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House of Assembly - Fifty-First Parliament, Third Session (51-3)
2008-11-26 Daily Xml
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STATUTES AMENDMENT (BETTING OPERATIONS) BILL

Second Reading

Second reading.

The Hon. M.J. WRIGHT (Lee—Minister for Police, Minister for Emergency Services, Minister for Recreation, Sport and Racing) (12:01): 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 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, bookmakers and licensed racing clubs with services offered through the traditional face-to-face environment and 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 or lay 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 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 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 of wagering services on racing and sporting events'.

While the High Court decision limits the state's ability to prohibit interstate betting operators from providing services to persons located in South Australia, it is still possible for the state to legislate for the welfare of their citizens, so 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 South Australian wagering operators.

This bill creates a process for the authorisation of interstate betting operators that 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 they comply with South Australia's consumer protection requirements which equally apply 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 that 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 of compensation by the South Australian TAB under their approved licensing agreement with the government.

The government has consulted with the South Australian TAB on the proposed bill. The South Australian TAB has advised that in-principle they support the changes. At this stage, however, the South Australian TAB has not formally consented to the bill under the approved licensing agreement, which is required to avoid the potential for a claim of compensation.

The government will continue to work cooperatively with the South Australian 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 that accept or facilitate bets on South Australian races will be required to have in place an integrity agreement with the relevant racing controlling 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 is 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 per cent on the gross wagering turnover of all Australian wagering operators that 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 New South Wales' lead, as they are expected to do.

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 government announced changes to the Authorised Betting Operations Act to provide for 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 that 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.

From 1 September 2008, there are special provisions for 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 wished to charge pari-mutuel operators (TABs) 1.5 per cent of turnover held on South Australian 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 it improves arrangements for integrity in South Australian racing.

To put this simply, we need to do this because of the High Court decision. As a result of that decision, New South Wales has broken what has previously been a gentleman's agreement in Australian racing, where you could bet on someone else's product and not be charged. New South Wales is the first state to change that operation. It was able to do it because of the Betfair v WA Government High Court decision. As a result of that, South Australia and other states are financially disadvantaged. We predict that, if other governments do what New South Wales is doing and charge to bet on their product, something like $9 million would leave the South Australian jurisdiction; and, put simply, we cannot allow that to occur. So, what we are doing with this legislation is facilitating for South Australia to be able to charge to bet on out product and, as a result, we will not be in a revenue-negative situation.

Dr McFETRIDGE (Morphett) (12:11): I indicate that I am the lead speaker on behalf of the Liberal Party, and we support the bill. The second reading explanation just read out by the minister explains most of the issues behind the bill, so I will not keep the house long. Before I came into this place, I was a veterinarian. I used to work in racehorse practice and I, for one, am very aware of the size of the industry, particularly in a state the size of South Australia.

The equine industry, which includes leisure horses, is about the fourth biggest industry in this state. The racing industry—which includes thoroughbreds, harness and greyhounds—is a huge employer. I think it employs something like 3,000 full-time equivalents. It is a very big industry that needs to be supported. We cannot allow the effects of legislation that has been put in place in other states or jurisdictions, and imposed upon us, to be detrimental to the industry as a whole.

We know that South Australia has always been a bit behind the eight ball regarding prize money. I was recently given some comparisons. At a recent Saturday race meeting in South Australia, the total prize money was $213,000 compared with $560,000 in New South Wales, $405,000 in Queensland and $900,000 in Western Australia. On any Saturday, the Spring Racing Carnival in Melbourne is worth well over $1 million. I think on that particular Saturday, when the comparisons were being done, it was $1.32 million in Victoria. That is significant prize money and significant betting on all forms of racing in South Australia and interstate.

We now have a situation where people can bet from all over the world. People from South Australia can bet all over the world and people from interstate can bet on South Australian races. Revenue can leave South Australia through those wagers, but nothing comes back to the industry by way of dividends. This legislation will ensure that that money now comes back to the industry in South Australia. As the minister pointed out in his second reading explanation, this will bring about $9 million back into the South Australian racing industry.

One part of this legislation that the Liberal Party would normally object to very strongly is that it is retrospective. As I understand it, in this particular case, because of what has happened in New South Wales, the legislation is retrospective to 1 September this year—not a huge time gap, but a significant one. I think the minister said that $180,000 a month is leaving South Australia, so that is a significant amount of money that we can at least claw back from that time. The concern is still with betting through overseas agencies. How that is ever going to be controlled, I am not sure. I do not know what proportion of bets are placed with overseas agencies. I know that a number of people choose to bet with interstate betting agencies because of better odds.

The nuances are beyond me at this stage. I am not a big punter; I might bet on the Melbourne Cup but that is about all. I was in racehorse practice for too long to see what a mug's game it could be if you were on the wrong end of it. I think the only people who made money out of the racing industry were a few owners. As a vet, I used to make a lot of money out of both the owners and trainers but I steered away from betting because I know how erratic horses can be, and when you then put a jockey on top, that compounds the issue. So I am not a big punter.

People look at the odds they can get and sometimes they get better odds when they bet interstate or overseas. The need to be able to control it within Australia is explained in the minister's second reading explanation and, for those who want more, this bill went through the other place last night so they can avail themselves of that information in Hansard.

As to the original Betfair issue that we spoke about in 2005, minister Wright (when he was minister for racing) put out a press release relating to the problems we were having then. That issue has not gone away but compounding that issue was the High Court decision in Western Australia which banned the ban on Betfair, for want of a better description, earlier this year. The reality now is that it is possible to bet anywhere in the world and, more particularly for us with this bill, anywhere in Australia.

