Commonwealth of Australia Explanatory Memoranda Commonwealth of Australia Explanatory Memoranda[Index] [Search] [Download] [Bill] [Help]
1998 - 1999 - 2000
THE PARLIAMENT OF THE
COMMONWEALTH OF AUSTRALIA
HOUSE OF
REPRESENTATIVES
INTERACTIVE GAMBLING
(MORATORIUM) BILL 2000
REVISED EXPLANATORY
MEMORANDUM
(Circulated by the
authority of the Minister for Communications, Information Technology and the
Arts, Senator the Hon. Richard Alston)
THIS MEMORANDUM TAKES
ACCOUNT OF AMENDMENTS MADE BY THE SENATE TO THE BILL AS INTRODUCED
ISBN: 0642 464324
The Commonwealth Government is concerned that new interactive technology,
such as the Internet and datacasting, has the potential to put a virtual 'poker
machine' in every home. This 'quantum leap' in accessibility to gambling has the
potential to expand both the amount of gambling available in Australia as well
as to exacerbate problem gambling.
Australians are already among the
heaviest gamblers in the world, spending twice as much on legalised gambling as
people in North America and Europe. The negative social impacts associated with
excessive gambling affect many Australian families and communities with an
estimated one in ten Australians affected in some way by problem
gambling.
The Interactive Gambling (Moratorium) Bill 2000 (the Bill)
proposes to impose a 12-month moratorium on the development of the interactive
gambling industry in Australia by creating a new criminal offence, the provision
of an interactive gambling service. The new offence prohibits a
person from providing an interactive gambling service unless the
person was already providing the service when the moratorium commenced on 19 May
2000. Consistent with the Government’s decision to impose a moratorium
for twelve months, the offence ceases to have effect at midnight on 18 May
2001.
The moratorium is intended to pause the development of the
Australian-based interactive gambling industry while an investigation into the
feasibility and consequences of banning interactive gambling is conducted. The
investigation is intended to be completed during the course of the
moratorium.
The Bill provides a definition of what is an
interactive gambling service. An interactive gambling
service has four essential elements:
• the service is a
gambling service; and
• the service is provided in the course of
carrying on a business; and
• the service is provided to customers
using any of the following communications services:
- an Internet carriage
service or any other listed carriage service; or
- a broadcasting service or
any other content service; or
- a datacasting service provided under a
datacasting licence; and
• the service is linked in a specified way to
Australia.
The links to Australia do not require an interactive gambling service
to be targeted to, or available to, Australians. The proposed
Interactive Gambling (Moratorium) Act 2000 will apply to all
interactive gambling services that have one or more of the
specified links to Australia, irrespective of whether the service is intended to
be provided to Australian residents.
The Bill specifically excludes from
the definition of interactive gambling service services for
telephone betting; certain types of wagering services; services relating to the
entering into of contracts that, under the Corporations Law, are exempt from a
law relating to gaming or wagering; and services that the Minister determines
are exempt services. Futures contracts and options contracts are the most
common forms of contracts exempt under the Corporations Law from gaming and
wagering laws. Online share trading will also not be covered by the moratorium
on interactive gambling because online share trading is not an interactive
gambling service within the meaning of that term in the Bill. Online
share trading involves the acquisition of contractual rights and is not a
gambling service.
The Bill provides a defence in relation to interactive gambling
services that were provided prior to 19 May 2000, the date that the
Commonwealth Government announced its intention to legislate to impose the
moratorium. The defence is intended to allow continuity of provision of pre-19
May 2000 interactive gambling services, not an expansion of the
pre-19 May 2000 interactive gambling services.
The defence
makes it clear that whether or not an interactive gambling service
comes within the moratorium depends on the date on which the interactive
gambling service was first provided, not the date on which the service
was licensed. The effect of the defence is to exclude from the moratorium an
interactive gambling service that the defendant proves they
provided before 19 May 2000. In proving that they provided the service before
19 May 2000, the defendant must prove:
• that the service was the same or substantially the same as the service provided before 19 May 2000;
• that the service was provided under the same name as the service
provided before 19 May 2000; and
• that the service had at least one
arm’s length paying customer before 19 May 2000.
Internet Service Providers will not be guilty of the offence of
intentionally providing an interactive gambling service under
the Interactive Gambling (Moratorium) Act 2000 unless they
themselves provide the content of an interactive gambling service.
The Internet Service Provider and the provider of the interactive gambling
service will almost always be different people. The Internet Service
Provider is responsible for the carriage of the service rather than the
provision of the content of the service. Also not at risk of prosecution are
persons providing ancillary services such as bill payment and provision of
credit, unless the providers of these ancillary services are also the content
providers of the interactive gambling service.
The Bill will not have any significant impact on the finances of the
Commonwealth. Enforcement costs are expected to be marginal.
REGULATION IMPACT STATEMENT
ISSUE
The Commonwealth is concerned new interactive
communications services will give interactive gambling service providers (IGSPs)
new opportunities to:
• expand both the size of the gambling industry
and quantum of gambling in Australia; and
• attract new players.
Australia already has one of the largest per capita gambling industries in
the world. The Productivity Commission found that, on average, adult Australians
currently spend (lose) at least twice as much on legalised gambling as people in
North America and Europe - making Australians among the heaviest gamblers in the
world. The negative social impacts associated with this industry affect many
Australian families and communities as well as cost the Commonwealth Government
in terms of welfare and other support functions provided to victims of problem
gambling.
Australia is also at the forefront of the information economy.
