Full text of Report
Betfair wins High Court judgment in Australia: Betfair has won a groundbreaking judgment in the Australian High Court in relation to allowing online bets by Western Australian residents. The Tasmanian-licensed betting exchange won its challenge against Western Australia laws that banned residents from using the Betfair service. The High Court has ruled that the legislation contravenes section 92 of the constitution. The unanimous decision prompted Queensland’s tote operation Unitab to say it was considering setting up a rival betting exchange. Barrie Fletton was quoted in the Sydney Morning Herald as saying “if it looks like something the public embraces we’ll set up our own service, similar to Betfair. That would stop any revenue leakage going from Queensland into Tasmania.”
The following Summary of the Australian Interactive Gambling Act 2001 was released by the Australian government. I include this information as an indication of the likely effectiveness of laws banning online gambling.
The Interactive Gambling Act 2001 (IGA) was passed by the Commonwealth Parliament on 28 June 2001 and was given Royal Assent by the Governor-General on 11 July 2001. The passage of the IGA was an important element of the Government’s policy of preventing the escalation of the harmful effects of gambling on the Australian community.
The following summary of the IGA is for information only. It does not constitute legal advice. The Explanatory Memorandum provides detailed discussion, definitions and examples in relation to each clause of the IGA. If you are in any doubt at all about how the IGA may apply to you or your organisation, you are strongly encouraged to seek independent legal advice.
The IGA targets the providers of interactive gambling services, not their potential or actual customers. The IGA makes it an offence to provide an interactive gambling service to a customer physically present in Australia.
- This offence applies to all interactive gambling service providers, whether based in Australia or offshore, whether Australian or foreign owned.
- This offence carries a maximum penalty of $220,000 per day for individuals and $1.1 million per day for bodies corporate.
- This offence comes into effect on the 28th day after Royal Assent.
Interactive gambling services include those that are often described as ‘online casinos’ and usually involve using the Internet to play games of chance, or games of mixed chance and skill. Examples include roulette, poker, craps, online ‘pokies’ and blackjack. ‘Interactive gambling services’ are defined in section 5 of the IGA.
The IGA also makes it an offence to provide such services to people in a ‘designated country’. This offence is discussed in more detail below.
Reasonable diligence by interactive gambling service providers
The offence will not apply if an interactive gambling service provider did not know and could not, with reasonable diligence, have ascertained that its service had Australian customers. Therefore, interactive gambling service providers that can show they have exercised reasonable diligence in ensuring that Australian customers are prevented from using their service will have a defence against the offence provision. The IGA provides that elements of a reasonable diligence defence can include, for example:
- whether prospective customers were informed that Australian law prohibits the provision of the service to customers who are physically present in Australia;
- whether customers were required to enter into contracts that were subject to an express condition that the customer was not to use the service if the customer was physically present in Australia;
- whether the person required customers to provide personal details and, if so, whether those details suggested that the customer was not physically present in Australia;
- whether the person has network data that indicates that customers were physically present outside Australia when the relevant customer account was opened and throughout the period when the service was provided to the customer; and
- any other relevant matters.
Online wagering is not prohibited by the IGA, except where wagers are accepted online after a sporting event has started. It is considered that real-time, ‘ball by ball’ betting-such as may be available via interactive television-could be highly addictive. Therefore, an online bet on a particular tennis match can be accepted during a tennis tournament but not after that particular match has started. Online bets during a match as to whether the next serve will be an ace are prohibited. Online wagering on a non-sporting event, before or after it has started, is exempt. Telephone betting via a standard voice call is exempt from the IGA.
Online lotteries and the online sale of lottery tickets are not prohibited by the IGA.
The exception is for online instant and scratch lotteries, which in practice are virtually indistinguishable from other online, player-initiated games. The Minister has the discretion under the IGA to make future regulations to ban highly repetitive or frequently drawn forms of keno-type lottery or similar types of lottery that are provided to customers using interactive communications networks or media.
Public place exemption
Where gambling services are provided in a public place, such as a licensed pub, club or casino, they are not prohibited by the IGA. This exemption applies to services such as linked jackpot poker machines in clubs.
The IGA makes it an offence to publish or broadcast in Australia an advertisement for an interactive gambling service. The prohibition extends to all forms of media, both electronic and non-electronic, including advertising via the Internet, broadcast services, print media, billboards and hoardings, subject to certain exceptions.
- These exceptions include political communication, incidental or accidental advertising, products or services having the same name as an interactive gambling service or anti-gambling advertisements.
- A number of gambling services are excluded from the definition of an ‘interactive gambling service’ – for example excluded wagering and excluded lottery services. The advertising ban does not apply to such excluded services.
- The prohibition does not extend to advertisements published in overseas media, such as magazines that are published overseas, or websites that are aimed at non-Australian audiences.
The IGA currently makes it an offence to provide interactive gambling services to people in Australia. The Minister has the ability under the IGA to widen the offence by also prohibiting the provision of such services to people in a ‘designated country’. However, a foreign country cannot become a ‘designated country’ unless:
- the government of that country has requested a designation under the IGA from the Minister; and
- there is legislation in force in that country that corresponds to the main offence provision of the IGA.
No foreign countries have been designated under this provision to date
The IGA provides for a complaint process that is administered by the Australian Broadcasting Authority (ABA). Complaints are to be made in writing and may be lodged using the online complaint form available at the ABA’s websote. More information on making complaints is available from this website.
Regulations relating to unenforceability of agreements
Section 69A of the IGA provides the Minister with the capacity to develop regulations relating to financial agreements involving illegal interactive gambling services. The regulations may provide:
- that an agreement has no effect to the extent to which it provides for the payment of money for the supply of an illegal interactive gambling service; and
- that civil proceedings do not lie against a person to recover money alleged to have been won from, or paid in connection with, an illegal gambling service.
The Government has not to date made such regulations but has continued consultation with financial institutions and the States and Territories on how their intent would best be given effect. It is clear from this consultation that the issues are complex and the Government is concerned to ensure that any regulations made would not create any unintended regulatory effects. The Minister has requested that the need for regulations under 69A be considered in the context of the statutory review of the IGA.
Review of the IGA
Section 68 of the IGA requires that the operation of the IGA be reviewed before 1 July 2003. The review must take into account matters including:
- the growth of interactive gambling services;
- the social and commercial impact of interactive gambling services;
- the impact of various exemptions in the Act; and
- technological developments that are relevant to the regulation of interactive gambling services.