A Focus on Responsible Gambling and Harm Minimisation
Following an agreement reached between the Australian federal government and all the Australian states and territories in December 2018, online gambling operators will be subject to the measures established in the National Consumer Protection Framework (NCPF). The NCPF established ten measures to be adopted by Australian state and territory governments in relation to the conduct of online betting by licensed operators.
The purpose of the NCPF is to introduce various regulatory standards across Australia over a period of 18 months (beginning on 26 November 2018) which focus on responsible gambling and harm minimisation in the conduct of online betting. These measures set out a minimum standard and each state and territory can decide on how they wish to implement them. A number of the measures came into effect in May 2019.
The ten measures address:
ISP Blocking for Offshore Gambling Operators
The Australian Communications and Media Authority (the ACMA) confirmed, on 11 November 2019, that it would begin to use powers to block illegal offshore gambling websites through Australian internet service providers (ISP Blocking). This development introduces a requirement for participating internet service providers to block illegal offshore gambling websites that have been the subject of a notice by the federal regulator.
National Consumer Protection Framework
Refer to 1.1 Current Outlook for an overview in respect of the NCPF. Among the measures that have come into effect during 2019 are restrictions on offering certain gambling inducements. This measure has had a significant impact on the sector, particularly for online betting operators who have had to adapt their marketing strategy to ensure that it complies with the different restrictions in each state and territory.
Banning of Lottery Betting
In June 2018, amendments were made to the Interactive Gambling Act 2001 (Cth) (the IGA) to prohibit the provision of services for the placing, making, receiving or acceptance of bets on the outcome of Australian and overseas lottery draws to persons located in Australia. The amendments came into effect from 9 January 2019. This has had a material impact on those betting operators who had provided those services under their licence from an Australian state or territory.
Point of Consumption Tax
Australian state and territory governments, with the exception of the Northern Territory and Tasmania, have introduced a point of consumption tax (POC tax) which imposes on online betting operators the requirement to pay tax on bets placed by customers resident in the relevant state or territory. Despite the intention for states and territories to implement the POC tax in a consistent manner, the laws introduced by each state and territory vary significantly as to the tax rate, the tax-free threshold, and the method for calculating taxable revenue. The POC tax was introduced first in 2017 by South Australia and the other states and territories followed suit. Tasmania has confirmed that it will introduce a POC tax from 1 January 2020. The Northern Territory continues to oppose the POC tax.
Following its review of the betting products offered under the licence issued to Lottoland by the Northern Territory Racing Commission, the ACMA concluded that Lottoland breached the IGA. The ACMA deemed that a number of Lottoland’s products were prohibited interactive gambling services which, therefore, could not be provided. Lottoland disagreed with the ACMA’s interpretation and submitted an application to the Supreme Court of New South Wales seeking declarations that these products were not prohibited interactive gambling services.
In its decision of 26 July 2019 in Lottoland v ACMA, the Court disagreed with the ACMA’s interpretation and found that Lottoland’s betting products were not in breach of the IGA and that Lottoland could continue to offer these products.
This judgment provides clarity on the scope of the prohibitions of the IGA on various online gambling services.
Online gambling is regulated at the federal level under the IGA. However, Australian states and territories separately regulate online gambling in their respective jurisdictions under the relevant legislation in accordance with the principles established in the IGA.
Under the IGA, betting is considered to be an “excluded wagering service”. Accordingly, online betting may be provided legally under the IGA as a “regulated interactive gambling service” when offered by an operator that holds a licence granted by an Australian state or territory.
The treatment of online bingo games is unclear under the IGA. The authorities, however, view online bingo as being prohibited under the IGA and not being able to be provided legally to persons present in Australia.
The offering of online casino games is prohibited under the IGA and cannot be offered legally to persons physically present in Australia.
Under the IGA, a lottery will be considered an “excluded lottery service” if it is a service for the conduct of a lottery or a service for the supply of lottery tickets.
