from gaming machines in respect of regular players, together with a 1 per cent community benefit levy. The sole casino licensee also pays a tax of 9 per cent on 'high roller' gaming revenue, together with a 1 per cent community benefit payment. Finally, the sole casino licensee pays an additional casino 'super tax' based on gross gaming revenue, which increases depending upon gaming revenue levels, with a maximum tax payable of 20 per cent. The relevant taxation amounts are reduced by the GST paid by the casino licensee in relation to these services.

Concerning retail wagering in Vic, NSW, and Qld (by way of example):

  1. the current totalisator commission (take-out rate) charged by the relevant licensee in respect of key Licences in Vic, NSW and Qld varies depending upon bet type, but may be up to 25 per cent with a maximum rate of 40 per cent in Victoria for international pooling;
  2. the previous wagering and betting tax payable by the retail wagering licensee in Victoria has been replaced by a 10 per cent point of consumption tax (POCT) on 'net wagering revenue' exceeding a threshold of A$1 million in respect of all bets placed by Victorian residents through the retail wagering licensee, corporate bookmakers and other relevant betting operators licensed in Australia. This framework (with an initial rate of 8 per cent, which changed to 10 per cent on 1 September 2021) commenced on 1 January 2019;
  3. the current tax rate applicable to the NSW retail wagering licensee on totalisator commissions is 7.6 per cent on fixed-odds racing, 4.38 per cent of net earnings on sport and 10.91 per cent of net earnings on computer simulated racing;
  4. the NSW government has imposed a 10 per cent POCT on 'net wagering revenue' exceeding a threshold of A$1 million in respect of all bets placed by NSW residents through the retail wagering licensee, corporate bookmakers and other relevant betting operators licensed in Australia. The wagering and betting taxes payable in NSW by the relevant retail wagering licensee prior to the introduction of the POCT have remained in place (unlike, for example, in Vic and Qld), with corresponding POCT offsets; and
  5. the wagering and betting tax previously payable by the retail wagering licensee in Qld has been replaced by a 15 per cent POCT on 'net wagering revenue', exceeding A$300,000 in respect of all bets placed by Qld residents through that licensee, corporate bookmakers and other relevant betting operators licensed in Australia. This framework commenced on 1 October 2018.

In addition to Vic, NSW and Qld, all states and territories other than the Northern Territory have introduced a POCT in respect of bets placed by their residents (which is payable by the retail wagering licensee, corporate bookmakers and any other relevant betting operator licensed in Australia, irrespective of the location of the relevant entity). This is a departure from the previous 'point of supply' regime, under which states and territories derived no betting tax revenue from corporate bookmakers and other licensed betting operators taking bets online in the relevant jurisdiction. The POCT rates for these other jurisdictions are currently 15 per cent of 'net wagering revenue' or some other similar revenue base, with various compensatory arrangements in place to ensure that the racing industry is not adversely impacted. Vic, NSW, and Qld also have similar compensatory arrangements.

Retail wagering operators, corporate bookmakers and on-course bookmakers are also required to pay race field fees/product fees to race controlling bodies and sports controlling bodies, respectively, in relation to bets taken on their product. These fees are generally a percentage of turnover, or the greater of a percentage of turnover and gross margin and depend upon the relevant product.

Lotteries are subject to relatively high state and territory taxation rates. for example, in the key states of Vic, NSW and Qld, respectively, the rates are 79.4 per cent of player loss where GST is payable and 90 per cent of player loss where GST is not payable, 76.918 per cent of player loss (player subscriptions net of prize liability) less GST payable on subscriptions and sales commissions and 73.48 per cent of monthly gross revenue for declared lotteries (with lower rates for instant scratch-its and soccer pools). By contrast, taxation of keno across the same three key states is 24.24 per cent of player loss, 8.91 per cent of player loss (increasing to 14.91 per cent where player loss exceeds A$86.5 million) and 29.4 per cent of monthly gross revenue after deducting any casino commissions. The various states also set minimum player returns.

State and territory taxes on gaming machine revenue are complicated and vary significantly. By way of example, in Vic, where the average revenue per gaming machine is greater than A$12,500 per month, the tax rate is 54.2 per cent.

