The Sports Law Review: Australia
Organisation of sports clubs and sports governing bodies
i Organisational form
There is no legal requirement for a sporting club (whether professional, amateur, commercial or non-profit) to become incorporated in Australia. However, many sports clubs (including non-profit amateur sports clubs) choose to incorporate, either as 'incorporated associations' under the applicable state or territory legislation (the Associations Incorporations Acts) or as corporations under the Corporations Act 2001 (Cth) (the Corporations Act). There are a number of advantages to incorporating a sporting club, the main being that it provides the members of the club with a degree of limited liability. Additionally, under Australian law, unincorporated amateur sporting clubs are not considered legal persons separate from their members, which means that these sporting clubs do not have capacity to enter into contracts (other than through their members).2 In the past, Australian courts have often found individuals involved with unincorporated sporting clubs liable for the actions of the clubs.3 However, it is important to note that incorporated clubs have restrictions on trading or conducting business for the purpose of distributing profit to its members.
In some instances, the governing body for a sport has imposed a requirement that sporting clubs be incorporated. For example, AFL NSW/ACT, the governing body for Australian football in New South Wales and the Australian Capital Territory, recently imposed a requirement that all Australian football clubs must be incorporated as either an incorporated association or a company.4
The national governing bodies for major sporting codes in Australia are structured as public companies, limited by guarantee and registered with the Australian Securities and Investments Commission under the Corporations Act. For example, the Australian Football League (AFL), the Australian Rugby League Commission (ARLC), which owns the National Rugby League (NRL), Football Federation of Australia (FFA), Cricket Australia and the Australian Rugby Union are all registered companies limited by guarantee. Companies limited by guarantee do not have shareholders or share capital, but rather the guarantors (the members) give an undertaking to pay a fixed, small amount in the event that the company is wound up. The sporting clubs that play in these leagues are the members. Similarly, many of the professional sporting clubs that play in these leagues are registered as public companies limited by guarantee, whose supporters pay an annual membership fee. For example, there were more than one million members of AFL clubs in 2019, nearly 290,000 members of NRL clubs in 2020 and over 126,000 members of A-League clubs in the 2019/20 season.5 Although registration as companies limited by guarantee is the most common legal structure for professional sporting clubs, other structures are also used. For example, in the NRL, there are also privately owned clubs (such as the Melbourne Storm), public companies limited by shares (such as the Brisbane Broncos, which is currently the only NRL club to be listed on the Australian Stock Exchange), and partially privatised clubs (such as the South Sydney Rabbitohs, which is currently 37.5 per cent owned by Russell Crowe, 37.5 per cent owned by James Packer, and 25 per cent owned by members through a company limited by guarantee).6
ii Corporate governance
The Australian Sports Commission (ASC) has released a set of guidelines (the Sports Governance Principles), which, although not legally binding on professional sporting leagues or sporting clubs, are in effect mandatory, because adherence is a prerequisite to government funding. The ASC is the Australian federal government body responsible for distributing approximately A$300 million in public funds to sports governing bodies throughout Australia each year.7 The ASC operates under the Australian Sports Commission Act 1989 (Cth). The Sports Governance Principles require, among other things, that national sporting organisations be registered under the Corporations Act as companies limited by guarantee, and sets out additional requirements for board composition, roles, powers and processes, governance systems, ethical and responsible decision-making and reporting.
There are no specific statutory requirements for corporate governance of sporting clubs or leagues. Corporate governance structures for amateur sporting clubs and leagues that are incorporated associations are set by the relevant state or territory Associations Incorporation Acts. These provide rules addressing, among other things, the associations':
- duties to hold general meetings;
- financial reporting obligations;
- duties regarding the constitution of the management committee;
- constitution; and
- duties to notify members of decisions.
For professional sporting clubs that are registered as companies limited by guarantee or companies limited by shares, their governance structures are dictated by the Corporations Act, with powers being split between the boards and the members. Both the Associations Incorporation Acts and the Corporations Act provide rules in relation to the constitution of the sporting clubs, their reporting requirements and their management. Incorporated associations are required to establish a committee to manage their affairs, while registered companies are required to establish a board of directors.
Committee members and directors are bound by duties contained in the applicable legislation, including duties:
- to act in good faith in the best interests of the company and for a proper purpose;8
- to exercise care and diligence;9
- to disclose conflicts between the interests of the company and personal interests;10 and
- to prevent the company trading while insolvent (that is, when it is unable to pay its debts as and when they fall due).11
iii Corporate liability
The Associations Incorporation Acts and Corporations Act both contain statutory provisions imposing liability upon managers and officers of sporting organisations (i.e., committee members and directors). For example, there are criminal prohibitions on officers dishonestly using their position, or information obtained by virtue of their position, to gain a financial advantage or cause detriment to their organisation.12 As discussed above, the legislation also imposes duties on officers to carry out their functions for the benefit of their organisation, and the Corporations Act prohibits insolvent trading by directors. The prohibition on insolvent trading is particularly relevant for sporting clubs in Australia, who are often on the brink of insolvency. Clubs must be careful if they are operating on the assumption that either their creditors will absolve their debts, or their members or the governing body will contribute funds to bail them out.13 For unincorporated associations operating as sporting clubs, Australian courts have in the past found the individuals responsible for management of the club liable for debts or an award of damages where the legal personhood of the club itself cannot be established.
Additionally, directors and officers also have obligations to ensure that their sporting club or organisation complies with its work health and safety obligations under the applicable work health and safety (WHS) laws. In most states and territories this legislation imposes a duty on directors and officers to exercise due diligence to ensure that their clubs comply with health and safety duties.14
A breach of this due diligence duty (and all health and safety duties) is a criminal offence, which can involve penalties for individuals of up to five years' imprisonment or a fine of A$600,000, or both. Corporations or associations can be fined up to A$3 million.15
For example, in 2015, the Essendon Football Club was convicted by WorkSafe Victoria, the statutory body responsible for administering Victoria's WHS laws, of failing to provide its players with a workplace free of health risks. This prosecution followed a 'supplements saga', which saw 34 players being found guilty of using the banned peptide Thymosin beta-4. The football club was fined A$200,000 for the breaches.