Accordingly, online lotteries may be conducted legally as a “regulated interactive gambling service” when offered by an operator that holds a licence granted by an Australian state or territory.
Online scratch lotteries and any other online instant lotteries are specifically excluded from the definition of “excluded lottery service” and are, therefore, prohibited under the IGA.
Fantasy sports are treated as a betting activity under Australian law (see the commentary on Betting above).
A game constitutes a gambling service if the following three elements are present:
Generally, either the prize element and/or consideration element will not be present in a social game; in those circumstances, social games would not constitute a gambling service and would not require a licence to be offered.
Under the IGA, poker is considered a gambling service and is prohibited and cannot be offered legally online to persons physically present in Australia.
Land-based gambling is regulated at the state and territory level, and, unlike online gambling, there is no legislation regulating land-based gambling specifically at the federal level. Each state and territory has specific legislation for the regulation of land-based gambling.
Land-based betting can be provided on-course by licensed bookmakers in all Australian states and territories. (Some of these bookmakers also provide services online or over the telephone).
Licensees in each state and territory can conduct off-course betting; however, a subsidiary of Tabcorp Holdings Ltd (a company listed on the Australian Securities Exchange) holds the licence in all states and territories, except for Western Australia. The licensee is also granted a statutory monopoly to conduct totalisator betting. In Western Australia, the licence is held by a government entity; however, this entity has recently been listed for sale.
Licensed casinos can conduct land-based poker. Poker may also be played in hotels and clubs, provided that no third party collects a share or percentage from the amounts paid by the players to participate in the poker game.
Land-based bingo games are treated differently under the laws of each state and territory. Generally, a licence will not be required if the prize is below a threshold established in the applicable legislation.
Casino games are offered in land-based casinos under the licence/s issued in each state and territory. The games that may be offered under a casino licence are table games (including poker) and gaming machines.
Gaming machines which offer slots games (which in Australia are known as poker machines) are permitted in land-based casinos licensed in each state and territory. Slots are also permitted in clubs and hotels in all states and territories (except Western Australia) under the specific legislation.
Land-based lotteries can be conducted in Australia under a licence issued by each state and territory. An exclusive licence is granted in each state and territory to conduct a lottery (except in Western Australia). Lottery tickets are available for purchase through newsagents and convenience stores, as well as online.
The key legislation that applies to the gambling sector in each state and territory is set out below.
Australian Capital Territory
New South Wales
There are also various directions, guidelines and orders issued by the relevant Minister and the Victorian Commission for Gambling and Liquor Regulation which need to be complied with.
There are also various rules and standards which need to be complied with.
As explained in 2.1 Online, only online gambling is defined at the federal level, under the IGA.
The laws of the Australian states and territories broadly define the term “gambling” in order to capture land-based and online gambling that has a connection with the relevant state or territory.
It is necessary to refer to the relevant legislation in each state and territory for a definition of land-based gambling. Legislation in various Australian states and territories make reference to an “unlawful game” rather than specifically defining “gambling”.
Gambling is generally considered to take place when a game consists of each of the following three elements:
Section 4 of the IGA defines a "gambling service" as a service:
The key offences vary from one jurisdiction to another. However, generally, the key offence comprises the conduct, offering, provision, and/or facilitation of the provision of unlawful gambling services or prohibited gambling services.
Penalties that apply in respect of the conduct, offer, provision, and/or facilitation of the provision of unlawful gambling or prohibited gambling services, vary between Australian jurisdictions.
The penalties for a contravention of the IGA are substantial. The following are the penalties under the IGA:
There is currently no pending federal legislation.
At the state and territory level, the most significant pending legislation is that in the New South Wales Parliament which, if passed, will impose further restrictions on the advertisement and the offer of inducements by online betting operators to persons located in New South Wales.