There is also a federal goods and services tax of 10 per cent payable on net revenue from gambling products; however, state and territory taxation rates sometimes take this into account, and it is offset against taxation payable to state and territory governments.

Advertising and marketing

Casino licences provide that casinos are permitted to offer casino games and gaming machines to patrons present within the casino. It is illegal to offer online casino gambling in Australia.

Retail Wagering Licensees offer: (1) pari-mutuel (totalisator) betting on racing (thoroughbred, harness and greyhound); and (2) fixed-odds betting on racing, virtual/simulated racing, sports and other approved events. With the exception of virtual/simulated racing (which is generally only offered in retail venues including hotels and clubs), this betting is generally offered at racecourses, retail venues, online and by telephone. The Vic Licence includes not only wagering and betting but also the ability to conduct a betting exchange.

Corporate bookmakers can offer fixed-odds betting on racing, sport, and other approved events online and over the telephone. On-course bookmakers offer substantially the same betting on-course and, subject to approval, also over the telephone and in some instances online.

Lotteries licensees can offer their approved lottery products through retail news agencies, other approved retail venues, third-party agents and online. Keno licensees can offer their products through retail venues, online in-venue only (in the case of NSW) and online (in the case of the ACT).

Hotels and clubs are permitted to provide approved gaming machines in the licensed premises.

There are comprehensive federal, state and territory advertising restrictions that apply to the lawful advertising of gambling services. In addition to the usual responsible gambling warnings, it is an offence to advertise an inducement to open a betting account and, in some jurisdictions, to gamble.

The federal government has recently enacted new 'rules' that restrict gambling advertising and odds promotion during broadcasts of live sport, with one key objective being to limit its exposure to children. These rules have recently been extended to online streaming of live sport.

Separately, the CCA imposes penalties for, amongst other things, misleading and deceptive conduct (including through advertising).

The year in review

i Australian casino sector

2021 was a particularly busy and eventful year for Australia's casino gaming sector, commencing in February 2021 with the handing down of the report of the NSW Inquiry.

New South Wales Inquiry

The Inquiry, overseen by former Supreme Court judge Patricia Bergin SC, was established in August 2019 by the ILGA in New South Wales, with terms of reference initially centred on matters relating to arrangements to sell a 19.9 per cent stake in Crown to Melco Resorts and Entertainment. The Inquiry was to examine whether this arrangement breached the terms of Crown's Sydney casino licence or any other regulatory agreement.

However, following the airing of the 'Crown Unmasked' television report on 60 Minutes, and associated media reporting raising concerns about anti-money laundering compliance failures among other allegations involving Crown Resorts and alleged associates and business partners, the terms were subsequently expanded to consider, among other things, whether Crown remained suitable to hold its Sydney restricted gaming licence and, if not, what changes would need to be made to render it suitable.

The media reports had alleged that Crown Resorts and its agents, affiliates or subsidiaries had facilitated money laundering, breached gambling laws, and partnered with junket operators with links to drug traffickers, money launderers, human traffickers and organised crime groups.

The Inquiry largely concerned itself with the alleged AML/CTF and governance-related shortcomings across Crown's Melbourne and Perth casinos and did not focus on the NSW jurisdiction or the only operational casino in NSW, The Star Casino. The Inquiry received and heard extensive submissions and evidence, including from the public and via public hearings involving Crown executives, directors, regulators and others. It is relevant to observe that AUSTRAC, Australia's Anti-Money Laundering regulator, is principally responsible for compliance and enforcement of the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 and has ongoing inquiries involving major Australian casino operators.

Although ultimately the reason for initiating the Inquiry, concern that the Consolidated Press Holdings and Melco Resorts share sale transaction contravened regulatory restrictions on the restricted gaming facility licence, was not substantiated, Commissioner Bergin did find Crown unsuitable to operate its Sydney Barangaroo casino. The Commissioner did, however, leave open a pathway for Crown to achieve suitability should sufficient changes occur, including board renewal, the preparation and delivery of a detailed remediation plan to the ILGA and the strengthening and monitoring of anti-money laundering controls that the Authority might consider when making its decision.

At the time of writing, interim liquor licences have been extended (allowing the opening of non-gaming parts of the facility such as accommodation, restaurants, bars and entertainment areas), but no decision has yet been made regarding Crown's suitability to regain its casino licence. The ILGA has noted that Crown is required to undertake significant change to satisfy the Authority that it is suitable to hold a gaming licence and that it will take further time for Crown to fully implement, and for the ILGA to assess, those changes.