It is one of the top four nations in terms of homes with Internet connections
and percentage of population with Internet access. In 1999 six million
Australians had access to the Internet and of these more than 75% accessed it
more than once a week. Between November 1998 to November 1999 the number of
households with Internet access increased by over 100%. Over the next twelve
months this access is expected to continue to grow rapidly and significantly.
The percentage of households with Internet access is expected to grow from 25%
in November 1999 to 35% by November 2000. Gambling on the Internet is not the
only concern. Within the next year, new interactive broadcasting and
telecommunications services such as wireless applications and datacasting could
provide new platforms for gambling. Australians are also becoming increasingly
comfortable with conducting electronic transactions online. Over 800,000 people
purchased goods or services over the Internet in the year ending November 1999 -
an increase of 183% on the previous year's figure of 286,000.
These two
factors underlie the Commonwealth and community's concern about the potential
for interactive gambling to exacerbate the negative social impacts of excessive
gambling by potentially enabling casino or bookmaker services in every
Australian home. Interactive gambling gives users access to gambling 24 hours a
day, 365 days a year. The Productivity Commission describes this as a
“quantum leap” in accessibility. This increase in accessibility
could contribute to an associated growth in problem gambling.
Of
particular concern is the presence of gambling in the home. Households with
children have been early adopters of new interactive technology such as the
Internet. Table 1 clearly demonstrates the high level of uptake of the Internet
in households with children.
Table 1: Internet access at
home
|
|
Nov 1998
|
Nov 1999
|
|
Couples with children
|
27%
|
39%
|
|
Single parent families
|
15%
|
19%
|
|
Couples with no children
|
15%
|
23%
|
|
Single person
|
9%
|
10%
|
|
Other
|
22%
|
25%
|
Source: "The Current State of Play: Australia and the
Information Economy" National Office for the Information Economy,
2000
While parents may take reasonable precautions to prevent
their children from accessing gambling within the home (via the home PC, etc),
it is possible that parental gambling within the home may encourage children to
learn and rehearse gambling activities and behaviours. With gambling occurring
in the home, it may be possible for children to watch adults gamble or 'gamble'
themselves by using the practice mode offered by many gambling providers. The
ability of children to view gambling has not been hitherto possible, with strict
regulations preventing minors from entering gambling venues in Australia. Thus
an increase in gambling from home could result in younger people taking up
gambling and, consequently, lead to an increase in younger problem gamblers.
New interactive technology gives developers the ability to include
highly attractive rich multimedia content in game and site development. Internet
gambling sites already offer sophisticated graphics, music, virtual casino
walk-throughs and live, streamed broadcasts of events such as horse racing.
Interactive gambling is easier to play and, potentially, increasingly attractive
to gamblers. Improvements in bandwidth, accessibility and processor technology
will give developers new opportunities to create new gambling products. Young
people, as early adopters of digital technology, may be particularly attracted
to using high-tech gambling products. This may create a new population of
gamblers and, possibly, problem gamblers. Although technology offers new
opportunities for verifying the identity and age of a gambler, the Commonwealth
is concerned that savvy users - particularly younger, computer-literate users -
may still find ways around these measures and access gambling from the home. The
growth and impact of the Electronic Gaming Machine (EGM) market in Australia is
an example of how new gambling products can attract new gambling populations as
well as create new problem gambling.
The Commonwealth is aware of broad
community concern about gambling. The Productivity Commission found that while
most Australians gamble, around 70 per cent of Australians (including a
substantial majority of regular gamblers) consider that gambling does more harm
than good to the community. A significant proportion of the submissions made to
the Senate Information Technologies Select Committee's inquiry into Internet
gambling expressed concern about the potential for interactive gambling to
exacerbate problem gambling in Australia.
For these reasons the
Commonwealth is keen to pause the further expansion of this industry in order to
provide an opportunity to investigate thoroughly the feasibility and
consequences of banning interactive gambling.
OBJECTIVE
The Commonwealth is concerned that the
interactive gambling industry has the potential to expand rapidly in Australia
over the next 12 months and that any further expansion of interactive gambling
could exacerbate problem gambling in Australia. Because of this concern, the
Commonwealth wishes to prevent the further expansion of the Australian-based
interactive gambling industry while it thoroughly examines the feasibility and
consequences of banning new interactive gambling
services.
OPTIONS
The Commonwealth has three options
available to it to prevent the further expansion of interactive gambling in
Australia while it conducts its investigation into the feasibility and
consequences of banning interactive gambling:
1. maintaining the status
quo;
2. relying on its Constitutional powers to legislate for a temporary
moratorium on all interactive gambling services within Australia;
or
3. relying on its Constitutional powers to legislate for a moratorium on
the introduction of new interactive gambling services in
Australia.
The Commonwealth does not currently have any practical
administrative options available to it to effect an immediate pause in the
growth of the interactive gambling industry in Australia.
The
Commonwealth cannot rely on the States and Territories to halt the growth of the
interactive gambling industry. On 19 April 2000, the Commonwealth signalled its
concern about the potential for interactive gambling to exacerbate the negative
social impacts of problem gambling in Australia and called on the States and
Territories to join it in imposing a voluntary moratorium on the introduction of
new interactive gambling services. Only New South Wales and Western Australia
indicated support for this initiative. Since this meeting, a number of
jurisdictions have continued to issue new interactive gambling licences.
Improving regulation or self-regulation within the industry will not
stem the growth of the interactive gambling industry. Regulatory options may
improve the safety and security of the industry but will not prevent the
industry from growing. Throughout the history of the Australian gambling
industry, legalisation and the legitimisation that comes from legalisation has
resulted in the growth of the gambling industry. For example, the Totalizator
system, which replaced illegal SP bookies, is now a multi-billion dollar
business.