The key regulatory bodies responsible for supervising gambling in Australia are:
The IGA takes a prohibitionist approach in respect of the regulation of online gambling in Australia. The IGA is drafted in a manner that prohibits all online gambling in Australia except for those activities which are either considered as regulated interactive gambling services, which may be licensed, or activities which are not considered to be prohibited interactive gambling services.
Generally, the state and territory regulatory authorities adopt a more prescriptive and interventionist approach in their legislative scheme, with the objective of minimising gambling harm.
The licences that are issued by states and territories to conduct gambling, either online or land-based (as defined in the respective state or territory), are generally B2C licences.
A personal licence may be required at a state and territory level, for example, in respect of gambling operators/venues which are in the land-based market, for –eg, gaming machine technician licences.
Companies may also be required to obtain a B2B licence in the land-based market to offer their services, for –eg, a gaming machine dealer/supplier’s licence, and a gaming machine testing facility licence.
Permits or approvals must be granted by the regulatory body in most states or territories to operate gaming machines in licensed premises.
Land-based licences relating to casinos, lotteries and betting are not readily available. The licences for these activities are for a long term and may be granted on an exclusive basis. These licences are subject to an onerous and lengthy licensing process and to the payment of substantial licence fees and taxes. Certain licences, especially those relating to casinos, are usually granted as part of a larger project. To give an example, presently the only prospect of opening a new land-based casino in Australia is in Queensland, where expressions of interest have been issued by the Queensland Government.
Approvals or permits to provide land-based poker machines in clubs and/or hotels are more readily available; however, there may be restrictions or a cap on the number of poker machines that may be available in a state or territory. We note that poker machines in Western Australia are installed only in the casino.
Online licences for sports bookmakers and/or lotteries are more readily available. The Northern Territory is the leading online gambling licensing authority in Australia. There is no limit on the number of online licences that may be granted by the Northern Territory.
The duration of the licences issued for land-based activities vary in each state and territory, however, they are usually for a long duration. Below are examples of the duration of licences that have been granted:
The duration of an online gambling licence varies, but is generally five years (for sports bookmakers).
The basic documentation requirements, whether applying for a land-based licence or an online licence, are similar in the sense that the documents required when applying for a gambling licence are required irrespective of the type of licence. Therefore, due diligence will be conducted to determine the suitability of the applicant company, its shareholders and directors, and that of the holding companies and ultimate beneficial owners. The business plan, the financial document and forecasts, the contribution the gambling business will make to the state or territory, and the technical documentation will be assessed in respect of any gambling licence (land-based or online).
Further detailed information, such as details of the premises to be used to offer the gambling services, and the impact the operation will have on the state and territory may also be required in respect of any land-based licence application.
Further documentation may be required in respect of an application for a gambling licence where the gambling service is part of a larger project.
The documents that directors and owners are required to submit include details of their employment history, a statement of their assets and liabilities, supporting documents, and police clearance certificates.
The disclosure thresholds for shareholders differ between the states and territories (and the type of gambling licence); generally, the applicable percentage is 10% but, in certain cases, may be 5% or lower.
Land-Based Licence Applications
The timescale for a land-based licence application will vary between the states and territories, and also depends on the type of licence for which the application is being made. To give an example, a casino licence application involves a lengthy and complex application process which usually also includes a formal tendering process. This may take some years.
Online Licence Applications
The period that will elapse in respect of an application for a sports bookmaker's licence in the Northern Territory before that application is granted is nine months.
The application fee for land-based licences depends on the relevant state and/or territory and the gambling activity to which the application relates. As explained, land-based licences for casinos, lotteries and wagering activities are granted (in the majority of cases) on an exclusive basis, therefore, any fees are usually substantial.
Online Gambling licences
The application fees currently applicable in the Northern Territory are:
Fees payable in respect of land-based licences vary depending on:
This varies materially. For example: in New South Wales a one-off payment of AUD256 million was paid in 1995 for a 12 year exclusivity period in respect of the casino licence and a further AUD100 million was paid in 2007 for a 12 year extension of that exclusivity period; and in Queensland a quarterly licence fee of AUD241,600 (indexed annually) is payable for the casino licence.