The NSW Inquiry report made 19 recommendations including proposed reforms to the regulation of casinos in NSW, including the creation of a standalone independent Casino Commission with extensive-standing powers akin to those of a standing Royal Commission. A further significant recommendation was that NSW legislation be amended to impose a ban on NSW casinos dealing with junket operators. The NSW government announced that it accepts all recommendations and will move to implement revised regulatory structures in the state.

Victorian Royal Commission

Given the nature of the issues aired during the NSW Inquiry, in late February 2021, the Governor of Victoria appointed Ray Finkelstein AO QC as Commissioner and chair of a Victorian Royal Commission into the casino operator and licence in that state. Crown Resorts operates the Crown casino and entertainment facility in Melbourne, which is one of the city's most visited attractions for tourists and residents alike and is a significant employer.

The terms of reference were similar in many respects to those for the NSW regulatory Inquiry in relation to, among other things, an examination of suitability to continue to hold the casino licence and the suitability of associates to the licensee and to make recommendations regarding changes to relevant Victorian legislation and government agreements necessary to address the Commissioner's findings. Interestingly, however, the terms also focused on Crown's compliance with Victorian law and regulation more broadly, including in relation to problem gambling. Responsible gambling matters and alleged failures were given significant airtime and were the subject of extensive media reporting during the hearings.

The Royal Commission conducted a total of eight weeks of public and closed hearings, concluding on 9 July 2021. Over 60 witnesses provided evidence, including senior executives and directors of the licensee and regulators with responsibility for overseeing Crown's compliance. More than 80 public submissions were also received.

Crown admitted to various matters raised, including underpayment of state gaming taxes, allowing what was purported to be money for hotel services to be used for gambling, allowing customers to gamble for a prolonged period and not cooperating as required with the Victorian gambling regulator.

The Commissioner's report was delivered to the Governor of Victoria on 15 October 2021. Among the key findings and recommendations, the Commissioner determined that Crown was unsuitable to operate its flagship Melbourne resort but did not recommend that Crown's licence be cancelled, citing the considerable harm to the Victorian economy and innocent third parties that would arise from a cancellation and noting significant steps taken towards reform, including the appointment of a new board and senior executive team. Instead, the Commissioner effectively provided Crown with two years in which to prove that it is suitable to operate that casino. Ultimate decision-making during that period will rest with a 'special manager' appointed to oversee Crown's operations and to report to the Victorian regulator at regular intervals on Crown's performance against reform efforts. Following the conclusion of the two-year period, the regulator will make its decision as to whether it is 'clearly satisfied' that Crown has returned to suitability, having regard to the reports from the special manager and the other inquiries mentioned in this chapter.

The Casino and Gambling Legislation Amendment Bill 2021 (Vic) establishes, amongst other things, the position of special manager, the supporting regime around the role and the new Victorian Gambling and Casino Control Commission. The Bill was passed by both Houses of the Victorian Parliament on 2 December 2021.

Perth Casino Royal Commission

Completing a 'trifecta' of inquiries and Royal Commissions, on 5 March 2021 a Royal Commission into Crown Perth, and its suitability to continue to hold a casino gaming licence in Western Australia, was established. The Commissioners – the Honourable Neville Owen AO, the Honourable Lindy Jenkins and Mr Colin Murphy PSM – are also to examine the regulatory framework in Western Australia for casino gaming and will assess the performance of the Gaming and Wagering Commission, the regulatory body with responsibility for monitoring Crown Perth's compliance.

In an interim report tabled in the Parliament of Western Australia in August 2021, the Commissioners advised that they were investigating alleged conflicts of interest between departmental officers and casino employees in addition to whether criminal organisations were likely to have laundered money at Crown Perth and other matters. A final report with findings and recommendations was presented to the Minister on 4 March 2022 but had not yet been made public at the time of writing this publication. The state government will closely consider its findings and recommendations. The government will respond to the findings and recommendations, and table the report in Parliament after a period of consideration.