The groups most likely to be affected
are:
• current gambling providers;
• prospective gambling
providers;
• State and Territory Governments;
• interactive
gambling consumers;
• problem gamblers; and
• welfare and
problem gambling agencies.
Option 1: Status Quo
The
Commonwealth could opt to take no action to slow the immediate growth of
interactive gambling while it investigates the feasibility and consequences of
banning interactive gambling.
Impacts
Interactive
gambling industry (current and prospective providers)
Doing
nothing is unlikely to slow the growth of this industry in Australia. The
Commonwealth is mindful of the difficulty States have experienced in trying to
deal with harm created by the recent rapid expansion of another mode of
gambling, Electronic Gaming Machines (EGMs). This EGM experience suggests it is
easier to deal with a potentially harmful industry while it is still in its
early stages of development than trying to deal with it once that industry has
become large and established.
Interactive Gambling
Consumers
If the Commonwealth does not take any action to stem
the immediate growth of the Australian-based interactive gambling industry,
gamblers will continue to have access to interactive gambling provided by a
range of Australian-based IGSPs and offshore sites. Given that Australian
States and Territories have already issued a number of interactive gambling
licences, it is reasonable to expect that interactive gambling consumers will
have access to an ever-increasing choice of providers.
Problem
gamblers
Under this option, potential problem gambling related to
interactive gambling will remain unchecked. Because interactive gambling may
appeal to new types of gamblers it is possible that the types of problems
encountered by problem gamblers may also be new and different.
State and Territory Governments
Under the status
quo option, State and Territory Governments will be able to continue to license
new interactive gambling service providers. This will enable the licensing
authorities to continue to collect fees and will provide ongoing opportunities
to generate revenue.
Welfare and problem gambling
agencies
If the Australian-based industry is left unchecked it
may continue to grow. If it does grow, there is a reasonable expectation that
problem gambling and the demand for problem gambling support services in
Australia will also continue to grow. Moreover, because interactive gambling
may attract new players, there is a chance that problem gambling support
agencies may need to adapt to deal with growing numbers of problem interactive
gamblers.
Option 2: Legislating for a moratorium on all
interactive services
The Commonwealth could rely on its
Constitutional powers to impose a temporary moratorium on all interactive
services including existing providers. This option goes beyond the main
objective of the Commonwealth of pausing the further expansion of the
industry and is, in effect, an immediate temporary ban on the industry in
Australia. The Commonwealth, however, has already indicated that although
predisposed to banning the industry - it wishes to investigate thoroughly the
feasibility and consequences of such a ban before making a final
decision.
Interactive gambling industry
The option
of legislating for a 12 month moratorium on new and existing interactive
gambling providers is likely to affect the Australian-based interactive gambling
industry. It is possible this option could have significant consequences for
the industry and industry employees.
Although the moratorium would be for
a 12 month period it is possible that the industry could view this as a
permanent ban on the industry as it would apply to new and existing providers.
Investment in the industry could be affected and possibly lead to
Australian-based IGSPs relocating to offshore jurisdictions. A number of
Australian-owned companies have already preferred to obtain licenses from less
heavily regulated offshore jurisdictions such as Vanuatu.
Although
predisposed to banning the industry, the Commonwealth has indicated that it
wants to investigate the implications of such a ban on the interactive gambling
industry before taking such a decision.
State and Territory
Governments
Preventing IGSPs from trading could result in States
and Territories losing revenue derived from interactive gambling taxation for
the duration of the moratorium. However, it is also possible that interactive
gamblers deprived of access to an Australian-regulated interactive gambling
services may substitute interactive gambling with non-interactive gambling
products. States and Territories would then continue to derive revenue from
gambling - in some cases at a higher rate of tax than currently applies to
interactive gambling.
Although predisposed to banning interactive
gambling in Australia, the Commonwealth has indicated that it wants to
understand the implications of such a ban on States and Territories before
taking such a decision, and has invited them to provide advice on the possible
implications.
Interactive gambling consumers and Problem
gamblers
A moratorium on all interactive gambling services
in Australia that does not prevent access to offshore gambling services would
result in Australian interactive gambling consumers not having access to a
locally regulated industry but still having access to offshore interactive
gambling providers. A number of industry representatives claim that many
offshore sites may be of a lesser standard than Australia's in terms of probity,
security and player protection. Therefore any policy that allows continued
access to these sites might be undesirable.
Although disposed to
banning, the Commonwealth has indicated that it intends to investigate
thoroughly the consequences of any banning option on consumers and problem
gamblers before it makes a final decision on whether to
ban.
Welfare and problem gambling agencies
It is not
clear what effects a moratorium on all services would have on demand for welfare
and problem gambling support services.
Option 3: Legislating for a
moratorium on new interactive services
The Commonwealth's
proposal is to impose a 12-month moratorium from 19 May 2000 to prevent
prospective and existing providers from offering new interactive gambling
services. The Commonwealth will achieve this by legislating to make it an
offence for IGSPs based in Australia to use a specified communications service
to provide new interactive gambling services. The law will clearly define what
constitutes new interactive gambling services and will specifically exclude
other similar services not intended to be covered by the moratorium such as
phone betting. During the period of the moratorium the Commonwealth Government
will, preferably with the cooperation of the States and Territories (whose input
has been sought) investigate the feasibility and consequences of banning
interactive gambling.