Online Gambling Licences
In the Northern Territory, sports bookmakers and online gambling licensees currently pay an annual licence fee of AUD24,200, while betting exchange licensees currently pay an annual licence fee of AUD242,000.
The licensing requirements relating to premises will vary depending on the form of land-based gambling, and the state or territory.
In respect of casinos, most states and territories will include, in the casino-licence conditions, the location of the casino and any conditions relating to the premises.
Clubs and hotels may, under their respective licences, operate gaming machines; however, the gaming machines must be approved in order for them to be operated in the premises.
There have been no recent changes to the land-based gambling sector; however, further casino licences may be granted in Queensland. Furthermore, an enquiry is being conducted in New South Wales which is examining the casino regulatory framework and recommendations may be made which could affect the manner in which casinos are regulated in Australia in the future.
B2C operators may be licensed in Australia to offer a regulated interactive gambling service (ie, lotteries, betting). A licence, issued in any state or territory in Australia, enables the licensee to provide the licensed services throughout Australia without the requirement to obtain a licence from any other state or territory.
B2B providers will not generally require a licence to offer their services to Australian operators. The B2B provider’s systems may, however, be subject to review or approval processes as a condition of the licence granted to the B2C operator which uses their system.
A licensed bookmaker must request the approval of the Northern Territory Racing Commission (NTRC) for any partnerships entered into where the licensed operator and the other party receive income jointly and carry on business as partners relating to the licensed activities. Therefore, if the arrangement with an affiliate satisfies these requirements, approval may be required from the NTRC.
Generally, white-label providers are not required to be licensed, however, agreements between bookmakers and white-label providers may need to be approved by the NTRC if they meet the requirements set out in 6.3 Affiliates.
The most significant recent changes to online gambling are the NCPF, ISP blocking, the imposition of a POC tax, and the banning of lottery betting services. For details on these changes please refer to 1.1 Current Outlook and 1.2 Recent Changes.
Please refer to ISP Blocking in 1.1 Current Outlook, which requires Australian ISPs to block illegal offshore gambling websites.
Responsible gambling requirements that apply to land-based gambling operators vary depending on the type of licence held by the operator, and the state and/or territory in which the operator is licensed.
Generally, a gambling service provider will be required to display certain responsible gambling messages and warnings in designated areas, and provide customers with:
In respect of online gambling, each state and territory has separate requirements and these are in the process of being harmonised with the implementation of the NCPF’s 10 measures (referred to in 1.1 Current Outlook).
The tools available to players to manage their gambling activities are referred to in 7.1 RG Requirements.
The key piece of anti-money laundering (AML) legislation in Australia is the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (Cth) (the AML/CTF Act). The AML/CTF Act is supplemented by the Anti-Money Laundering and Counter-Terrorism Financing Rules Instrument 2007 (No 1) which provides further detail in relation to specific requirements under the AML/CTF Act.
Gambling (excluding the provision of a lottery) is considered a “designated service” under the AML/CTF Act. This means that licensed operators are considered “reporting entities” and, as such, are subject to obligations under the AML/CTF Act including, among other things:
The relevant regulatory and supervisory agencies in respect of gambling advertising include:
Land-Based Gambling Advertisements
Land-based gambling advertisements are regulated under the relevant state and territory laws. The definition of advertising in the respective legislation in the states and territories also capture online gambling advertisements.
In New South Wales, a “gambling advertisement” is defined under the Betting and Racing Act 1998 (NSW) to mean an advertisement that gives publicity to, or otherwise promotes or is intended to promote, participation in gambling activities. Other state and territory statutes provide similar definitions of “gambling advertisement”.