The covid-19 pandemic implications for sport mean that directors and officers must now take into account a number of other governmental health and safety policies beyond the WHS laws. For example, the National Principles for the Resumption of Sport and Recreation Activities provide that resumption of sport and recreation activity should be staged, starting with small group, non-contact activities, prior to moving to large group, full contact training and competition. It states that significantly enhanced risk mitigation strategies must be applied to indoor activities associated with outdoor sporting codes. Further, it recommends that resumption of elite sports should involve a spectator-free environment with minimum support staff and states that the Australian Institute of Sport's 'Framework for Rebooting Sport in a COVID-19 Environment' should be followed and considered as a minimum baseline standard required prior to resumption of training and match play.
There has been increased attention on the activities of sports scientists in Australia after a number of professional sporting clubs in Australia came under scrutiny for employing sports scientists who are alleged to have facilitated the use of unlawful or banned substances.16 In 2013, the Australian Senate Regional Affairs and Transport References Committee published the results of an inquiry into the 'practice of sports science in Australia'.17 The publication identified three 'key governance practices' that should be established by all professional sporting clubs with the assistance and endorsement of the sports' governing bodies. These involve:
- regular reporting of the activities of sports scientists to the CEO and board;
- the primacy of medical advice and direction over the decisions of sports scientists, such that sports scientists must seek endorsement from club doctors where decisions affect athlete health and welfare; and
- the importance of ensuring that while the CEO and the board are kept informed of the activities of sports scientists, the privacy of athletes and the protection of personal medical information are ensured.
II THE DISPUTE RESOLUTION SYSTEM
i Access to courts
In Australia, it is settled law that a sporting organisation's rules cannot completely remove the jurisdiction of the courts, because to do so would be against public policy.18 However, each sporting league has established quasi-judicial tribunals that are responsible for administering and enforcing the rules of the sport, including in relation to on-field infringements. Courts will generally only be able to be called upon to resolve disputes where:
- an issue of law arises;
- the sporting organisation makes a decision that is outside its jurisdiction under its rules;
- there is a breach of natural justice;
- the sporting organisation does not comply with its own rules, which constitutes a breach of contract with its members; or
- the sporting organisation, its members or athletes are alleged to be involved in breaches of statutory obligations or criminal laws being investigated or prosecuted by a regulator or third party.
Examples can include where a sporting participant claims that they were not dealt with in accordance with the sporting league's rules (and this constitutes a breach of contract), or where a sports tribunal fails to accord a participant procedural fairness in making its decision. In cases where the issue of procedural fairness is raised, the court will not substitute its own decision for that of the tribunal; it will instead mandate that the tribunal remake its decision such that the participants are afforded natural justice.
An example of an alleged breach of statutory obligations by a sporting organisation can be seen when Cricket Australia dismissed the head coach of the Australian cricket team, Mickey Arthur, two years before his employment contract was to expire. Mr Arthur was the first non-Australian coach of the Australian cricket team. He was dismissed abruptly and replaced by former Australian cricketer, Darren Lehman. Mr Arthur subsequently brought a claim under the anti-discrimination provisions of the Fair Work Act 2009 (Cth), which alleged, among other things, that he was subjected to discrimination owing to his South African heritage. Cricket Australia and Mr Arthur subsequently reached a confidential settlement.
ii Sports arbitration
Most major Australian sporting leagues have established quasi-judicial tribunals, which are responsible for administering and enforcing the rules of the sport, including in relation to on-field infringements (for example, the NRL Judiciary, the AFL Match Review Panel and Tribunal and the FFA Tribunal). Additionally, collective bargaining agreements and standard players' contracts often provide that it is a condition precedent to bringing court proceedings that the dispute is first referred for determination by a tribunal (for example, in standard contracts with AFL players), or that the tribunal has exclusive jurisdiction, and its determination is final and binding (for example, in standard contracts with A-League players).19 However, this does not prevent recourse to the courts in the situations described above.
The appeals process for a decision depends on the rules governing a particular sporting organisation. In some cases, decisions can also be appealed to the international sporting organisation responsible for the sport, such as the International Cricket Council or FIFA. For example, these tribunals make decisions about, among other things:
- eligibility of players to play for a particular sporting club or nation;
- disputes between members of the international organisation;
- disputes between sporting clubs in different leagues;
- contractual disputes between players and sporting clubs; and
- sanction to players for breaking of sports' rules or doping.
If all avenues of appeal within a sporting organisation's tribunal system are exhausted, a case can usually be appealed to the Court of Arbitration for Sport (CAS) and then the Swiss Federal Tribunal for the resolution of the dispute.20 A recent example can be seen in the decision of the AFL Anti-Doping Tribunal not to suspend 34 Essendon Bombers players for alleged violations of anti-doping rules. The World Anti-Doping Authority (WADA) appealed the Tribunal's decision, backed by the Australian Sports Anti-Doping Authority (ASADA), to the CAS, who suspended the 34 players for 12 months. The players then appealed to the Swiss Federal Tribunal, who upheld the CAS decision.
The CAS has an Oceanic registry based in Sydney, Australia. This registry hears a broad range of selection and doping disputes. A recent example is the dispute between Mitchell Iles, a professional trap shooter, and Shooting Australia, in relation to Mr Mitchell's non-selection for the 2016 Olympic Games. Mr Mitchell first appealed to Shooting Australia's Appeals Tribunal, where his appeal was dismissed, and he subsequently appealed to the CAS. The CAS overturned the decision of the Appeals Tribunal and remitted the matter to Shooting Australia to reconsider his non-selection, which then selected him to compete.21
On 19 March 2020, the National Sports Tribunal (NST) was established. The NST hears and resolves national-level sporting disputes between sporting bodies and their members or between members. It employs the use of arbitration, mediation, conciliation and case appraisal. The establishing of the NST provides an independent body of recourse for Australian sports codes that is more cost-effective than the Swiss CAS. The NST is comprised of three divisions: Anti-Doping, General, and Appeals. Appeals to the NST are possible after either the NST or another sporting tribunal has made an initial decision. Within the appropriate division, the NST can hear any of the following kinds of disputes:
- anti-doping rule violations;
- selection and eligibility;
- bullying, harassment and discrimination; and
- other disputes (must be approved by the NST CEO).