The Commonwealth is concerned that, while it
examines the banning option, unless there is a moratorium in place the
Australian interactive gambling industry will continue to expand, attract new
players and contribute to an overall increase in problem gambling in
Australia.
Current Interactive Gambling Service
Providers
A moratorium will prevent current IGSPs from
introducing new interactive gambling services. This constraint will inhibit the
ability of these providers from responding to changing market conditions. This
will effectively mean that IGSPs will not be able to offer new services. This
constraint could adversely affect the perceived value of publicly listed IGSPs.
Conversely, it is possible that operating IGSPs will enhance their value
because they will enjoy a relatively protected position in the market due to the
absence of new Australian competitors.
Prospective Interactive
Gambling Service Providers
A moratorium will prevent prospective
IGSPs from offering interactive gambling services for 12 months. Given the
global market for this industry is in its nascency, providers delayed for
12-months may miss an opportunity to establish a market presence. On the other
hand, the very infancy of the market could also mean that it will not change
significantly within a 12 month period.
Some recently licensed providers
who had not launched its gambling service at 19 May 2000 have incurred costs
associated with obtaining a licence - including fees and extensive probity
checks at their own expense. However, given the Commonwealth is not
extinguishing the licensing arrangement, and notwithstanding the Commonwealth's
predisposition to examine the possibility of banning interactive gambling - it
is possible that licensed operators may still be able to offer services at the
end of the moratorium.
Some recently licensed providers may have made
business decisions and investments based on an ability to generate revenue in
the near future. Given a moratorium will temporarily delay these providers from
entering the market, it is possible the providers will have to carry the cost of
any investment decisions taken before the announcement of the moratorium. Recent
licensees frustrated from operating by the moratorium may claim for restitution
from States and Territories for the costs associated in obtaining a license.
Principles of restitution will apply to any contracts frustrated by the
Commonwealth's action to prevent one party to a contract from gaining a windfall
benefit at the expense of the other party.
State and Territory
Governments
Although the proposed 12-month moratorium does not
purport to invalidate State and Territory licensing arrangements it may deter
prospective IGSPs from applying for State and Territory licences during the
period of the moratorium. States and Territories may not receive revenue from
licensing and the other benefits that may flow from the establishment of new
interactive gambling industries. It is not possible to estimate the potential
loss given uncertainty about the number of enterprises contemplating licensing
and the competitive licensing arrangements.
As noted above, States and
Territories may be subject to claims for restitution for recent licences
allegedly frustrated by the moratorium. The self-governing Territories have
identified interactive gambling as a potential revenue generating industry and
have been actively licensing operators.
Online gambling
consumers
Online gamblers will have ongoing access to operating
IGSPs both inside and outside Australia. However, by restricting the number of
potential providers in Australia to 19 May 2000 levels, consumers will have a
fixed choice of Australian-based providers. Furthermore, as at 19 May 2000,
Australia's first licensed and operating interactive casino, Lasseters, did not
offer casino gambling to Australian residents beyond the immediate area around
its land-based casino in Alice Springs.
Problem
gamblers
The moratorium will not restrict Australian gamblers'
current ability to access offshore sites.
By freezing the interactive
gambling industry to 19 May 2000 levels, the moratorium may lessen the growth of
problem gambling that could have occurred had the industry continued to grow.
However, given the moratorium will not prevent the expansion of the offshore
industry or the availability of traditional gambling products, it is not
possible to gauge whether this will directly affect demand.
The
moratorium will mean that Australian gamblers will have access to a local
interactive gambling industry that is fixed for 12 months at 19 May 2000 levels.
This could result in the uptake of interactive gambling services plateauing at
current levels for 12 months. If this happens, it is reasonable to anticipate a
similar plateauing of problem gambling generated by interactive gambling.
Welfare and problem gambling services
If the
moratorium results in a plateauing of associated problem gambling resulting from
interactive gambling, welfare and problem gambling support services will benefit
by not having to provide increasing levels of service to those affected. It is
important to note that the Productivity Commission (PC) found that for every
problem gambler there are at least seven other individuals directly affected to
some extent. The PC estimated that there are 290,000 problem gamblers in
Australia with around 130,000 having severe problems. Because interactive
gambling is relatively new it is not clear how many of the estimated 90,000
Australians who used the Internet in 1998-99 to gamble were problem gamblers or
had developed problem gambling.
PREFERRED OPTION
The
option most suited to the Commonwealth's objective of preventing the further
expansion of the Australian-based interactive gambling industry whilst it
investigates thoroughly the feasibility and consequences of banning interactive
gambling is the imposition of a moratorium on the introduction of new
interactive gambling services (option 3). The status quo option will not
necessarily halt the further expansion of this industry. The option of imposing
a 12-month moratorium on the entire industry is likely to have a significant
impact on the industry. Although predisposed to banning interactive gambling,
the Commonwealth intends to investigate thoroughly the feasibility and
consequences before taking such a decision.
Other
issues
Restriction on competition
The moratorium
effectively limits the opportunities operating IGSPs have to respond to market
conditions. Australian IGSPs may be disadvantaged relative to offshore
providers. The moratorium also prevents recently licensed prospective operators
from entering the interactive gambling market for 12
months.
Effects on small business
Although small
businesses will not face any additional compliance costs, a moratorium will
effectively prevent new IGSPs from entering the market for 12 months. IGSPs
range in size from individual bookmakers through to larger enterprises employing
50 to 100 people.
Effects on regional Australian
jobs
The proposed moratorium will not adversely impact on any
existing rural or regional jobs although it may limit the potential number of
new high-tech jobs created in such areas.