We need to get some money back for our industry here and we need to protect it, hence we have this piece of legislation before us. I thought it may have come a bit earlier, particularly with all Labor states in place at the time. We had an opportunity for 12 months with Labor states around Australia and federally, but it was not to be.

We support the bill. We may have to come back to review it at some stage because of the overseas issue. I see in the Western Australian legislation a provision that betting operators located overseas will be required to apply to the Gaming and Wagering Commission for approval, and in that respect I say, 'Good luck!' I think there is a fat chance of that happening, just as I think there is a fat chance of the Rudd federal government controlling the internet through the censorship it wants to bring in with ISP providers. I think the only outcome of that will be to slow down the internet for all Australians which is something we need to resist strongly.

Last night the SAJC had its annual general meeting. I understand from reading the media report this morning that a number of issues were raised, including some legal matters and injunctions being discussed. I will not discuss the ins and outs of that too much other than to say that I strongly encourage all those connected with thoroughbred racing in South Australia to get their act together to make sure that the industry is not being harmed in any way by egotistical agendas, and to make sure that we take full advantage of the opportunity we have. This legislation will enhance those opportunities. The Liberal Party supports this bill.

Mr PEDERICK (Hammond) (12:19): I, too, rise to support the bill and I note that it will bring more gambling money into South Australia. Whether or not we like betting, it is a practice that some people in the community enjoy, so if there can be some benefit brought back to support an industry which supports thousands of people in this state, well and good. I note that as part of the bill interstate betting agencies will be establishing a fund, essentially an integrity fund, to protect the situation.

It is very interesting to consider horses and horseracing. The member for Morphett alluded to the cost of horses. I have a sister who is very involved with horses. She has six, maybe seven if you include the 24 year old horse that is retired on my farm. I indicated to her that I do not mind how long the old racehorse stays there but I am not paying for the hay. Whether you are involved in horses on a social basis or in the racing industry, plenty of costs are incurred. I have always referred to horses as hay burners, and plenty of people have gone broke trying to get a winner.

In fact, my sister, Nicole, resides on King Island and I had the opportunity to be down there a couple of Christmases ago. She had a racehorse running that she was a part owner of and she had a win, which was quite a shock because I heard from punters in the crowd that it was within a hair's breadth of being put down. This year I laughed when my sister said to me that she came into the racing season at King Island and realised that she did not have a share in a thoroughbred, so out she trotted to get a share in a horse. So, I do not know how that hay burner is going—

Mr Venning interjecting:

Mr PEDERICK: Yes; I guess we will find out. I am so glad that my sister's husband has a very good job and he obviously has a lot of patience.

Mr Venning: And money.

Mr PEDERICK: Yes. In saying that, I also support horseracing at a local level. The Murray Bridge Racing Club is proactively looking at its new facility across the southern side of the freeway, and I hope the government is doing all it can to assist that development. I believe that, if it is good enough for my area to facilitate a state prison, it is good enough to facilitate other amenities such as good horseracing venues. This will be a training venue, which I think is a great initiative by the local club. I know that the processes are underway but I also know that things need to happen quickly because the landholder cannot hold out much longer on the surety of that land being sold. I hope that the government works collaboratively with the racing club and the local council to get that process fast-tracked. With those few words, I support the bill.

Mr VENNING (Schubert) (12:22): I rise briefly to support the shadow minister, the member for Morphett. I have been in this place for some years and have seen this industry go through a pretty difficult time. It is a major employer in South Australia. I used to frequent the racetrack as a secondary schoolboy, when I followed the jockey, the late Noel Mifflin, whom you might remember, who was a very good jockey. If you followed him and backed him you usually went home richer than you went to the races. Sadly, he passed away some years ago. Since then, I have not frequented the racetrack or the betting ring at all, apart from the occasional flit on the Melbourne Cup. One day I did scoop the Melbourne Cup with an ill-gotten gain of $500 on Saintly, which came home at 11:1; so work that out.

I welcome this, because it does strengthen the integrity arrangements for betting and racing, and that is what we all want to do in South Australia. Authorised interstate betting operators can offer betting services to persons located in our state by telephone, internet or other electronic means provided they comply with South Australia's consumer protection requirements, which apply equally to South Australian licensees.

I believe that all betting operators will have no problem in accepting that, if they facilitate bets in South Australia, they will be required to have in place an integrity agreement with the relevant racing authority. With that, I commend the member for Morphett for his work in this area as a vet. It is quite unique to have a vet in the parliament and a horse lover to boot. Certainly, we have been very much guided by his input on this matter, and we support the bill.

The Hon. M.J. WRIGHT (Lee—Minister for Police, Minister for Emergency Services, Minister for Recreation, Sport and Racing) (12:24): I would like to thank members for their contribution, and I wish the bill a speedy recovery.

Bill read a second time.

Third Reading

The Hon. M.J. WRIGHT (Lee—Minister for Police, Minister for Emergency Services, Minister for Recreation, Sport and Racing) (12:24): I move:

That this bill be now read a third time.

In doing so, I would like to acknowledge the opposition which has allowed this bill to go through both houses quickly. I would also like to acknowledge the industry, particularly Thoroughbred Racing SA, Harness Racing SA and Greyhound Racing SA. They have all been very supportive of this bill. This will be good for the racing industry and good for South Australia.

Bill read a third time and passed.

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