Online Gambling Advertisements
The IGA prohibits “designated interactive gambling service advertisements” which is defined to include any writing, still or moving picture, sign, symbol or other visual image, or any audible message or any combination of two or more of those things that gives publicity to or is intended to promote:
This prohibition generally applies to the advertising of gambling services that are prohibited, unlicensed, or provided by offshore gambling operators.
The key legal and regulatory provisions in respect of advertising vary depending on the type of gambling services being provided and the state or territory in which they are provided. There are no licensing provisions in respect of advertising.
Gambling operators’ advertising is also subject to federal laws, including the Australian Consumer Law in Schedule 2 of the Competition and Consumer Act 2010 (Cth), the Spam Act 2003 (Cth) and the Broadcasting Services Act 1992 (Cth).
Advertisements for land-based gambling are generally permitted in Australia. However, there are strict restrictions in respect of what can be included in an advertisement and when advertising is allowed. In general terms, linked promotion of gambling activities is permitted.
As outlined in 9.2 Definition of Advertising, the advertising of gambling services is regulated at the state and territory level and the requirements vary from one jurisdiction to another. There are also industry codes of practice which outline the manner in which gambling services can be advertised on various media platforms.
Generally, gambling advertising will be prohibited or considered unlawful if, among other things, the advertisement:
Further advertising restrictions are imposed on wagering operators in respect of, among others, the:
Land-based operators are also required to display responsible gambling messages. However, the requirements around the display of such messages vary significantly from one jurisdiction to another.
The restrictions referred to above also apply to online gambling operators. However, further advertising restrictions are imposed on online gambling operators by means of the NCPF (see 1.1 Current Outlook).
The sanctions and penalties that apply in respect of breaches of advertising restrictions vary significantly depending on the laws of the relevant jurisdiction and the nature of the contravention.
In New South Wales, for example, the maximum penalty prescribed for an online betting operator that publishes a gambling advertisement in contravention of the Betting and Racing Act 1998 (NSW), or offers an inducement to participate (or participate frequently) in gambling activity, is AUD55,000 for a corporation, and AUD5,500 for an individual.
At the federal level, in respect of contraventions of the provisions relating to advertising in the IGA, fines of up to AUD37,800 for an individual and AUD189,000 for a corporation may be imposed.
The disclosure requirements in respect of acquisitions of an interest and/or a change of control in respect of a gambling operator varies from one jurisdiction to another. Accordingly, it is necessary to refer to the provisions of the relevant legislation in the state or territory in which the relevant entity holds its licence.
Land-based casino licences cannot be transferred. Another company may, however, acquire shares in the licensee. In this circumstance, if the share sale exceeds a certain threshold (usually 5% or 10% of the issued shares), the purchaser will need to notify, and obtain approval from, the relevant regulator. For example, in New South Wales, the purchaser will be required to disclose all information required for the regulator to enable it to conduct an investigation into the suitability of the purchaser.
Online lottery and wagering licences also cannot be transferred. Another company may, however, acquire shares in the licensee. If the transfer of shares exceeds a certain threshold (usually 5% or 10% of the issued shares), the purchaser will need to notify the regulator and obtain regulatory approval in the relevant jurisdiction. For example, the licensee and the purchaser in a transfer of shares which exceeds the threshold (say 10%) will be required to disclose the information required by the regulator to consider whether approval should be granted in respect of the transfer of shares in the licensed company.
Generally, an acquisition of shares (directly or indirectly) that exceeds 5% or 10% of the issued shares in the licensee will trigger the relevant change of control provisions, whereby notification and approval of the purchaser and associated persons will be required.
Generally, passive investors will not be excluded from the requirements relating to change of control if they exceed the percentage threshold.
The ACMA (the federal regulator) has broad investigative and enforcement powers under the IGA. For example, the ACMA has powers to:
The regulatory bodies’ enforcement powers vary between the states and territories. Generally, state and territory regulators also have broad investigatory and enforcement powers and have powers to commence civil and criminal proceedings (where relevant); conduct licence reviews; where required, vary licence conditions; and/or suspend or cancel the licence.