Trade Impact
Analysis
Given the global market for interactive gambling service is
largely untapped, the Australian interactive gambling industry has the potential
to generate export revenue.
The Australian industry is relatively new and
small. As at early June 2000 there were approximately 15 providers operating.
States and Territories had issued 25 interactive gambling licences. At least
one jurisdiction, Norfolk Island, claimed to have received over 250 expressions
of interest in the past 12 months and at least 9 formal applications for
licences.
Evidence provided to the Senate Select Committee on
Information Technologies' inquiry into Internet gambling indicates that,
although new, a number of providers have had rapid growth and are generating
export revenue.
Australia's first Internet casino, Lasseters, was
launched in April 1999 and since then has attracted over 62,000 players from 196
countries and generated $78 million in turnover. Given Lasseters almost
exclusively targets overseas players (except for a small area around Lasseters'
land-based casino in Alice Springs) the majority of this revenue is export
revenue. Lasseters claim a growth rate of over 75% per month.
Centrebet
was the world's first interactive bookmaking service. Since then it has grown
to become the predominant provider in the global market. Centrebet currently
has over 50,000 clients from 80 countries and an annual turnover in excess of
$100 million.
ACT-based bookmaking service, Canbet has been a licensed
bookmaker since 1996. In 1996 its annual turnover was $14.6 million. Since
then, and due in large part to going online, Canbet's turnover in 1999 was $47
million. It is forecasting turnover of $98 million in 2000. Canbet claims that
98% of its clients are from the United States.
A moratorium will prevent
existing and prospective IGSPs from introducing new interactive gambling
services from 19 May 2000. This will constrain the industry's potential to
generate additional revenue from offshore and local markets. However, under the
moratorium, operating IGSPs will still be in a position to offer the same
services to the same markets as they could prior to 19 May 2000. Accordingly,
the industry should be able to generate at least the same amount of revenue as
it did as at the date the moratorium takes effect.
The proposed
moratorium is also for a limited period of time (12 months). Accordingly,
unless the Commonwealth imposes a ban on interactive gambling following its
inquiry into the industry, the effects of a moratorium on the local gambling
industry would be temporary.
Consultation
On 19 May 2000
the Commonwealth wrote to State and Territory Minsters outlining the
Government's intention to legislate for a moratorium. The letter invited States
and Territories to provide input into the nature and scope of a legislated
moratorium. The Commonwealth also issued several public statements outlining
its approach to the moratorium and this resulted in a number of queries and
correspondence from industry representatives. The Commonwealth's intention has
been to signal in a very broad way its intention to legislate for a moratorium.
The Commonwealth will be in a better position to consult on the detail of the
moratorium once it has developed and introduced legislation into
Parliament.
The Commonwealth has received responses to its letter of 19
May 2000 from Tasmania, Western Australia, Norfolk Island, Victoria and Northern
Territory. In its response, Western Australia expressed qualified support for a
moratorium although it highlighted its view that the focus of the moratorium
should be on interactive gaming and not wagering. The Victorian government's
response indicated a willingness to hold off proclaiming its new Interactive
Gaming (Player Protection) Act 1999 for 3 months and invited the
Commonwealth to suggest improvements to this law that might address its concerns
about problem gambling. The Northern Territory's reply did not directly address
the moratorium. It expressed an interest in working with the Commonwealth and
other jurisdictions to improve gambling regulation rather than expressing a view
on a moratorium. Both Tasmania and the Northern Territory outlined their
efforts to address problem gambling and to effectively minimise harm.
Although the Commonwealth has yet to receive replies from New South
Wales, South Australia, Queensland and the ACT it notes:
• the New
South Wales' government's strong expressions of support for the Commonwealth's
approach to interactive gambling made at the Ministerial Council on Gambling
meeting of 19 April 2000 and in subsequent public statements; and
• the
ACT Assembly motion directing the ACT Minister responsible for gambling to not
grant any further interactive gambling licenses or grant any further
authorisations to conduct interactive games until the ACT's Gambling and Racing
Commission had reported on the adequacy of ACT legislation.
The majority
of responses received so far from industry and consumers have generally
expressed concern about the Commonwealth's proposal to legislate for a
moratorium. Most of these responses argue that Australia already has a
well-regulated interactive gambling industry with the potential to generate
considerable revenue. A number of other public statements from industry
representatives also express concern that uncertainty created by the
Commonwealth's moratorium announcement may adversely affected investment in the
industry.
The Commonwealth has also received letters and public
statements of support from a number of church and welfare organisations for its
proposal to legislate for a moratorium.
The National Office for the
Information Economy (NOIE) has consulted with a number of Commonwealth agencies
including:
• Department of Prime Minister and Cabinet;
• The
Treasury;
• Department of Family and Community Services;
• The
Attorney-General's Department; and
• Department of Transport and
Regional Services.
CONCLUSION AND RECOMMENDED OPTION
Given
the majority of States and Territories rejected a voluntary moratorium, the
Commonwealth's only viable option to effect an immediate halt to the further
expansion of the local interactive gambling industry for 12 months is to
legislate for a moratorium.
The Commonwealth considers the benefits to
the community of imposing a temporary pause on the further expansion of the
interactive gambling while it investigates the feasibility and consequences of
banning the industry outweigh the costs to the industry in terms of restricted
competition.
Implementation and review
Following Royal
Assent, the Commonwealth intends the Australian Federal Police to enforce the
moratorium on the introduction of new interactive services. The moratorium
legislation will not require any review, as a sunset clause will ensure the law
ceases to have effect after 12 months.
