An extract from The Gambling Law Review, 5th Edition
In general terms, for an activity to be classified as gambling in Australia, it must involve the staking of money or other valuable consideration of real-world value on the outcome of an event determined in whole, or in part, by chance and with the objective of winning a prize.
Where an activity does not satisfy these criteria, it is not generally considered to be gambling under Australian law.
'Trade promotions', being free-to-enter competitions for the promotion of trade, are also regulated under gambling legislation in each Australian state and territory. These competitions are subject to specific restrictions and, in certain jurisdictions, are only able to be conducted where a permit has been issued by the relevant regulator.
Fantasy sports operators have existed in the Australian market for some years. Initially, they were regulated as a form of trade promotion, whereas now they are treated by regulators as a form of bookmaking.
No specific regulation of 'pool betting' exists in Australia. Exclusive licences are granted to totalisator operators in all Australian jurisdictions. These operators are licensed to accept bets relating to a contingency (generally, the outcome of a racing or sporting event), which are then contributed to a pool that is paid out by reference to successful bets (after the operator deducts a percentage of the pool as commission, as well as various fees and taxes).
Spread betting and betting on financial products are regulated by the Corporations Act 2001 (Cth). To be conducted legally, operators must obtain an Australian Financial Services Licence. These products are regulated under a different regulatory regime to gambling products; however, in certain circumstances, a sports betting licence may also be obtained.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:
- lotteries (both in venue and online);
- wagering and sports betting (both in venues and online);
- electronic gaming machines, slot machines, or 'pokies' (just in venues); and
- 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 were government-owned entities. Almost all states and territories (Western Australia being the exception in respect of its totalisator and lottery) have corporatised and privatised these gambling operators. All leading gambling businesses in Australia (many of whom are listed) conduct business under a licence granted by a state or territory government (or regulator).
The principal licensed gambling operators are:
- Tabcorp Holdings Limited (Tabcorp), which, since combining with Tatts Group Limited (Tatts) (see Section VIII, below) has the exclusive right 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;
- The Star Entertainment Group Limited (The Star), which operates casinos in Sydney and in South East Queensland;
- Crown Resorts Limited (Crown Resorts), which operates casinos in Melbourne and Perth (and Sydney by 2024) and also conducts a betting exchange, Betfair;
- Sportsbet Pty Limited (Sportsbet), a sports bookmaker which is owned by Flutter Entertainment;
- BetEasy Pty Limited (formerly, CrownBet, now owned by The Stars Group), a sports bookmaker that acquired William Hill's Australian operation in 2018, and is due to merge with Sportsbet (and conduct business under the 'Sportsbet' brand) as a result of the merger of The Stars Group and Flutter Entertainment, which is anticipated to be finalised in late 2020 (see Section VIII, below); and
- Aristocrat Leisure Limited, Ainsworth Game Technology, Scientific Games Australia, Konami Australia, International Game Technology (IGT) and Aruze Australia (all being 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 announced in late 2018 that it is conducting a tender process in respect of the exclusive licence to operate the state's totalisator. The tender process remains ongoing.
Separate exclusive licences are also issued in each state and territory in respect of the conduct of Keno games in land-based retail venues.
The right to operate a casino has been the subject of an exclusive licence in the relevant jurisdiction, save for Queensland, New South Wales and the Northern Territory. The recent issue of new casino licences in New South Wales and Queensland is discussed further in Section II, below.
Wagering services are not only provided by totalisator operators (who also provide fixed-odds betting services) but also by on-course bookmakers (some of whom also operate online) and corporate bookmakers (mostly licensed in the Northern Territory).iv Territorial issues
As mentioned in subsection iii, above, licences to conduct gambling are issued by the relevant state or territory government (or regulator) including those listed in Section II, below. Traditionally, gambling was conducted solely in venues. However, as a result of new technologies and the challenges posed by gambling monopolies in most Australian states and territories, a number of gambling businesses (particularly in the wagering sector) are licensed to conduct gambling remotely. This includes corporate bookmakers, most of whom are subsidiaries of leading European online betting companies.
However, it is generally understood under principles of Australian constitutional law that gambling services provided under a licence issued in any state or territory of Australia are able to be 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).v Offshore gambling
In 2001, the federal government enacted the Interactive Gambling Act 2001 (Cth) (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. In September 2017, the IGA was amended by the Interactive Gambling Amendment Act 2017 (Cth) (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 (with the exception of online in-play sports betting services, which is prohibited) and lottery services (with the exception of 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 Advertising Prohibition).
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 their service had an 'Australian customer link,' that is, that any or all of the customers of the service were physically present in Australia.
Legal and regulatory frameworki Legislation and jurisprudence
Australia is a federation. In practice, this means that legislative power is divided between the federal government and the eight constituent states and territories. Traditionally, the power to regulate gambling activities in Australia was reserved by the states and territories.
This changed in 2001 with the enactment of the IGA.
Whereas the IGA regulates interactive (or online) gambling services, state and territory legislation continues to regulate land-based gambling activities and sets out different regulatory frameworks for different types of gambling (both remote and land-based gambling), including casinos, sports betting, poker machines and lotteries.
The IGA prevails over state and territory legislation to the extent of any inconsistency. However, even where certain conduct does not contravene the IGA, it may nonetheless be in breach of state and territory gambling laws.
In addition to regulating the manner in which gambling is conducted, legislation in each Australian state and territory also establishes separate regulatory bodies.
Even though the federal government's proposed poker machine regulation in November 2012 was unsuccessful, there remains the possibility that the federal government may intervene in the future to regulate further land-based gambling, particularly poker machines, or direct state and territory governments to reform particular regulatory frameworks for other types of gambling.