Fallout

The consequences for Crown Resort have been, and are likely to continue to be, significant. For example, 10 of the 11 Crown Resorts board members occupying positions in October 2020 have since departed, including the chair. Changes have been similarly extensive at an executive level, with the chief executive, chief legal officer and many other executives departing the organisation in recent months. Changes have also occurred at the regulators, including with Western Australia's chief casino officer standing down and the break-up the Victorian Commission for Gambling and Liquor Regulation and implementation a new gambling and casino control commission with a dedicated division for the casino, namely the Victorian Gambling and Casino Control Commission. Ms Annette Kimmett AM was appointed as the inaugural chief executive officer commencing in March 2022.

An A$8.9billion bid was made by Blackstone for the company following the rejection of an initial approach in 2021. The Crown board of directors backed the private equity buyout providing James Packer with an exit from the Australian casino sector. The Blackstone deal requires regulatory approval. A shareholder meeting to vote on it is expected in the June 2022 quarter.

The Australian Securities and Investments Commission publicly announced in March 2022 that the directors and senior executives of Crown would not be legally pursued for potential breaches of corporate law because the claims were too old and there was a lack of hard evidence to bring a winning legal case, despite the royal commissions lambasting their misconduct.

The Star Entertainment Group

While much of the regulatory focus in 2021 was on Crown Resorts and its alleged failures, the Star Entertainment Group – which has operated Sydney's only casino and entertainment facility, The Star Sydney, in addition to properties in Queensland – has also been the subject of material adverse press at the time of writing. Reports have been broadcast on national television and in major newspaper reports alleging that money laundering and infiltration by organised crime figures have occurred at the Group's Sydney and Gold Coast casinos, although the company has advised the Australian Stock Exchange that it considers aspects of the media assertions as misleading amid a significant decline in the company's share price.

While The Star Sydney casino was not the subject to the NSW Inquiry, the ILGA is investigating these latest allegations as part of its periodic review of the suitability of the casino operator under Section 31 of the Casino Control Act 1992. ILGA had already appointed a senior lawyer, Adam Bell SC, who was lead senior counsel assisting the NSW Inquiry into Crown Resorts, to conduct the review of The Star Sydney's suitability.

Adam Bell SC will conduct public hearings into The Star Casino from Thursday 17 March 2022. The independent review has so far largely been undertaken in private; however, Mr Bell will now conduct hearings on several topics where he has determined that witnesses should give evidence publicly. The public hearings are the concluding phase of the review before Mr Bell delivers his findings in June 2022.

It seems the concerns in Australia are less about a single operator and more about systemic issues across the regulatory framework and operator conduct at large. The casino industry, including regulatory bodies, will remain an area of focus for governments and other stakeholders, and reforms for the sector are likely given the number and extent of established and alleged governance and compliance failures.

ii Growth in digital wagering and wagering advertising

Digital wagering in Australia increased by 215 per cent during 2020, largely driven by the covid-19 pandemic, and it has continued to grow in 2021. Spending on online gambling in Victoria and New South Wales post-covid-19 peaked at 329 per cent above pre-pandemic norms according to research and transaction data from the credit bureau illion. With retail wagering and land-based casinos shut down in various states and territories during much of 2021 and Australians spending more time at home during stay-at-home orders, it appears many people have been introduced to online gambling.

According to an Australian Institute of Family Studies survey of more than 2,000 Australian punters in July 2020, one in three participants, mostly young men, registered new betting accounts during the covid-19 pandemic, and the number who visited gambling sites more than four times a week grew from 23 per cent to 32 per cent.6 Whether, and to what extent, there will be a shift in turnover back to retail and land-based casinos now that venues are able to open is unknown, noting that in Australia, online gaming (including casino products) is illegal. Tabcorp – Australia's largest retail wagering operator, with licences in all jurisdictions other than Western Australia – has itself noted that some customers who have transitioned to online betting will not come back to place bets in retail venues when covid-19-linked closures are lifted.

The digital wagering sector in Australia, however, has never been more buoyant, with total spend reaching A$6.9 billion in 2020, and has heightened efforts on customer retention and acquisition strategies by wagering operators.