Decisions made by Australian courts are directly enforceable within Australia. However, decisions made by sporting organisation tribunals are not directly legally enforceable. In practice, parties must either accept a decision if they wish to continue participating in the sport or appeal the decision to a court on the grounds that the tribunal did not have jurisdiction to make the decision.
Organisation of sports events
i Relationship between organiser, spectators, athletes and clubs
There is no special or unique relationship under Australian law between organisers and spectators. Their relationship is governed by, among other things, consumer, contract and tort law. However, each state has implemented, to differing degrees, legislation that applies to the staging of major sporting events.22 This legislation provides protections to organisers, spectators and athletes, including through provisions governing the resale of tickets for major events and the control and management of event venues during events.
The primary contractual relationship that exists between organisers and spectators is in the terms and conditions of the ticket sale. Under contract, organisers can impose terms and conditions of access to the sporting venue, such as restrictions on resale or transfer or restrictions on entry. However, ticket sales and membership conditions are also governed by the Australian Consumer Law (ACL), which contains additional protections for consumers, including protection against unfair contract terms for standard form consumer contracts. For example, a term or condition to a ticket sale that excludes all liability of the organiser for death, personal injury or loss by the consumers, or that denies refunds in all circumstances, will be held to be unfair and consequently void. Additionally, spectators are entitled to expect that organisers and clubs will comply with anti-discrimination laws.
The primary contractual relationships that exist between organisers, clubs and athletes are in the playing contracts of the athletes and the contracts between the sporting clubs and sporting leagues or organisations, including the relationship of the clubs as members of the league (as an incorporated association). This also includes the rules of the sport, which may be incorporated as a contract between the sporting organisation, clubs and athletes.
ii Liability of the organiser, athletes and spectators
Under both common law and statute, as the occupiers of the sporting venue, organisers owe a duty of care to avoid causing harm to spectators and athletes that is 'reasonably foreseeable'. Under the civil liability legislation of each state and territory, organisers owe a duty of care to take reasonable precautions against risks of harm that are foreseeable and not insignificant.23
For example, in a well-known case before the High Court of Australia, an indoor cricketer sued the organiser after serious injury during a game, alleging that the organiser breached its duty of care by failing to provide protective eyewear, and by failing to erect a sign warning of possible hazards (although in this case, the High Court of Australia held that the organiser's duty of care did not extend to require these precautions be taken).24
Additionally, if a professional athlete causes injury to a third party, such as an opponent, both the athlete and his or her sporting club (as his or her employer) may be liable for damages. In another well-known case, a professional rugby league player for the Wests Tigers in the NRL brought proceedings against Melbourne Storm and two of its players after being seriously injured in a tackle that ended his career. The two players and Melbourne Storm (as their employer) were held to be liable for damages for the injury.25
In Australia, like many other jurisdictions, consent to minor assaults will often absolve the accused from criminal liability.26 This means that although minor assaults technically occur in contact sports, there is usually no liability as it is implicit in the participation of the athletes that they have consented. However, consent is not a defence for athletes where the assault is outside the rules of the sport. For example, rugby league players have previously been convicted of assault for punching an opponent and causing a fractured jaw in one case, and biting an ear after a tackle in another case.27 However, in other cases, on-field actions by athletes that could lead to a criminal conviction for assault have been met with only sanctions from the sport's governing body, rather than police prosecution. For example, there have been several high-profile instances of footballers violently punching opponents on the field that have not been prosecuted, in both the AFL and NRL and also at lower levels of the sport.28 The fact that such athletes have not been charged with criminal offences is a consequence of the police discretion in enforcing criminal law.
Commercialisation of sports events
i Types of and ownership in rights
Broadcasting rights are arguably the most valuable and lucrative rights available to sporting organisations to gain revenue from a sporting league. For example, the AFL currently has a broadcast rights agreement in place with Channel 7 (a commercial free-to-air television station), Foxtel (a subscription television station) and Telstra (a telecommunications provider) that is worth approximately A$2.5 billion.29 The ARLC currently has a broadcast rights agreement in place with Channel 9 (another commercial free-to-air station) Fox Sports, News Corp Australia (a media outlet) and Telstra, which is worth approximately A$1.8 billion.30
Additionally, Australia has enacted 'anti-siphoning' laws, which provide a list of events that must be made available free to the general public.31 This means that in practice, subscription television providers, such as Foxtel, are prohibited from acquiring the rights to these events unless a free-to-air television channel also has the right to broadcast them. Any rights that are not acquired by free-to-air channels can then be acquired by subscription television providers. Currently, the list of 'anti-siphoning events' that 'should be available to the general public' includes the following:32
- each event in the Olympic Games and Commonwealth Games;
- each running of the Melbourne Cup;
- each match in the Australian Open tennis tournament;
- each match of the AFL and NRL;
- each international rugby union test match and cricket match involving the Australian team; and
- each match of the FIFA World Cup, each match of the FIFA qualification tournament involving the Australian team and the English Football Association Cup final.
Image rights, sponsorship and merchandising are also valuable rights available to be exploited. However, the relatively small size of the Australian market, and the fact that many of Australia's major sports are primarily, if not solely, domestic (for example, the AFL and NRL) or played at an international level but among a relatively small number of nations (for example, cricket and rugby union), mean that their value is often limited.
ii Rights protection
Broadcasting, image rights, sponsorship and merchandising are primarily protected by the contractual provisions in place between the owners and licensees of these rights, but also by the statutory intellectual property rights. Primarily, this consists of ownership in:
- trademarks under the Trade Marks Act 1995 (Cth), in property such as club names, logos and mascots; and
- copyright under the Copyright Act 1968 (Cth), in property such as rulebooks, recorded images and footage of events, and photographs.