Enforcing the moratorium may
impose costs on the Commonwealth. However, it should be noted that the
Commonwealth will only incur costs when and if the Commonwealth prosecutes
providers in breach of the law. Moreover, given an existing enforcement agency,
the Australian Federal Police, will enforce the moratorium, the costs of
enforcement will be marginal.
Over the term of this moratorium, the
Commonwealth will investigate the feasibility and consequences of banning
interactive gambling. If the outcome of this investigation requires regulatory
change, a further Regulation Impact Statement will be prepared.
NOTES ON CLAUSES
Clause 1 provides for the Act to be cited as the Interactive Gambling
(Moratorium) Act 2000.
Clause 2 provides that the Interactive Gambling (Moratorium) Act 2000
commences on the day after the day on which it receives the Royal
Assent.
Clause 3 sets out a simplified outline of the Interactive Gambling
(Moratorium) Act 2000.
Clause 4 sets out the definitions of terms used in the Interactive
Gambling (Moratorium) Act 2000.
Australia is defined in
clause 4 to include the external territories (including Norfolk Island, Cocos
(Keeling) Islands and Christmas Island).
Bet is defined in
clause 4 to include a wager. A bet in a pool betting scheme such as the TAB or
Tattslotto is a “bet” for the purposes of the Interactive
Gambling (Moratorium) Act 2000.
Definitions of the terms
broadcasting service and broadcasting services bands
in clause 4 are the same as the definitions of these terms in the
Broadcasting Services Act 1992.
Business is defined
in clause 4 to include a venture or concern in trade or commerce, whether or not
conducted on a regular, repetitive or continuous basis. The definition of
business in clause 4 has been included so that it is clear that a
person would be providing a service in the course of carrying on a business for
the purposes of the Interactive Gambling (Moratorium) Act 2000 even if
the person conducted a one-off or irregular commercial activity.
The
definition of Chapter 8 agreement in clause 4 is the
same as the definition of the term in the Corporations Law.
Content
service is defined in clause 4 as a content service provided using a
listed carriage service. The definitions of the terms content service
and listed carriage service are the same as the
definitions of those terms in the Telecommunications Act 1997. The
definition of content service includes:
• a broadcasting
service (as defined in the Broadcasting Services Act 1992);
• an
on-line service (including those for information, entertainment and education);
and
• a service specified in a determination by the
Minister.
The definition of datacasting licence in clause 4
is the same as the definition of the term in subclause 6(1) of the
Broadcasting Services Act 1992. Datacasting licences are established by
Part 2 of Schedule 6 to the Broadcasting Services Act
1992.
Datacasting service is defined in clause 4 as a
service that delivers content in any form to persons having equipment
appropriate for receiving that content where delivery of the service uses the
broadcasting services bands and the service is provided in Australia under a
datacasting licence.
The definition of futures contract in
clause 4 is the same as the definition of the term in the Corporations
Law.
Gambling service is defined in clause 4 to
mean:
(a) a service for the placing, making, receiving or acceptance of bets;
or
(b) a service the sole or dominant purpose of which is to introduce
individuals who wish to make or place bets to individuals who are willing to
receive or accept those bets; or
(c) a service for the conduct of a lottery;
or
(d) a service for the supply of lottery tickets; or
(e) a service for
the conduct of a game, where:
(i) the game is played for money or anything
else of value; and
(ii) the game is a game of chance or of mixed chance and
skill; and
(iii) a customer of the service gives or agrees to give
consideration to play or enter the game; or
(f) a gambling service (within
the ordinary meaning of that expression) that is not covered by any of the above
paragraphs.
Types of services that fall within the definition of
gambling service are discussed below in clause
5.
Game is defined in clause 4 to include an electronic
game.
Interactive gambling service is defined in clause 4
to have the meaning given by section 5 of the Interactive Gambling
(Moratorium) Act 2000. An interactive gambling service is a gambling
service where the service satisfies the conditions in paragraphs
5(1)(a)-(c) and the service is not a service specified in subclause 5(3).
Internet carriage service is defined in clause 4 to mean a
listed carriage service that enables end-users to access the
Internet. Like the Telecommunications Act 1997, the term
“end-user” is used without being defined. An end-user need not
necessarily be a customer of an Internet Service Provider or Internet content
host. The definition of Internet carriage service is the same as
the definition of Internet carriage service in Schedule 5 to the
Broadcasting Services Act 1992 (Online Services).
The definition
of listed carriage service in clause 4 is the same as the
definition of the term in section 16 of the Telecommunications Act
1997. The definition is intended to include a service for the
carriage of Internet communications.
Lottery is defined in clause 4 to include an electronic
lottery. For clarification, the ordinary meaning of lottery is
relevant in the context of the Interactive Gambling (Moratorium) Act 2000.
The Macquarie Dictionary definition of lottery is a
scheme or arrangement for raising money....by the sale of a large number of
tickets, certain among which, as determined by chance after the sale, entitle
the holders to prizes.
An example of a scheme which has recently been
generally touted as a lottery, but is not a lottery for the purposes of the
Interactive Gambling (Moratorium) Act 2000, because it is not a
“lottery” within the ordinary meaning of the term
“lottery”, is the Sydney Olympic Ticket Lottery. In this
“lottery” people paid for tickets to the Olympics when they put in
an application for a specific number of tickets to specific events (or
alternative events) and if not successful, their money was refunded. In a
lottery within the meaning of the term in the Interactive Gambling
(Moratorium) Act 2000, money is not refunded to a person who is
unsuccessful.
The definition of option contract in clause 4 is the same
as the definition of the term in Chapter 7 of the Corporations Law.
