Legislative Council Fifty-First Parliament, Third Session (51-3) 51 3 Parliament of South Australia Legislative Council published Bills Statutes Amendment (Betting Operations) Bill STATUTES AMENDMENT (BETTING OPERATIONS) BILL Introduction and First Reading Introduction and First Reading The Hon. CARMEL ZOLLO Legislative Council Minister for Correctional Services, Minister for Road Safety, Minister for Gambling, Minister Assisting the Minister for Multicultural Affairs The Hon. CARMEL ZOLLO (Minister for Correctional Services, Minister for Road Safety, Minister for Gambling, Minister Assisting the Minister for Multicultural Affairs) (15:28): Obtained leave and introduced a bill for an act to amend the Authorised Betting Operations Act 2000 and the Lottery and Gaming Act 1936. Read a first time. Second Reading Second Reading The Hon. CARMEL ZOLLO Legislative Council Minister for Correctional Services, Minister for Road Safety, Minister for Gambling, Minister Assisting the Minister for Multicultural Affairs The Hon. CARMEL ZOLLO (Minister for Correctional Services, Minister for Road Safety, Minister for Gambling, Minister Assisting the Minister for Multicultural Affairs) (15:28): I move: That this bill be now read a second time. This bill seeks to amend the authorised Betting Operations Act 2000 and the Lottery and Gaming Act 1936 to strengthen integrity arrangements for betting and racing, to provide a sustainable funding source for the racing industry, and broaden consumer protection regulation to include interstate betting operators. The amount of change in betting service providers operating across Australia since the enactment of the Authorised Betting Operations Act in 2000 has been significant. This change is arriving in parallel with changes more broadly felt across the economy and the community as internet services develop. The model that underlies the Authorised Betting Operations Act is one of a single, major betting operations licence for bookmakers and licensed racing clubs, with services offered through the traditional face-to-face environment and by telephone. Betting services offered over the internet are becoming increasingly competitive. A significant shift occurred when the Tasmanian government issued Australia's first licence for a betting exchange to Betfair Pty Ltd. Betfair's description of a betting exchange is a wagering operator that 'matches' punters with directly opposing views on the outcome of a particular event or race. It operates in a manner resembling a stock market, in that a punter can either back (that is, buy) or lay (that is, sell) an outcome on a race or event. Understandably, representatives of the Australian racing industry became concerned about the integrity implications for betting exchanges which allow any person to bet, for example, that a horse will lose. To address concerns about integrity, other jurisdictions introduced legislation that sought to limit the operation of betting exchanges and control the availability of race field information to betting operators. The Western Australian legislation was challenged by Betfair Pty Ltd in the High Court. The High Court ruled in favour of Betfair Pty Ltd. The High Court found that, because the Western Australian legislation precluded Betfair from competing for wagering customers with in-state fixed-odds bookmakers and the government-owned totalisator, a discriminatory burden of a protectionist kind was placed on interstate trade. The High Court gave emphasis to evidence which shows 'that there is a developed market throughout Australia for the provision by means of the telephone and the internet for wagering services on racing and sporting events.' While the High Court decision limits the states' ability to prohibit interstate betting operators from providing services to persons located in South Australia, it is still possible for the states to legislate for the welfare of their citizens, as long as it does not have a protectionist purpose, and it is appropriate and adapted to address the identified welfare objective. The authorisation process reflects the requirements of section 92 of the Constitution, but also specifically requires authorised interstate betting operators to have the same regulatory requirements as licensed SA wagering operators. This bill creates a process for the authorisation of interstate betting operators who have been licensed in another Australian jurisdiction. Authorised interstate betting operators can offer betting services to persons located in South Australia by telephone, internet or other electronic means, provided that they comply with South Australia's consumer protection requirements which apply equally to South Australian licensees. Key elements of that environment are: prohibitions on accepting bets from children and requirements for systems designed to prevent bets from being made by children; compliance with advertising codes of practice; compliance with responsible gambling codes of practice; and limitations on the contingencies on which bets can be accepted. These obligations are in addition to the licensing and regulatory requirements on the operator from their 'home' jurisdiction. To provide for effective compliance, the statutory default provisions have been extended to include authorised interstate betting operators. Prohibitions on unlawful totalisators and bookmakers have been extended to include unlawful betting exchanges. It should be noted, however, that these changes which are necessary to address the Betfair High Court decision and to ensure application of consumer protection measures to interstate operators have the potential to trigger a claim for compensation by the SA TAB under its approved licensing agreement with the government. The government has consulted with SA TAB on the proposed bill. SA TAB has advised that, in principle, it supports the changes. At this stage, however, SA TAB has not formally consented to the bill under the approved licensing agreement which is required in order to avoid the potential for a claim for compensation. The government will continue to work cooperatively with SA TAB to arrive at an outcome that will not expose South Australians to the risk of litigation and compensation. The results of this work will be reported to the council. To address concerns about integrity, all betting operators who accept or facilitate bets on South Australian races will be required to have in place an integrity agreement with the relevant racing authority. Integrity