Additionally, rights owners are able to take action under the common law tort of 'passing off', to protect the goodwill of their brand from misrepresentation through unauthorised use. In this context, passing off occurs when one person misrepresents that their goods (for example, merchandise) are the official, sanctioned goods of the rights owner (usually the sporting organisation or sporting club), or that he or she is affiliated with the rights owner. Similarly, action can be taken against persons who engage in misleading or deceptive conduct or make false or misleading representations via the ACL.
In addition, the ACL can apply to examples of ambush marketing.
Australia also has several other legislative protections, in addition to laws protecting intellectual property rights that can be used to prevent ambush marketing at sporting events. Legislation was enacted to regulate the commercial use of images associated with the 2015 Asian Cup, the 2015 Cricket World Cup and the 2018 Commonwealth Games to restrict the ability of entities that are not official sponsors to use event images, or represent that they are associated with the event.33 Similar legislation prohibits the unauthorised use of images and phrases associated with the Olympics.34
In 2016, the Australian Olympic Committee (AOC) brought proceedings against Telstra in relation to alleged ambush marketing. Telstra had entered into an agreement with Channel 7 under which Telstra would sponsor Channel 7's broadcast of the Olympics and create a mobile app called 'Olympics on 7'. Telstra's advertising campaign then promoted watching the Olympics on the Olympics on 7 app, despite the fact that it did not have any direct association with the Olympics. The AOC alleged that Telstra engaged in misleading and deceptive conduct and made false or misleading misrepresentations in representing that they were associated with the Olympics, in breach of the ACL, and engaged in an unlawful use of protected Olympic expressions for commercial purposes in breach of the Olympic Insignia Protection Act 1987 (Cth).35 However, the Federal Court of Australia ruled against the AOC and held that Telstra's advertisements did not suggest to the reasonable person that Telstra was a sponsor of an Olympic body. The Court held that the legislation was not breached if the advertisements simply created uncertainty as to the nature of Telstra's association with the Olympics.36 The AOC appealed the decision, but in October 2017, the Full Court of the Federal Court of Australia upheld the first instance decision, and agreed that the advertisements did not suggest to a reasonable person that Telstra was a sponsor of bodies and teams associated with the Rio Olympic Games.37
Sports and antitrust law
The key antitrust legislation is the Competition and Consumer Act 2010 (Cth) (the CCA). The CCA contains, among other things, prohibitions against:
- cartel conduct;
- anticompetitive agreements between competitors;
- exclusionary provisions in agreements; and
- misuse of market power by a corporation with substantial market power.
Each major domestic sporting league in Australia constitutes a monopoly (for example, the AFL and the A-League). While there have been several instances where rival leagues have emerged, including in cricket and NRL, these have ultimately been unsuccessful in establishing a foothold in the Australian market.
Arguably the most notable application of Australian antitrust laws in a sporting context involved a dispute between a media organisation, News Limited, and the predecessor to the ARLC, the ARL.42 At the time, News Limited was attempting to establish a rival 'Super League' to replace the ARL. In response, the ARL sought commitment agreements and loyalty agreements requiring the current ARL clubs to commit themselves to the ARL for an extended period. News Limited alleged that these agreements contained exclusionary provisions or constituted a misuse of market power in seeking to prevent the entry of the proposed Super League into the market, in breach of Australian antitrust legislation.
A single judge of the Federal Court of Australia found that there had been no breach of the antitrust legislation. However, on appeal, the Full Federal Court reversed the decision and concluded that the agreements constituted an illegal collective boycott, and were therefore void.43 A collective boycott occurs when a group of competitors agrees not to acquire goods or services from, or not to supply goods or services to, a business with whom the group is negotiating, unless the business accepts the terms and conditions offered by the group. In this case, the Full Federal Court held that there was a boycott of the Super League by the ARL and the clubs. Subsequently, the Super League and ARL merged to form the NRL, restoring the monopoly.
A more recent case provides a further example of where a party sought to rely, albeit unsuccessfully, on Australia's antitrust laws in a sporting context. In 2012, a single judge of the Federal Court of Australia held that a thoroughbred horse breeder failed to establish that the exclusion of thoroughbreds bred by artificial insemination from racing and registration was likely to have the effect of substantially lessening competition.44 The judge found that the disputed provisions of the Australian Stud Book and the Australian Rules of Racing contributed to the nature and quality of the sport and were a feature of 'thoroughbred racing'. There was insufficient evidence to establish that major studs had a position of market dominance and that removing the impugned provisions would affect competition in the market for racehorses or the market for stallion services.
In 2017, the ACCC assessed a A$11 billion proposed merger between two major players in the large Australian wagering market Tabcorp and Tatts. The parties applied to the Australian Competition Tribunal45 for approval of the merger short-circuiting an application for informal clearance which had been pending before the ACCC. The merger was opposed by a number of parties including the ACCC. The opponents' main concerns were:
- the alleged advantages of the exclusive retail licences held by each of Tabcorp and Tatts;
- whether Tatts was the only other likely bidder against Tabcorp for a new Victorian wagering licence in 2024;
- the advantages Tabcorp had through owning the racing vision provider Sky Racing; and
- whether the future growth of online bookmakers might slow, with speculation about future tax and regulatory changes.
The Tribunal found that as punters switch readily between retail outlets and online, online betting forms part of the retail market. Further, the Tribunal considered that the industry is driven by technology and scale, meaning that smaller operators may not be able to compete, and that further consolidation in the Australian wagering market is likely. The Tribunal was satisfied the merger would increase competition, given the many corporate bookmakers active in the Australian market, including strong competition from largely UK-based corporate bookmakers who would constrain the merged entity.