Findings from the 2021 ACMA Annual consumer survey into Online Gambling Australia (Feb 2022), show more than one in 10 Australian adults (11 per cent) reported that they had gambled online in the six months to June 2021, up from 8 per cent in 2020.7 The 2021 survey also asked respondents to report how frequently they gambled before the pandemic, and during the strictest covid-19-related restrictions in their area. While the majority of online gamblers (77 per cent) reported the same frequency of gambling activity in June 2021 and before the pandemic, 16 per cent indicated a higher frequency in June 2021 than before the pandemic. Gambling advertising expenditure has also increased significantly in recent years. According to Nielsen Media Research, the gambling industry's spending on advertising increased from A$90 million in 2011 to A$252 million in 2020. Australia's largest online bookmaker, Sportsbet, spent A$139 million in 2020, accounting for 55 per cent of total gambling industry advertising spend.8

Despite Australia's strict advertising laws, including a 'siren-to-siren' ban on betting advertisements during live sports broadcasts between 5am and 8.30pm, bookmakers have moved their advertising to other high-rating primetime programmes, including those screened before games. There continues to be debate around whether tighter rules might be needed for gambling advertising, including sponsorship arrangements between gambling operators and domestic and international sporting teams, clubs and associations.

iii Enforcement activity in the gambling sector

Australia has a comprehensive gambling regulatory environment across federal and state and territory levels; however, inconsistency in requirements across jurisdictions undermines its efficacy. From a wagering perspective, there are three common enforcement trends, each of which is consistent with a policy focus on harm minimisation.

Advertising

The regulator in New South Wales, Liquor and Gaming NSW has been focused on pursuing wagering operators that publish gambling advertising that it considers breaches state legislation since circa 2012. We expect this focus to continue throughout 2022. NSW is widely regarded as having the strongest gambling advertising restrictions and associated penalties in Australia (which include potential director and other corporate officer liability). However, the regulatory approach seems incapable of deterring the targeted behaviour. Several prominent bookmakers have, or are facing, court action in NSW for alleged advertising breaches involving gambling inducements. In NSW (and other jurisdictions), it is an offence to publish or communicate any inducement to participate or to participate frequently in any gambling activity. This includes an inducement to open a betting account.

The maximum penalties that can be applied in NSW for infringements were recently increased to A$110,000 for corporations and A$11,000 for individuals.

Illegal gambling websites

The ACMA is responsible for enforcing the IGA. The IGA prohibits certain online gambling services and unlicensed operators, including those that operate offshore, from offering services into Australia.

The ACMA has been proactive throughout 2021 in its strategic engagement with international regulators and adopted a robust enforcement approach, recently advising that since the IGA was amended in 2017 and its responsibilities were expanded, the ACMA has blocked 295 illegal gambling websites, and 144 services have departed Australia altogether. The ACMA, which now regularly requests that internet service providers block proscribed websites, claims that there has been a 95 per cent reduction in traffic to the top 10 gambling websites that were blocked to June 2021.

A key focus for ACMA has been combating illegal online casinos from being offered into Australia. More recently, this focus has expanded to targeting affiliate advertising websites that promote and drive traffic towards illegal gambling websites.

Terms and conditions

The ACCC, in concert with state and territory fair trading regulators, is responsible for enforcing Australia's consumer protection laws. Since July 2010, there has been legal protection for consumers against unfair contract terms with businesses. This includes where businesses, including wagering operators, use standard form contracts in which there is no opportunity for the consumer to negotiate terms.

Recently, the NTRC, which regulates many of Australia's corporate bookmakers licensed in the Northern Territory, requested all licence holders to review their existing terms and conditions by 31 October 2021, citing concerns regarding the ability for consumers to understand the terms and conditions clearly, fair dispute resolution and power imbalances between the parties.

iv Credit Card Gambling

Australians are unable to use Australian credit cards for gambling purposes in casinos and in gaming lounges in hotels and clubs around the country.

In Australia, following changes to the law associated with the implementation of the National Consumer Protection Framework in 2018, totalisator operators, betting exchanges and corporate bookmakers have been banned from offering credit facilities for gambling purposes to their customers whether in a physical or online environment. Wagering customers have, however, been able to continue to use credit cards to deposit funds into their betting accounts.

Following similar moves in the United Kingdom in 2020, a joint parliamentary committee on corporations and financial services has been considering possible legislative amendments to ban this practice. A separate Senate committee and the primary banking industry representative body, the Australian Banking Association, have separately been consulting on and considering the issue. Some Australian banks pre-empted any potential legislative intervention and moved to restrict their customers from using their credit cards to transact with gambling providers.