agreements provide for the sharing of information relating to betting activity, provision of specific information as required by the controlling authority, notification regarding disciplinary and criminal proceedings and the facilitation of investigations. The provisions contained in this bill represent the minimum essential requirements. Racing controlling authorities will not be constrained in their efforts to ensure ongoing integrity of their racing operations. Specific provisions regarding disclosure of information and confidentiality underpin the integrity agreements and pave the way for information to be provided to the racing controlling authorities. Another consequence of this increasingly national market is that the funding arrangements for Australian racing have broken down. In the world contemplated in the year 2000, with the Authorised Betting Operations Act, the racing industry in each state or territory would source its funds from betting operations conducted in that state or territory, regardless of where the races that generated the wagering revenue were actually conducted. In a marketplace where the location of betting operators is no longer relevant, this arrangement cannot be maintained. This was evidenced by the recent implementation by the New South Wales government of legislation that allows its racing controlling authorities to levy a charge of up to 1.5 per cent on the gross wagering turnover of all Australian wagering operators who accept bets on New South Wales races from 1 September 2008. It is understood that this has the potential to impact on the South Australian racing industry by up to $180,000 per month. This would increase if other jurisdictions followed the New South Wales lead. This is a financial impact that cannot be sustained by the South Australian racing industry. It was for this reason that on 28 August 2008 the then Acting Premier (Hon. Patrick Conlon, MP) announced changes to the Authorised Betting Operations Act to provide the South Australian racing industry a sustainable funding mechanism for the changed national betting and racing environment. This bill makes good on that commitment to the racing industry. All betting operators who accept or facilitate bets on South Australian races will be required to have in place with the racing controlling authorities contribution agreements that require operators to make contributions to the racing industry, state the basis for calculation, identify the terms of payment and include information provision requirements to support the agreement. For the period of time from 1 September 2008 there are special provisions for the recovery of the contribution to the racing industry, calculated in accordance with the position stated by the industry and documented in the media release of 28 August 2008. In that release it was stated that the three codes wish to charge parimutuel operators 1.5 per cent of turnover held on SA racing events and other operators, including TAB fixed odds betting, all bookmakers and betting exchanges 20 per cent of their gross revenue from wagering on SA events. This position is reflected in the bill. It is considered that this outcome does not discriminate in a protectionist way between the various types of wagering operations, so it is consistent with section 92 of the Australian Constitution. This bill creates an environment wherein consumer protection measures are applied to both local and interstate betting operators. It achieves a mechanism for sustainable funding for the South Australian racing industry and improves arrangements for integrity for South Australian racing. I commend the bill to the chamber and seek leave to have the explanation of the clauses inserted in Hansard without my reading it. Leave granted. Explanation of Clauses Explanation of Clauses Part 1—Preliminary 1—Short title 2—Commencement 3—Amendment provisions These clauses are formal. Part 2—Amendment of Authorised Betting Operations Act 2000 4—Amendment of long title The long title is amended to reflect the fact that the Act is being amended to deal with interstate betting operators through a mechanism that does not involve licensing. 5—Amendment of section 3—Interpretation Various definitions are included for the purposes of the amendments. 6—Amendment of section 4—Approved contingencies Section 4 is amended to list matters that the Authority must consider before approving contingencies or varying an approval. Instead of an approval or variation being effected by notice in the Gazette, publication in the Gazette is required within 14 days. 7—Insertion of section 6A A new section is inserted dealing with the issuing of advertising and responsible gambling codes of practice by the Authority and the setting by the Authority of requirements for systems and procedures designed to prevent bets from being made by children in the course of betting operations conducted by telephone, Internet or other electronic means. These matters are made subject to disallowance. 8—Amendment of section 12—Approved licensing agreement 9—Amendment of section 13—Racing distribution agreement These clauses contain minor amendments to ensure that negotiation of an agreement, including collective negotiation, is within the existing Trade Practices exemption. 10—Substitution of heading to Part 3 This is a technical amendment related to distinguishing the Part from new Part 3A proposed to be inserted. 11—Insertion of Part 3A Part 3A—Authorisation of interstate betting operators 40A—Authorisation of interstate betting operators This clause establishes a scheme under which interstate betting operators may be authorised to conduct betting operations in this State by telephone, Internet or other electronic means on races and approved contingencies. An interstate betting operator must hold an interstate licence or be an interstate statutory body and must not have a physical presence in this State. 40B—Annual fees and returns Authorised interstate betting operators are required to pay annual fees to the Authority and make annual returns. 12—Substitution of heading to Part 4 Division 1 The heading is altered to accommodate the inclusion of new Divisions 3 and 4. 13—Amendment of section 43—Prevention of betting by children This is a minor amendment to recognise the Authority's power to establish requirements to be met by electronic communication systems. 