The Tribunal also found there to be flow-on benefits for the racing industry (which is funded by the merger parties) and other arising from the synergies created by the merger.
The merger was approved, with the ACCC successfully appealing and the matter was remitted to the Tribunal for reconsideration, and it again authorised it.
iii Australian Consumer Law
The key Australian Consumer Law (ACL) legislation is Schedule 2 to the CCA. The ACL contains, among other things, prohibitions against:
- misleading and deceptive conduct;
- the making of false representations in relation to the sale of goods and services;
- unconscionable conduct; and
- consumer guarantees.
The ACCC is also responsible under the ACL for enforcement of a number of mandatory safety standards. The ACCC alleges that between October 2016 and December 2019, Decathlon (which is fully owned by its ultimate holding entity, Decathlon S.A. in France) offered 14 models of basketball rings and backboards and five models of portable swimming pools for sale that failed to carry the safety labelling, consumer warnings or installation and use instructions required under applicable product safety standards.
In that period, Decathlon sold more than 400 basketball rings and backboards, and nearly 300 portable pools online or at its physical stores. The pools included small inflatable and non-inflatable pools, which were intended for use by small children.
The ACCC alleges that warnings such as 'improper installation or swinging on the ring may cause serious injury or death' were missing from many basketball products. The ACCC also alleges Decathlon made a false or misleading representation that some of the basketball rings and backboards were safe to attach to brickwork, when that was not the case.46
On 23 July 2020, The ACCC has instituted Federal Court proceedings against Decathlon (Australia) Pty Ltd (Decathlon) for allegedly selling sports and recreation goods that did not comply with the applicable product safety standards, in breach of the Australian Consumer Law.
In 2020, TEG Live Pty Limited (TEG) admitted47 it made false or misleading claims about seating at the basketball games held in Melbourne and acknowledged the Australian Competition and Consumer Commission's (ACCC) concerns that it may have breached the ACL by misleading consumers about which USA national basketball team players would be playing, or would be available to play, in the games. When promoting these games, TEG Live used a picture of an American basketball stadium showing the floor-level seats would be tiered. In fact, the seats at the Melbourne games were not tiered and many consumers had obstructed views. The ACCC also considered that TEG Live may have misled consumers when it advertised the games using names and images of high profile USA players like LeBron James and Kevin Durant that did not ultimately play in the games, when it did not have reasonable grounds in most cases for representing to consumers they would play or be available to play.
Sports and taxation
Under Australian taxation legislation, a sporting organisation is exempt from income tax if it meets all of the following requirements:48
- it is a non-profit organisation;
- it has been established for the purpose of the encouragement of a game or sport; it is not a charity; and
- it meets either the 'physical presence in Australia' test, the 'deductible gift recipient' test or the 'prescribed by law test'.49
Many professional sporting clubs meet these requirements, which are satisfied by inserting relevant clauses into the constitution of the club. For example, the Carlton Football Club's Constitution provides that 'The assets and income of the Club shall be applied solely in furtherance of the objects of the Club set forth in this Constitution and no portion shall be distributed directly or indirectly to the members of the organisation except as bona fide compensation for services rendered or expenses incurred on behalf of the organisation', which establishes it as a non-profit organisation. The Constitution also provides that 'If a surplus remains following the winding up or dissolution of the Club, the surplus will not be paid to or distributed among members, but will be given or transferred to another corporation or club with similar objects to that of the Club'.50
For individual athletes, prize money, playing fees, sponsorships, salaries and media fees are each considered to be taxable income.
Specific sports issues
State and federal criminal laws cover conduct involving some (but not all) substances that appear on the WADA World Anti-Doping Code Prohibited List, including a large number of anabolic steroids.51 These laws include the following offences associated with these substances:
- trafficking or supplying a prohibited substance;52
- using or administering a prohibited substance without appropriate medical or therapeutic justification;53
- possession of a prohibited substance;54 and
- aiding, abetting or concealing any of the above offences.55
Individuals who are found guilty of the above offences can potentially face life imprisonment and fines in excess of A$1 million (in particular, for serious trafficking offences).
It has also been suggested by some commentators that doping by professional athletes may constitute the offence of fraud, which is defined as where a person gains a financial advantage, property, services, a benefit, dishonestly or by deceit.56 However, this has not been judicially established, and doping itself is not a criminal offence in Australia.
On 1 July 2020, Sport Integrity Australia (SIA) was established as the new government organisation responsible for the integrity of Australian sport. SIA's functions include those formerly exercised by the Australian Sports Anti-Doping Authority, meaning part of its role will be to oversee the implementation of anti-doping practices. The Australian Sports Anti-Doping Authority Amendment (Sport Integrity Australia) Act 2020 (Sport Integrity Act), which established SIA, grants the CEO of SIA powers to request information or documents from any person or body about matters relating to sports integrity. The Sport Integrity Act also declares SIA to be an enforcement body for the purposes of the Privacy Act 1988. This means that, among other things, SIA would not be required to obtain an individual's consent to collect sensitive information which is reasonably necessary to perform its functions, or to disclose personal information to an overseas recipient that performs functions similar to it.
The Australian Sports Anti-Doping Authority Amendment (Enhancing Australia's Anti-Doping Capability) Act 2020 came into force in June 2020. Importantly, it permits action to be taken against third parties who have supplied the prohibited substances. The third party does not need to be directly associated with the athletes accused of an anti-doping violation.57 The amendment also removes the protection from self-incrimination (right to silence) in anti-doping proceedings.
Betting on sporting events is legal in every state and territory, but highly regulated.58 The licensing laws vary between each state and territory jurisdiction, but each jurisdiction provides that customers must be over the age of 18 to place a bet, and that licensees must obtain reasonable proof of identity from their customers. The state and territory gambling laws are supplemented by federal legislation that, among other things, has banned online 'in-game' betting on sports (although customers can still place in-game bets over the phone).59
In 2008, the Western Australian government attempted to implement legislative amendments that would prohibit the operation of betting exchanges, such as that operated by Betfair Pty Ltd.60 Specifically, the legislation prohibited 'out-of-state' betting exchanges, where the operator is licensed in another jurisdiction (for example, Betfair was licensed in Tasmania), and preventing Western Australian residents from placing wagers through such betting exchanges.