This is clear from the federal government's critical role in developing and passing the National Consumer Protection Framework (the NCPF), a framework of 10 mandatory minimum standard measures, which is intended to minimise gambling related harm for Australian consumers (see Section VII, below).ii The regulators
The key responsibilities assigned to the state and territory regulators include granting licences, monitoring compliance of gambling operators and enforcement of legislation where necessary. The key regulators in each jurisdiction are:
- New South Wales: Liquor and Gaming NSW;
- Victoria: Victorian Commission for Gambling and Liquor Regulation and the Department of Justice and Regulation;
- Australian Capital Territory: ACT Gambling and Racing Commission;
- Northern Territory: the NTRC;
- Western Australia: Department of Racing, Gaming and Liquor;
- South Australia: the Consumer and Business Services Department;
- Tasmania: Liquor and Gaming Commission;
- Queensland: Office of Liquor and Gaming Regulation; and
- Australia-wide: the ACMA.
In certain states and territories, a different regulator is responsible for the regulation of casinos. For example, the Independent Liquor and Gaming Authority (ILGA) is responsible for determining the regulatory arrangements that apply to the operation of casinos in New South Wales. Additionally, separate government departments are responsible for regulating lower-risk gambling activities such as trade promotions, and certain racing and sporting bodies have been given the right to regulate certain activities of individual and corporate licensed bookmakers.iii Remote and land-based gambling
The Australian legislative framework for the gambling sector distinguishes between remote and land-based gambling; both are regulated at the federal and state and territory levels.
As indicated in subsection i, above, interactive (or online) gambling services are regulated at the federal, and state and territory levels, while land-based gambling is regulated mostly at the state and territory level.
At the state and territory level, the distinction is due in part to the different regulatory frameworks that exist for the different types of gambling services, such as casinos and gaming machines. In addition, the distinction can be attributed to the rapid evolution of the market and the often outdated legislation at the state and territory level. For example, in New South Wales, the Unlawful Gambling Act 1998 (NSW) (NSW UGA) does not contemplate online gambling. However, the preferred position of Liquor and Gaming NSW, the New South Wales regulator, is that the NSW UGA applies equally to both online and offline forms of gambling.iv Land-based gambling
Land-based gaming is regulated largely by state and territory legislation, which is principally directed at gambling products or services that are venue-based. These include operators of wagering and lottery terminals, and poker machines. However, certain federal laws apply to land-based gambling, such as the laws relating to anti-money laundering and counter-terrorism financing (see Section IV, below).
Generally, an exclusive licence has been granted in each state or territory to conduct off-course betting in retail venues. Similarly, an exclusive licence has been granted to provide lottery products (which are made available for purchase by consumers from retailers, principally in newsagents).
Further, licensed venue operators are permitted to conduct land-based machine gaming (such as slot machines, known in Australia as poker machines). These venues include casinos, pubs and clubs. The sole exception to this principle is in Western Australia, where poker machines are only permitted in casinos. Certain restrictions are imposed on the operation of gaming machines by licensed venue operators, such as caps on the total number of poker machines in any particular venue, locality or in the jurisdiction as a whole. The regulatory regime in respect of poker machines differs substantially from jurisdiction to jurisdiction with Victoria, for example, having a mandatory pre-commitment system in place (which players can opt out of).
Until recently, there was a limited number of casino licences granted in each state and territory. However, in recent years, this exclusivity has been relaxed. Previously, in New South Wales, the exclusive casino licence was held by Echo Entertainment Group Ltd (now The Star). In 2014, the New South Wales state government granted a licence to Crown Resorts for the construction and operation of Crown Casino at Barangaroo in Sydney (which is scheduled for completion in 2024). Similarly in Queensland, the government is in the process of granting additional casino licences to various private entities.v Remote gambling
The IGA prohibits the supply of online gambling services to persons present in Australia, unless they are wagering or lottery services and the service provider is licensed by a regulatory authority in an Australian jurisdiction. However, the ability of wagering operators to provide remotely in-play sports betting is restricted to bets placed over the telephone via a voice call or via a 'place-based betting service', that is, using 'electronic equipment' at the venue of a licensed operator.
Generally speaking, licensed operators may offer remote or online gambling services and no distinction exists between the online platforms or devices on which a gambling product may be offered to customers.
Licences granted to Australian operators to provide gambling services online often impose restrictions on the location and manner in which the licensed operator may conduct its gambling business. For example, gambling operators licensed by the NTRC are required to locate various aspects of their operations in the Northern Territory. In addition, the conditions of the licence have the effect that bets are deemed to be placed, received and accepted in the Northern Territory for the purposes of the licence, irrespective of where the customer placing the bet is located.
Various restrictions and requirements exist at the state or territory levels that apply to licensed online wagering operators (even where based in another state or territory). These restrictions set out mandatory requirements relating to advertising, warning messages and pre-commitment and, in many jurisdictions, there exists the requirement to pay a product fee in respect of races and some sporting events that take place in that state or territory and a point of consumption tax (PoC Tax) in respect of revenue generated by customers of a particular state or territory (see Section VII, below).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
There are a limited number of financial mechanisms that are prohibited in Australia for use as payment in connection with gambling services. For example, the IGA prohibits licensed online wagering operators from providing to Australian customers, or facilitating the provision through third parties, credit for use in connection with the operator's services. Throughout 2019, various Australian financial institutions introduced a limit on the use of credit cards for gambling-related purposes (see Section VII, below).
Additionally, Australian gambling laws do not, at either the federal or state and territory level, contemplate the use of cryptocurrency as a mechanism for payment in connection with online gambling services. However, the NTRC has imposed a restriction on all of its licensed online wagering operators accepting cryptocurrency as a form of payment for bets placed with the operator.