On 10 November 2016, the Hon. Alan Tudge MP, Federal Minister for Human Services, introduced into the House of Representatives of the Australian Federal Parliament the Interactive Gambling Amendment Bill 2016 (the IGA Amendment Bill) which proposes to amend Australia's primary online gambling legislation, the Interactive Gambling Act 2001 (Cth) (the IGA).
The amendments proposed by the IGA Amendment Bill are a direct response to the Final Report (Final Report)1 of the Review of Illegal Offshore Wagering conducted by the Hon. Barry O'Farrell (O'Farrell Review) and reflects the Federal Government's position as outlined in the government's response to the recommendations set out in the Final Report (the Government Response).2 For further detail, please see our previous Focus Paper on the O'Farrell Review and the Government Response:
The IGA Amendment Bill reflects the Federal Government's objective that the provisions of the IGA regarding illegal offshore gambling be clarified and that greater powers be given to the Federal regulator, the Australian Communications and Media Authority (the ACMA), to enforce these provisions. An overview of the key objectives of and amendments to be introduced by the IGA Amendment Bill which are relevant to offshore wagering operators are set out below.
1. Requirement to be licensed in Australia
The IGA Amendment Bill sets out a distinction between "regulated interactive gambling services" and "prohibited interactive gambling services". The key distinction between these categories of services is that no party is permitted to provide to persons present in Australia a prohibited interactive gambling service, while regulated interactive gambling services can be provided, but only by licensed Australian operators under the terms of their licence.
Previously, those services which now fall within the scope of a regulated interactive gambling service (e.g. excluded wagering and lotteries services) were exempt from the definition of a "prohibited interactive gambling service" and, therefore, were not prohibited by the IGA (save in respect of in-play and instantaneous lotteries provided online, both of which will remain prohibited by the IGA).
These "excluded" services (among others) are now defined under a new section 8E of the IGA to be a "regulated interactive gambling service". In other words, the IGA Amendment Bill makes it clear that only those exempt services which are regulated interactive gambling services fall outside the scope of the prohibition at section 15 of the IGA.
The IGA Amendment Bill amends section 15 of the IGA so that, where a person provides a prohibited interactive gambling service to customers in Australia, they are liable both for a criminal offence and a civil penalty.
The IGA Amendment Bill introduces a new section 15AA. This will make it an offence to intentionally provide to persons present in Australia a regulated interactive gambling service unless the operator/provider of the proposed service holds a licence under the laws of an Australian State or Territory which authorises the provision of that kind of service. In a manner similar to the prohibition set out at section 15, section 15AA makes it both a criminal offence and imposes a civil penalty for the breach of this provision.
In respect of both sections 15 and 15AA, a person commits a separate offence for each additional day that a contravention occurs. The penalty for contravention by a corporate entity is $4.5 million for a criminal offence provision and $6.75 million for a civil offence provision, for each day a contravention takes place.
In other words, the IGA Amendment Bill confirms that it is prohibited to supply online gambling services to persons present in Australia without a licence under the laws of an Australian State or Territory. It also enshrines the principle confirmed by the decision of the High Court of Australia (Australia's highest court) in Betfair Pty Ltd and Another v Western Australia (2008) 244 ALR 32 that an online gambling service licensed under the laws of an Australian State or Territory will not be in breach of the IGA by offering services conducted in accordance with its licence to Australian customers located outside of the State or Territory in which it is licensed.
2. ACMA civil penalty regime and enforcement capabilities
ACMA Enforcement Tools
Perhaps the most significant amendments proposed by the IGA Amendment Bill are those which will give the ACMA greater powers to enforce the provisions of the IGA. The proposed changes include:
- a stricter civil penalty regime. The enforcement tools available to the ACMA include the right to issue formal warnings and infringement notices, impose civil penalties and to seek injunctions; and
- establishing a framework for complaints to be made to the ACMA about the provision and advertising of any unlicensed or prohibited interactive gambling services, and a process for the ACMA to conduct investigations in relation to these complaints.
One of the amendments proposed by the IGA Amendment Bill is to require the ACMA to set up a register of legitimate or "eligible interactive gambling services" (broadly, betting services which are not in breach of the civil offence under section 15AA) that will be available for inspection by the general public on the ACMA website. In other words, , "eligible interactive gambling services" will not include online gaming operators.
ACMA Notification Powers
The IGA Amendment Bill will also amend the Australian Communications and Media Authority Act 2005 (Cth) (the ACMA Act) to empower the ACMA to disclose information relating to prohibited or regulated interactive gambling services to:
- the Department of Immigration and Border Protection, for the purposes of placing the names of executive officers of entities who are in breach of the IGA on a "Movement Alert List" with the aim of restricting their travel to, or from, Australia; and
- international regulators to provide details of operators licensed by that regulator who may be providing interactive gambling services to persons present in Australia in contravention of the IGA. The purpose of this capability is to raise awareness of the IGA and receive enforcement assistance from overseas regulators.
These are consistent with the "name and shame" provisions contemplated in the Government Response to the O'Farrell Review.
What does this mean for offshore wagering operators?
The proposed amendments strengthen the current provisions of the IGA which prohibit the provision of gambling services by offshore wagering operators to persons present in Australia.
The effect of these amendments is to make it clear to any offshore online wagering operators that it is not legal under Australian law to provide those services to persons present in Australia. This will be emphasised by the "name and shame" policies to be pursued by the ACMA in the event of a contravention of the IGA. The significant penalties that may be imposed in respect of contraventions of the IGA is also evidence of the Australian government's position that it will take a strong stance to penalise any person who seeks to conduct and/or promote a prohibited interactive gambling service to persons present in Australia.
At this stage, the IGA Amendment Bill has been introduced in the Australian Federal House of Representatives (the House) on the basis that the Bill may be debated in the House in the course of this week.
If the IGA Amendment Bill is passed by the House, it will then be considered by the Australian Senate. The Australian Senate has already referred the IGA Amendment Bill to the Senate Environment and Communications Legislation Committee to consider the IGA Amendment Bill. The report will be completed by 30 November 2016.
However, it may be that the IGA Amendment Bill is passed by the Australian Senate without amendment. In any event, it will come into effect 28 days after receiving Royal Assent. This means that it is possible that the IGA Amendment Bill may take effect as soon as early January 2017.
We are monitoring the progress of the IGA Amendment Bill closely and will provide further updates as they arise. If you have any questions about the IGA Amendment Bill, or how it may affect your business, please feel free to contact any member of Addisons Media and Gaming Team.