In October 2021, the Senate committee determined not to support a bill that would implement the ban. The committee noted the principles of choice and autonomy for individuals but also that some individuals using credit to engage in online gambling activities may experience a degree of harm, although there is limited available research into the extent and drivers of that harm. The committee, in recommending against adopting the bill, was cognisant of potential unintended consequences of the bill (including on sales of lottery tickets) and industry-led moves already underway amongst some participants to develop measures to prohibit online credit card wagering.

As a result, it is currently unclear when a legislative prohibition on online credit card funded wagering will be introduced in this jurisdiction.

v Cashless gaming in New South Wales

Aristocrat Gaming and the Wests Newcastle club are conducting the first trial of cashless gaming machines at a venue in NSW with the support of the local regulator. The trial involves cashless payments being used for all club services, including electronic gaming machines.

In announcing the trial in 2021, the government advised that it supports the fact that the digital proposal is linked to identity and a bank account, and that harm minimisation settings are involved. The technology will enable patrons to set spend and time limits for play, speak to a staff member, or even exclude themselves from the club, in addition to using their own mobile wallet to pay for a meal, membership and gaming services.

Customers will be able to reload their cashless gaming card only off the gaming room floor and utilise an approved bank account. The card cannot be linked to a credit card.

Issues related to money laundering and problem gambling have recently been prominently exposed through an Inquiry in NSW, conducted under Section 143 of the Casino Control Act 1992, and Royal Commissions into the casino operator and licence in Victoria and Western Australia, with cashless technologies seen as an important way of identifying and minimising these risks. Crown Resorts and The Star Entertainment Group have agreed to work with the NSW regulator to introduce cashless gaming at their casinos to help tackle money laundering, but no specific timelines have been given.

vi Australian Sports Wagering Scheme

Sports Integrity Australia released the Australian Sports Wagering Scheme (ASWS) Consultation Regulatory Impact Statement (the Statement) on 30 November 2021.

The objectives of the ASWS are to:

  1. streamline sport integrity aspects of sports wagering regulation to provide clarity, transparency and consistency at a national level and ensure sports wagering occurs in a framework that protects the integrity of sport;
  2. strengthen the link between Commonwealth government funding and sport integrity outcomes;
  3. encourage the development of integrity capability within sporting organisations and facilitate sporting organisations' access to revenue streams from wagering on their sport; and
  4. develop a robust integrity framework for national sporting organisations, event controllers and wagering providers.

The purpose of the Statement is to undertake a rigorous process to reach an evidence-based policy solution to an issue with a clear rationale for government intervention to address the problem with the current situation.

Based on feedback received and through further consultations, a further statement will be prepared. This will provide an evidence base and recommendations for consideration in making policy decisions around the ASWS.

vii Gambling licensing process

Gambling licences issued by the various states and territories of Australia – including for casinos, retail wagering, lotteries and keno – are typically for long durations. As such, licensing opportunities for these types of gambling businesses do not arise regularly and are often contested.

There are two major licensing processes underway in the Australian market. One is ongoing in Victoria and the one is ongoing in Western Australia.

Wagering in Victoria

The current Victorian wagering and betting licence is also held by the Tabcorp group. It expires in August 2024. Similarly, to some other jurisdictions in Australia, the holder of the current licence was required to make an upfront payment to the government to acquire the licence and to maintain a close contractual and operational relationship with the local racing industry. In Victoria, that takes the form of an unincorporated joint venture arrangement for the conduct of pari-mutuel and fixed odds betting online on the course, over the phone and in retail locations. The licensee also offers simulated race wagering but has not taken up the right to operate a betting exchange.

In September 2020, the Department requested expressions of interest for the next wagering and betting licence. Responses were due by 6 May 2021. Unlike some other jurisdictions, apart from on-course bookmaking by licensed bookmakers, due to exclusivity arrangements secured with the relevant government, there has only been one operator in each state and territory permitted to conduct retail betting operations. However, some industry participants and potential applicants for the licence have advocated for significant regulatory changes in the state, including shifting away from the current approach to exclusivity and sole-licence model that, they claim, is no longer appropriate given the growth of online wagering in Australia and that operators that are licensed in other Australian states and territories are able to offer wagering to Victorian residents over the internet and phone in any event.