14—Substitution of sections 48 and 49 These amendments do not change the substantive requirements for the holder of the major betting operations licence or an on-course totalisator betting licence to comply with the advertising and responsible gambling codes of practice but reflect the fact that under new section 6A the Authority is to issue the relevant codes. 15—Amendment of section 50—Major betting operations licensee may bar excessive gamblers This is an amendment made for the purposes of consistency. 16—Amendment of section 51—Alteration of approved rules, systems, procedures or equipment 17—Repeal of section 51A These amendments are consequential on the inclusion of new section 6A. 18—Insertion of section 53A 19—Repeal of section 56 The question of bookmakers taking bets by telephone, Internet or other electronic means is elevated from a matter relevant to permits to one relevant to the licence. This reflects that the matter is dealt with in practice by a once off approval. 20—Amendment of section 60—Prevention of betting with children by bookmaker or agent This is a minor amendment to recognise the Authority's power to establish requirements to be met by electronic communication systems. 21—Insertion of sections 60A and 60B New sections 60A and 60B place obligations on bookmakers of the kind placed on other licensees and interstate betting operators in relation to compliance with advertising and responsible gambling codes of practice. 22—Amendment of section 62—Rules relating to bookmaker's operations This is a minor amendment to reflect that new section 60A contemplates advertising by bookmakers. 23—Insertion of Part 4 Divisions 3 and 4 Division 3—Interstate betting operations 62A—Prevention of betting by children 62B—Advertising code of practice 62C—Responsible gambling code of practice New sections 62A to C place obligations on authorised interstate betting operators of the kind placed on licensees in relation to preventing betting by children and compliance with advertising and responsible gambling codes of practice. 62D—Notification New section 62D places an obligation on authorised interstate betting operations to inform the Authority about criminal and disciplinary proceedings. Division 4—Betting operations relating to racing 62E—Integrity agreements and contribution agreements All persons conducting betting operations in relation to a race in South Australia are required to enter into an integrity agreement and a contribution agreement with the relevant racing controlling authority. An integrity agreement is essentially an agreement about the provision of information relating to the betting operations and a contribution agreement requires contributions to be made to racing controlling authorities. The racing distribution agreement is to be taken to be a contribution agreement. In the absence of a contribution agreement, the racing controlling authority may recover contributions in accordance with the regulations. 62F—Supreme Court review The Supreme Court is given power to set aside an agreement, to order a racing controlling authority to refrain from action or to take action or to make other orders if satisfied, on application, that the controlling authority's conduct or proposed conduct constitutes or would constitute a contravention of section 62E. 62G—Contributions for betting operations on races held on or after 1 September 2008 and before commencement of section 62E This section provides for the payment of contributions for the period from the date of the media release on the topic on a basis set out in the section. 62H—Disclosure of information and confidentiality This section provides for the racing controlling authority to seek orders from the Supreme Court requiring the disclosure of information if it is not forthcoming as required by an agreement or the Act. It also authorises disclosure of information by the racing controlling authority in certain circumstances. 62I—Prosecution requires Authority's consent The Authority's consent is required for a prosecution for an offence against the Division. 24—Amendment of section 64—Power to obtain information The ability for the Authority and the Commissioner to require information to be provided is extended to authorised interstate betting operators. 25—Amendment of section 67—Statutory default 26—Amendment of section 68—Effect of criminal proceedings 27—Amendment of section 69—Compliance notice 28—Amendment of section 70—Expiation notice 29—Amendment of section 71—Injunctive remedies 30—Amendment of section 72—Disciplinary action The statutory default provisions are extended to an authorised interstate betting operator who contravenes or fails to comply with a provision of the Act or fails to discharge an obligation under an integrity or contribution agreement. In an appropriate case the Authority may give directions to the operator as to the winding up of betting operations in this State or prohibit the operator from conducting betting operations in this State for a specified or unlimited period. 31—Amendment of section 78—Finality of Authority's decisions The right to appeal to the Supreme Court against a decision to take disciplinary action is extended to an authorised interstate betting operator. 32—Amendment of section 81—Further trade practices authorisations This clause contains a minor amendment to ensure that negotiation of an agreement, including collective negotiation, is within the existing Trade Practices exemption. 33—Amendment of section 89—Evidence An evidentiary aid is provided in relation to whether a person is or is not an authorised interstate betting operator. Part 3—Amendment of Lottery and Gaming Act 1936 34—Amendment of section 60—Public betting and advertising This amendment extends the prohibition on advertising to cover all forms of printed and electronic advertising and to cover totalisator betting, bookmaking operations and a betting exchange. 35—Insertion of section 65 The new section makes it unlawful to establish or conduct a betting exchange. Authorisation of the activity by interstate operators through telephone, Internet or electronic means is a matter for the Authorised Betting Operations Act. Schedule 1—Transitional provisions 1—Authorised Betting Operations Act—codes of practice This is a transitional provision to enable the codes of practice on advertising and responsible gambling for the major betting operations licence and on-course totalisator betting licences to be repromulgated in substantially the same form without consultation and without potential disallowance. Debate adjourned on motion of Hon. T.J. Stephens.