The
definition of relevant agreement in clause 4 is the same as the
definition of the term in the Corporations Law.
The definition of standard telephone service in clause 4 is the
same as the definition of the term in section 6 of the Telecommunications
(Consumer Protection and Service Standards) Act 1999. The definition of
standard telephone service includes voice telephony and another
form of communication that is equivalent to voice telephony that would be
required to be supplied to the end-user in order to comply with the
Disability Discrimination Act 1992.
Ticket is
defined in clause 4 to include an electronic ticket.
Voice call is defined in clause 4 to include a call that
involves a recorded or synthetic voice or an equivalent call to a voice call for
a person with a disability. The reference to an equivalent call to a voice call
for a person with a disability has been included to ensure that it is clear that
use of the National Relay Service and a teletypewriter by hearing impaired
persons is considered to be a voice call for the purposes of the definition of
voice call.
Clause 5 sets out what an interactive gambling service is for
the purposes of the Interactive Gambling (Moratorium) Act 2000.
Essentially four elements must be satisfied for a service to be an
interactive gambling service:
• the service must be a
gambling service (within the meaning of the definition of that
term in clause 4);
• the service must be provided in the course of
carrying on a business (paragraph 5(1)(a));
• the service must be
provided to customers using a specified communications service such as an
Internet carriage service (paragraph 5(1)(b)); and
• the service must
have a specified link to Australia (paragraph 5(1)(c)).
Subclause 5(3)
specifically excludes certain services from being interactive gambling
services. These services are telephone betting services,
certain types of wagering services, services relating to option contracts,
futures contracts and various other specified contracts that are excluded under
the Corporations Law from gaming and wagering laws, and services that the
Minister determines are exempt services under subclause 5(5).
What is a gambling service
Subclause 5(1) provides that an interactive gambling service is
a gambling service where the service satisfies all of the
conditions in paragraphs 5(1)(a) to 5(1)(c), and the service is not an excluded
service set out in subclause 5(3).
A gambling service is
defined in clause 4 as:
(a) a service for the placing, making, receiving or
acceptance of bets;
(b) a service the sole or dominant purpose
of which is to introduce individuals who wish to make or place bets to
individuals who are willing to accept or receive those bets;
(c) a service
for the conduct of a lottery;
(d) a service for the supply of lottery
tickets;
(e) a service for the conduct of a specified kind of game;
or
(f) any other gambling service (within the ordinary meaning of the
expression gambling service) that is not covered by paragraphs (a) –
(e).
Paragraph (b) of the definition of gambling service in clause 4 provides that a service, the sole or dominant purpose of which is to introduce invididuals who wish to make or place bets to individuals who are willing to accept or receive those bets, is a gambling service. Two individuals merely having a bet over the Internet would not be a gambling service and would, therefore, not an offence under the Interactive Gambling (Moratorium) Act 2000.
The question of what is the sole or dominant purpose of a service for the
purposes of paragraph (b) is a question of fact, which would be determined by a
Court in the event of a prosecution under section 10 of the Interactive
Gambling (Moratorium) Act 2000.
A service that merely provides lottery results is not a service for the
conduct of a lottery for the purposes of the definition of gambling
service set out in paragraph (c) of the definition in clause 4.
Paragraph (e) of the definition of gambling service in clause 4
provides that a service for the conduct of a specified game is a gambling
service. The kind of game specified is one in which all of the
following conditions are satisfied:
• the game is played for money or
anything else of value;
• the game is a game of chance or of mixed
chance and skill; and
• the customer of the service gives, or agrees to
give, consideration to play or enter the game.
A game played for money or anything else of value is a game played for some
kind of prize which is of monetary value. An example of a game of chance is
Roulette. There is no skill involved in a game of Roulette. An example of a
game of mixed chance and skill is Blackjack.
The reference to a game of
mixed chance and skill is not intended to include games that would generally be
regarded to be games of skill even though it could be argued that the outcome of
the game might be affected by chance. For example an on-line competition on
knowledge of Australian history should be regarded as a game of skill even
though it could be argued that there is an element of chance in relation to the
questions that are asked. Similarly a network electronic game like Quake, a
game for one or multiple players, should be regarded as a game of skill even
though it could be argued that there is an element of chance in relation to game
play. For example there are elements of chance in that a player won’t be
aware of what another player might do and yet may act in anticipation of what
the other player might do.
Paragraph (f) of the definition of gambling service in clause 4
refers to a gambling service, within the ordinary meaning of that expression,
that is not covered by any of the paragraphs (a) – (e) of the definition
of gambling service. This paragraph is intended to
ensure that any gambling service not specifically provided for in the definition
of gambling service at paragraphs (a) – (e) of the
definition is subject to the Interactive Gambling (Moratorium) Act
2000.
Guidance as to the ordinary meaning of
“gambling” can be obtained from the Encyclopedia Britannica
which defines “gambling” as “the betting or staking of
something of value, with consciousness of risk and hope of gain, on the outcome
of a game, a contest, or an uncertain event whose result may be determined by
chance or accident or have an unexpected result by reason of the bettor’s
miscalculation.”
A promotion such as the chance to win a trip overseas upon signing up to an
online service is not a gambling service for the purposes of the
Bill and is not covered by the Interactive Gambling (Moratorium) Act
2000. A promotional game or lottery does not involve the betting or staking
of something of value, with consciousness of risk and hope of gain.
A
service for online share trading is not a gambling service because
online share trading involves the acquisition of contractual rights. As a
service for online share trading is not a gambling service it
cannot be an interactive gambling service.