The High Court of Australia held that it was constitutionally unlawful for a state or territory government to protect local betting operators from online bookmakers that were licensed in other jurisdictions, as an impermissible restriction on free trade between the states.61 As such, online betting operators licensed in one state or territory can offer wagering products to anyone in Australia. Most online operators are now licensed in the Northern Territory, owing to its lower taxation and less stringent regulation.62
In 2015, legislation was introduced to Parliament proposing a ban on gambling advertising during sports events, and the establishment of a national regulator and national self-exclusion register for people struggling with a gambling habit. This legislation, however, was not supported by the two major political parties in Australia63 and lapsed in July 2019. The newly established Sport Integrity Australia's functions includes developing better regulation and integrity frameworks for sports betting, including a suspicious wagering alert scheme. 64
Each state and territory has implemented, or is in the process of implementing, laws designed to prevent match fixing. For example, in New South Wales, South Australia, Victoria and the Northern Territory it is an offence to knowingly or recklessly corrupt a betting outcome of an event with the intention of obtaining a financial advantage or causing a financial advantage in relation to any betting on an event.65 It is also an offence to facilitate conduct that corrupts a betting outcome of an event. In Queensland, it is an offence to engage in match-fixing conduct for the purpose of obtaining a pecuniary benefit for any person, or causing a pecuniary detriment to another person.66 For each of these jurisdictions, save for the Northern Territory, a person found guilty of an offence is liable for imprisonment up to 10 years. The maximum penalty in the Northern Territory is imprisonment for 7 years.
There have been several recent high-profile match-fixing incidents in Australian sport.
- In 2011, a professional rugby league player in the NRL was convicted of 'conspiring to gain financial advantage for others', namely that he intentionally gave away a penalty to the opposing team so that others could succeed in a 'first points scorer' bet. He was convicted prior to the introduction of specific match-fixing laws in New South Wales, but his conduct would now be caught by the prohibition against corrupting the betting outcome of an event. He was fined A$4,000 and placed on a 12-month good behaviour bond.67 He was also banned for life from the NRL.
- In 2016, Australian tennis player Nick Lindahl was convicted of match-fixing after deliberately losing a match at a Towoomba Futures event in 2013. He was given a 12-month good behaviour bond and fined A$1,000. He was also subsequently banned from professional tennis by the International Tennis Federation and fined US$35,000.
In July 2020, the newly established Sport Integrity Australia partnered with the Australian Criminal Intelligence Commission (ACIC). Part of the aim of the ACIC partnership is to develop 'policy and potential regulation around match fixing, betting, wagering and whistle blower protection'.68 The sports integrity body also aims to have new federal match fixing offences introduced in Parliament in the second half of 2020. 69
iv Grey market sales
The extent to which sporting event ticket sales in the grey market, also referred to as 'scalping', is prohibited depends on the state or territory. For example, in New South Wales ticket scalping is only prohibited in areas around particular sporting venues.70 In Queensland, there are prohibitions on reselling tickets to 'major sports facility events' at a price greater than 10 per cent of the original ticket price.71 Major sports facilities are listed in the regulations, and a declaration that a facility is a major sports facility may only be made with the agreement of the owner. In Victoria, if the Minister for Sport declares a particular event to be a 'major sport event', and it is a condition of sale of the ticket that the buyer is not authorised to sell or distribute it, it is an offence for the buyer to redistribute the ticket.72 In South Australia, if the Minister declares an event a 'major event', ticket scalping is prohibited inside declared areas. It is also prohibited in South Australia to resell 'major event' tickets at a price that exceeds the original ticket price by more than 10 per cent.73
Additionally, the ACL contains general consumer protections that apply to ticket resellers. For example, it is prohibited for an unauthorised reseller to represent that they are authorised to sell the tickets, or to misrepresent the original face value of the ticket, and the consumer guarantee provisions ensure that tickets purchased from unauthorised resellers are valid, and for the event they are represented to be for.
Recently, the Australian Competition and Consumer Commission instituted proceedings in the Federal Court of Australia against Viagogo AG, a ticket reseller for live sporting events (among other events). In 2019, the court held that, by referring to tickets as “official” in online advertising, failing to disclose substantial fees and claiming tickets to certain events were scarce when the scarcity referred only to tickets available on the Viagogo resale platform, Viagogo had made false or misleading representations and engaged in misleading or deceptive conduct.74 For example, the total price for three Ashes 2017–18 (cricket matches) tickets increased from A$330.15 to A$426.82 (29 per cent increase) when the A$91.71 booking fee and A$4.95 handling fees were included.75
Outlook and conclusions
In 2020, we have witnessed the unprecedented challenges brought about by covid-19. These have primarily manifested in the form of financial difficulties as sports came to an abrupt halt.
Looking forward, we will keenly watch the development of and actions taken by the two new government bodies, Sport Integrity Australia and the National Sports Tribunal. Their establishing represents a step forward in the fight against corruption in sport.
1 Annie E Leeks is a partner, Prudence J Smith is of counsel, Mitchell J O'Connell is an associate and Henry Baek and Daniel Faber are law graduates at Jones Day. The authors appreciate and acknowledge the work of Michael Whitbread, Matthew Whitaker and Lachlan J Green in previous versions of the this chapter.
2 Australian courts have found contracts with unincorporated sporting clubs to be unenforceable; for example, see Carlton Cricket and Football Social Club v. Joseph (1970) VR 487.
3 For example, see Carlton Cricket and Football Social Club v. Joseph (1970) VR 487.
4 AFL NSW/ACT, 'Incorporating Your Club', http://aflnswact.com.au/community-football/manage-your-club/incorporating-your-club/.