Regulators are vigilant to ensure that operators comply with the applicable laws, and, when required, the regulators will proceed to take enforcement action.
In considering whether to impose sanctions, such as suspending or revoking a licence, or varying licence conditions, regulators will have regard to the administrative and legislative tools which they have at their disposal to implement and enforce these sanctions.
There have been numerous recent cases where the court has imposed fines on operators following court proceedings being initiated by the relevant regulator. Online sports-betting operators, Sportsbet and Neds were issued a fine of AUD10,000 and AUD18,000 respectively by the New South Wales Court for a breach of advertising provisions. The cases were initiated by Liquor & Gaming NSW.
Where the regulatory body is granted powers under the relevant legislation to impose financial penalties, the regulatory body issues the fines as prescribed in the legislation. However, when the regulatory body does not have the power to impose fines under the respective legislation, the financial penalties are imposed and enforced by a court decision.
Refer to 2.1 Online for an overview of the legal position relating to social gaming in Australia. In view of this legal position, social games have become more popular and licensed land-based casino operators have invested in social games to complement their casino offering.
eSports Regulation in Australia
Sports bookmakers licensed in the Northern Territory are permitted to take bets on certain official eSports tournaments and/or competitions. However, some states do not permit betting on eSports.
Action Taken in Australia
Australian police have recently undertaken an investigation into eSports match-fixing, resulting in six arrests in Victoria in relation to the offence of engaging in conduct that corrupts (or would corrupt) a betting outcome.
eSports, however, continues to be an activity which is growing in popularity in Australia and developments in respect of eSports betting should be expected with the growth of the eSports sector.
Where it is recognised as a gambling service, fantasy sports in Australia is usually provided under a sports bookmaker's licence to be provided legally, and, as such, is regulated under the same provisions that apply to online betting services.
The regulatory approach to skill gaming in Australia varies significantly, depending on the state or territory in which the offering is made. It is, therefore, important for an operator to review the applicable legislation and the regulator’s policy in each state and territory when considering whether it is legal or permitted to offer skill games. The different approaches adopted to skill gaming makes it difficult for an operator to offer skill games throughout Australia and requires an in-depth understanding of the regulatory framework prior to making skill games available. This may be a reason why operators are hesitant in making their skill games available in Australia.
Blockchain technology in gambling is not permitted in Australia.
The NTRC has clarified that it prohibits its licensees from accepting cryptocurrency as a form of payment.
Refer to 5.2 Recent or Forthcoming Changes.
There are currently no significant legislative amendments proposed concerning online gambling. However, legislative amendments which implement the NCPF (referred to in 1.1 Current Outlook) in each state and territory will continue to be made over the coming months.
Also, as outlined above in 1.1 Current Outlook, the ISP Blocking mechanism is a further restriction on the capability of illegal gambling operators to provide services in Australia.
Sports Integrity Australia (SIA) is a new regulatory body, that is expected to be fully operational by 2021. SIA will address integrity-related issues in Australian sport, including match-fixing, illegal betting, and organised crime and corruption. Its focus will be on regulation, monitoring and intelligence, policy, and programme delivery, including education and outreach.
The rate of gambling tax payable by operators varies depending on the state and/or territory where the operator is licensed and the type of land-based gambling activity being provided. To give an indication of the tax rates, reference is made to the following examples:
The gambling tax which is applicable in the Northern Territory is:
An online gambling operator, irrespective of the jurisdiction in which it is licensed, will also be subject to a point of consumption (POC) tax (chargeable by reference to net wagering revenue) in the following states and territories (subject to certain thresholds being achieved):
The Tasmanian Government has recently announced its intention to introduce a POC tax, effective from 1 January 2020, at a rate of 15% of net wagering revenue.
The Northern Territory has not announced a proposal to introduce a POC tax.
All of the above taxes are calculated in a slightly different manner. Further enquiries should be made to obtain details of the calculations.