Wagering in Western Australia

The Western Australian government commenced a long-awaited sale process for the Western Australian TAB, the last government-owned TAB in Australia, in late September 2019. A discussion paper issued by the Department of the Treasury noted that the local racing industry relies heavily on the Western Australian TAB for funding but that the TAB faces several challenges common to incumbent retail operations in other states and territories, including intense competition from larger operators, growth in online betting, and customer preferences shifting from the TAB's traditional strengths. Many of those pressures have intensified as the effects of covid-19 impact market dynamics and the operations of retail-exposed wagering operators.

The Western Australian government subsequently announced in October 2021 that a new sale process will now commence, with a revised licence structure on offer. Expressions of interest are open until 16 November 2021, with the government expecting a new wagering operator to be in place by late 2022. Among the key differences in approach under the new framework is that the licensee will not be responsible for funding of the Western Australian racing industry.

Outlook

The Implementation of the National Consumer Protection Framework (NCPF)

In November 2018, all state and territory gaming ministers agreed to a National Consumer Protection Framework for online wagering, with the stated objective of having a nationally consistent approach to harm minimisation measures in the wagering industry. In Australia, gambling is regulated at a federal, state and territory level, which has resulted in inconsistency and associated regulatory burden and duplication between jurisdictions.

The NCPF is comprised of 10 consumer protection measures intended to apply to wagering service providers that offer online and telephone betting services:

  1. a national self-exclusion register;
  2. a voluntary opt-out pre-commitment scheme;
  3. a prohibition on lines of credit offered by wagering providers;
  4. a harmonised regime for offering inducements to participate in gambling activities;
  5. a requirement to provide activity statements;
  6. a requirement for accessible account closure options to be readily available;
  7. consistent responsible gambling messages and counselling services;
  8. staff training in consumer protection;
  9. reducing the 90-day customer verification period; and
  10. a prohibition of links between online wagering operators and payday lenders.

The NCPF has been introduced progressively, with most of the changes now implemented, albeit with some differences as between the states and territories.

One of the most awaited aspects of the NCPF, the introduction of a national self-exclusion register, is yet to be implemented but has been progressed during 2021 following delays due to covid-19. This follows the passing in December 2019 of the Interactive Gambling Amendment (National Self-exclusion Register) Act 2019 (Cth) and the National Self-exclusion Register (Cost Recovery Levy) Act 2019 (Cth), which enable the establishment and operation of the register and deal with important issues, including the security of information.

As opposed to the current disjointed approach that requires people that want to self-exclude to contact multiple operators, involving undue friction and leaving potential vulnerabilities, the new regime provides for a one-stop shop self-exclusion service from all betting operators registered in Australia offering online or telephone betting. The self-exclusion can be temporary (with a minimum period of three months) or permanent. Registered people will also have the option to revoke or extend their period of exclusion.

Under the new regime, licensed betting operators will be prohibited from offering their services to these individuals, sending them advertisements/promotions, making (or causing to be made) any telemarketing calls to such persons or sharing their private information for marketing purposes. If a licensee breaches these prohibitions without an available defence, it will face penalties of up to 750 penalty units for corporations per day (equivalent to A$787,500).

On 23 June 2021, ACMA, which is responsible for the register's development, announced that it had partnered with Engine Australia (Engine) to complete and deliver the register. Engine previously developed and delivered the self-exclusion scheme in the United Kingdom known as GAMSTOP. ACMA has advised that trials of the service are expected to start in late 2021 ahead of a launch prior to mid-2022.

Costs for the establishment and maintenance of the register are to be borne by the industry, with rules to be made prior to commencement and following consultation with the industry and other stakeholders.

Footnotes

1 Julian Hoskins, Daniel Lovecek and Alexandra Hoskins are principals and Alexander Norrish is a lawyer at Senet.

2 See Part 3, Division 3 of the Gaming Machine Regulation 2019 (NSW).

3 See Section 22 of the Betting Control Act 1954 (WA).

4 See Sections 23 and 24 of the Betting Control Act 1954 (WA).

5 See Section 313 of the Telecommunications Act 1997 (Cth).

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