5 'Thanks a million: AFL club memberships hit all-time record, AFL.com.au' (6 August 2019),
https://www.afl.com.au/news/2019-08-06/thanks-a-million-afl-club-memberships-hit-alltime-record; League Unlimited Media, '2019 NRL Club Membership Tracker' (14 June 2020), https://leagueunlimited.com/news/34223-2020-nrl-membership-tracker/, 'A-League membership' (undated), https://www.a-league.com.au/membership.
6 The company limited by guarantee that owns 25 per cent is the South Sydney Members Rugby League Football Club Limited.
7 ASC 2018-2019 Annual Report, Financial Statements, https://www.sportaus.gov.au/__data/assets/pdf_file/0007/716119/ASC-Annual-Report-20182019.pdf.
8 Corporations Act 2001 (Cth), Sections 181 and 184.
9 Corporations Act 2001 (Cth), Sections 180 and 184.
10 Corporations Act 2001 (Cth), Section 191.
11 Corporations Act 2001 (Cth), Section 588G.
12 Corporations Act 2001 (Cth), Section 184.
13 In 2015, only six of 18 AFL clubs were profitable, and each club is heavily reliant on fund distributions from the AFL (see www.theage.com.au/afl/afl-news/unprofitable-clubs-get-millions-in-aid-from-afl-20150228-13rqwm.html).
14 For example, Work Health and Safety Act 2011 (NSW) Section 27(5); Occupational Health and Safety Act 2004 (Vic) Section 21; Work Health and Safety Act 2011 (QLD) Section 27(5); and Occupational Health and Safety Act 1984 (WA) Section 19.
15 See, for example, Occupational Health and Safety Act 2011 (NSW), Sections 31 to 33.
16 For example, Stephen Dank; see 'Stephen Dank handed lifetime ban by AFL Anti-Doping Tribunal following Essendon supplements saga', ABC (26 June 2015), www.abc.net.au/news/2015-06-26/stephen-dank-handed-lifetime-ban-from-afl-tribunal/6575962.
18 For example, see Stollery v. Greyhound Racing Control Board (1972) 128 CLR 509.
19 See, for example, the AFL and AFL Players' Association Collective Bargaining Agreement 2012–2016, www.aflplayers.com.au/wp-content/uploads/2014/09/CBA-2012-2016-FINAL.pdf.
20 However, like other jurisdictions, the CAS only has jurisdiction to hear a dispute if an agreement between the parties (for example, in the rules governing the sport), specifies the CAS as the avenue of appeal.
21 CAS A1/2016, Mitchell Iles v. Shooting Australia.
22 For example, the Major Sporting Events Act 2009 (Vic) and the Major Events Act 2014 (Qld).
23 Civil Liability Act 2002 (NSW) Section 5B; Civil Liability Act 2003 (Qld) Section 9; Civil Liability Act 1936 (SA) Section 32; Civil Liability Act 2002 (WA) Section 5B; Civil Liability Act 2002 (Tas) Section 11; and Wrongs Act 1958 (Vic) Section 48.
24 Woods v. Multi-Sport Holdings Pty Ltd (2002) 208 CLR 460.
25 McCracken v. Melbourne Storm Rugby League Football Club and 2 Ors  NSWSC 107.
26 R v. Brown  1 AC 212.
27 R v. Billinghurst (1978) Crim LR 553; and R v. Johnson (1986) 8 Cr App R (S) 343.
28 For example, see the incidences described in an article published by The Age in July 2017 involving Barry Hall, Bachar Houli and Thomas Bugg (professional footballers) and Ali Fahour (an amateur footballer in a lower division) www.theage.com.au/afl/afl-news/ali-fahour-incident-would-the-police-act-on-an-afl-punch-20170707-gx6yom.html.
31 Broadcasting Services Act 1992 (Cth).
32 Broadcasting Services (Events) Notice (No. 1) 2010 (Cth).
33 Major Sporting Events (Indicia and Images) Protection Act 2014 (Cth) Section 16.
34 Olympic Insignia Protection Act 1987 (Cth).
35 Australian Olympic Committee, Inc v. Telstra Corporation Limited  FCA 857.
36 id. at .
37 Australian Olympic Committee, Inc v. Telstra Corporation Limited  FCAFC 165.
38 D Thorpe, 'The use of multiple restraints of trade in sport and the question of reasonableness', 2012, Australian and New Zealand Sports Law Journal, vol. 7(1).
39 See Adamson v. New South Wales Rugby League (1991) 31 FCR 242 per Wilcox J at 266.
40 Beetson v. Humphries (unreported, Supreme Court of New South Wales, Hunt J, 30 April 1980).
41 Adamson v. New South Wales Rugby League (1991) 31 FCR 242.
42 News Ltd v. Australian Rugby League Limited (1996) ATPR 41-466.
43 News Ltd v. Australian Rugby League Ltd (No. 2) (Superleague) (1996) 64 FCR 410.
44 McHugh v Australian Jockey Club (No. 13) (2012) 299 ALR 363.
45 Until recently, under the Competition and Consumer Act 2010, the Tribunal could grant authorisation for a merger or acquisition if satisfied that it will result in sufficient public benefits, including efficiencies. The Tribunal was required to weigh the risks of a detrimental loss of competition from the merger against the public benefits and efficiencies from the merger. Currently, all parties must seek authorisation from the ACCC.
49 An organisation will meet the 'physical presence in Australia' test if it has a physical presence in Australia and, to the extent it has a physical presence in Australia, it pursues its objectives and incurs its expenditure principally in Australia. An organisation will meet the 'deductible gift recipient' test if it is either listed by name as a deductible gift recipient (DGR) in the legislation, or if it meets the requirements of a general DGR category set out in the legislation. An organisation will meet the 'prescribed by law' test if it is prescribed by name in income tax regulations, and it is located outside Australia and is exempt from income tax in its country of residence.
50 Carlton Football Club Constitution, www.carltonfc.com.au/staticfile/AFL%20Tenant/Carlton/Documents/Constitution.pdf.
51 For example, see Schedule 3 of the Criminal Code Regulations 2002 (Cth); and Schedule 2 of the Drugs Misuse Regulation 1987 (Qld).
52 For example, Drug Misuse and Trafficking Act 1985 (NSW), Section 25.
53 For example, Drug Misuse and Trafficking Act 1985 (NSW), Sections 12 and 13.
54 For example, Drug Misuse and Trafficking Act 1985 (NSW), Section 10.
55 For example, Drug Misuse and Trafficking Act 1985 (NSW), Sections 19 and 20.
56 For example, see Christopher McKenzie, 'The use of criminal justice mechanisms to combat doping in sport' (July 2007), Sports Law eJournal.
57 Sport Integrity Australia, 'Anti-Doping Law Reform Strengthens Integrity of Australian Sport', www.sportintegrity.gov.au/news/ministerial-statements/2020-06/anti-doping-law-reform-strengthens-integrity-of-australian-sport.
58 For example, the Betting and Racing Act 1998 (NSW); Gambling Regulation Act 2003 (Vic); Wagering Act 1998 (Qld); Betting Control Act 1954 (WA); Authorised Betting Operations Act 2000 (SA); Gaming Control Act 1993 (Tas); Racing and Betting Act 1983 (NT); and Racing and Sports Bookmaking Act 2001 (ACT).
59 See the Interactive Gaming Amendment Act 1997 (Cth), which amended the Interactive Gaming Act 2001 (Cth).
60 In a betting exchange, the operator acts as the facilitator, matching the wagers of participants betting on opposing outcomes, and takes a commission of the winner's payout.
61 Betfair Pty Limited v. Western Australia (2008) 234 CLR 418.
62 Many of the large corporate online bookmakers in Australia are subsidiaries of UK corporate bookmakers, licensed in Australia. This includes the three largest corporate bookmakers by turnover: Sportsbet is a subsidiary of Paddy Power, Sportingbet is a subsidiary of William Hill and Ladbrokes operates a subsidiary in Australia. Each of these is licensed in the Northern Territory.
63 See the Interactive Gaming Amendment (Sports Betting Reform) Bill 2015 (Cth); and the Senate Environment and Communications Legislation Committee inquiry report (March 2017), www.aph.gov.au/Parliamentary_Business/Committees/Senate/Environment_and_Communications/SportsBetting/Report.
64 Sport Integrity Australia, 'What We Do', www.sportintegrity.gov.au/what-we-do/sports-wagering.
65 See Crimes Act 1900 (NSW) Section 193N; Criminal Law Consolidation Act 1935 (SA) Section 144H; Crimes Act 1958 (Vic), Section 195C; Criminal Code Act 1983 (NT) Section 237H.
66 Criminal Code 1899 (Qld), Section 443A.
67 M Whitbread, 'Fixing match-fixing in Australia – Australian sporting administrators propose stricter criminal sanctions' (October 2010) 18 SLAP 6.
68 Sport Integrity Australia, 'Powerful intelligence partnership 'crucial' to protect sport', www.sportintegrity.gov.au/news/media-statements/2020-07/powerful-intelligence-partnership-crucial-protect-sport.
70 Major Events Act 2009 (NSW), Section 41.
71 Major Sports Facilities Act 2001 (Qld), Section 30C.
72 Major Sporting Events Act 2009 (Vic), Section 166.
73 Major Events Act 2013 (SA), Section 9.
74 Australian Competition and Consumer Commission v. Viagogo AG  FCA 544.
75 ACCC Media Release, 'ACCC takes ticket reseller Viagogo to court' (28 August 2017), www.accc.gov.au/media-release/accc-takes-ticket-reseller-viagogo-to-court.
76 Northern Territory Government, 'Declared sporting events for bookmaking', https://nt.gov.au/industry/gambling/licences/bookmaker-licences-and-permits/declared-sporting-events-for-bookmaking.
78 ABC News, 'Victorian men hit with corruption charges over alleged esports match fixing', www.abc.net.au/news/2020-05-03/men-charged-over-alleged-esport-match-fixing-australia/12209154.
79 See Crimes Act 1958 (Vic), Section 195C.
80 See Crimes Act 1900 (NSW), Section 193N; Criminal Law Consolidation Act 1935 (SA), Section 144H; Criminal Code Act 1899 (Qld), Section 443A; Criminal Code Act 1983 (NT), Section 237H.
81 The Australian, 'Esports targeted by matchfixers', www.theaustralian.com.au/sport/esports-targeted-by-matchfixers/news-story/bdf96b75ac1376362039db5b0214229d.
82 The Atlantic, 'A New Lawsuit Could Transform How the Influencer Industry Is Regulated', www.theatlantic.com/technology/archive/2019/05/why-tfues-lawsuit-against-faze-clan-matters/589900/.
83 ABC News, 'Equestrian Australia goes into voluntary administration after Sports Australia withdraws funding', www.abc.net.au/news/2020-06-09/equestrian-australia-goes-into-voluntary-
84 ABC News, 'Cricket Australia cuts 40 staff, international tours, to save $40 million after coronavirus pandemic', www.abc.net.au/news/2020-06-17/cricket-australia-cuts-40-staff-over-coronavirus-
85 ABC News, 'Rugby Australia axes more than 40 per cent of staff', www.abc.net.au/news/2020-06-01/rugby-australia-axes-forty-percent-of-staff/12302232.
87 The Australian, 'NRL and its clubs ready to ask players to take a pay cut for 2021', www.theaustralian.com.au/sport/nrl/nrl-and-its-clubs-ready-to-ask-players-to-take-a-pay-cut-for-2021/news-story/66ba3179f635e9240b0cf5363326edc0.
89 Department of Health, 'The Review of Australia's Sports Integrity Arrangements', www1.health.gov.au/internet/main/publishing.nsf/Content/the-review-of-australias-sports-integrity-arrangements.