A service that carries an interactive gambling service, such as
an Internet carriage service does not itself become an interactive
gambling service for the purposes of the Bill merely because the
Internet carriage service carries an interactive gambling service.
A service that is ancillary to an interactive gambling service
such as a billing service for an interactive gambling service
is not a gambling service for the purposes of the Bill, and
therefore is not an interactive gambling
service.
Service is provided in the course of carrying on a
business - paragraph 5(1)(a)
Paragraph 5(1)(a) provides that one of the
conditions that must be satisfied for a gambling service, as
defined in clause 4, to be an interactive gambling service is
that the service is provided in the course of carrying on a business.
There is a definition of business in clause 4.
A commercial enterprise that provides a service with a view to a profit is
clearly providing a service in the course of carrying on a business. However an
in-house electronic raffle run by a staff member of a commercial enterprise to
raise money for a charity would not be a service provided in the course of
carrying on a business, even though it takes place within a commercial
enterprise. The motive in this example is not for profit.
In contrast, a
not-for-profit body, such as a religious, community or sporting association
would generally not be regarded to be providing a service in the course of
carrying on a business because, in carrying on its activities, such an
association does not exist for the purpose of making a profit. However, the
relevant consideration for a Court in assessing whether a service is provided in
the course of carrying on a business would be the nature of the particular
activity and the profit motive. For example a not-for-profit amateur sporting
association that runs an electronic lottery once or twice a year as a
fund-raising activity would not generally be regarded as providing that service
in the course of carrying on a business due to the absence of the profit
motive.
Paragraph 5(1)(b) provides that one of the conditions that must be met for a
gambling service, as defined in clause 4, to be an interactive gambling
service is that the service is provided to customers using any of
the following communications services:
• an Internet carriage
service;
• any other listed carriage service;
• a broadcasting
service;
• any other content service; or
• a datacasting
service.
The terms Internet carriage service, listed
carriage service, broadcasting service, content
service and datacasting service are defined in clause 4.
Link with Australia – paragraph 5(1)(c)
Paragraph 5(1)(c) sets out the conditions that establish a link with
Australia. This link to Australia is one of the conditions which must be met
for a gambling service, as defined in clause 4, to be an
interactive gambling service for the purposes of the
Interactive Gambling (Moratorium) Act 2000.
To satisfy
paragraph 5(1)(c):
• the service must be provided in the course of
carrying on a business in Australia; or
• the central management and
control of the service must be in Australia; or
• the service must be
provided through an agent in Australia.
These conditions are all that is
required to establish a link to Australia. Residency or citizenship issues are
not relevant in relation to whether a condition is satisfied.
An example
of the central management and control of a service being in Australia when a
service would be considered to be carrying on business in Australia is that of a
company that provides an on-line gambling service such as a casino which has its
web-site maintained in an offshore jurisdiction and the company executives (or
principal company executives) are based in Australia.
Subclause 5(2)
Subclause 5(2) provides that subsection 5(1) of the
Interactive Gambling (Moratorium) Act 2000 has effect subject to
subsection 5(3). As a result of subclause 5(2) a service that is an
interactive gambling service because of subsection 5(1) is taken
not be an interactive gambling service if it is an excluded
service provided for in subsection 5(3).
Excluded Services - services that are not interactive gambling services
– subclause 5(3)
Subclause 5(3) specifically provides that
several services are not interactive gambling services. The
specified services are not, as a result, subject to the moratorium.
Paragraph 5(3)(a) specifically provides that a telephone betting service is not an interactive gambling service. A telephone betting service is defined in clause 4. This paragraph ensures that the expansion of telephone betting services such as TAB Phone Betting is not subject to the Interactive Gambling (Moratorium) Act 2000.
The reference in the definition of telephone betting service in
clause 4 to the requirement for dealing with customers being “wholly by
way of voice calls” is a reference to dealings with customers in relation
to the content of the gambling service. A dealing with a customer of a
telephone betting service in relation to an ancillary aspect of the service,
such as bill-payment, in some way other than by way of voice call does not
negate the telephone betting exception.
Paragraphs 5(3)(aa) and (ab) provide that certain wagering services are not
an interactive gambling service and consequently not subject to the moratorium.
While the effect of paragraphs 5(3)(aa) and 5(3)(ab) is to exclude certain
wagering services for the moratorium, subclause 5(3A) limits the wagering
services exclusion so as not to cover certain wagering services on sporting
events after the event has begun (see discussion below on subclause
5(3A)).
Paragraph 5(3)(aa) specifically excludes a service that relates
to betting on a horse race, harness race, greyhound race or a sporting event, or
a series of these races or sporting events, from the meaning of
interactive gambling service. ‘Sporting event’ is to
be given its ordinary meaning.
Paragraph 5(3)(ab) ensures that other
wagering services which relate to betting on an event, a series of events, or a
contingency are also excluded services for the purposes of the Interactive
Gambling (Moratorium) Act 2000. While the most common forms of wagering
relate to betting on a sporting event or horse race, a wager includes a bet on
any outcome or event. For example, a bet on the weather for a particular day
would be a wager and would be excluded from the moratorium.
It is
intended that a service that introduces individuals who wish to make or place
bets to individuals who are willing to receive or accept bets on the events or
contingencies specified in paragraphs 5(3)(aa) and (ab) would also be covered by
the exclusion. Such a service would be a ‘service that relates to
betting’ on these events or contingencies.
Wagering services are
different to gaming services. Wagering is focused on a bet on an event or
contingency while gaming is focused on playing games of chance for money or
something else of value. In a wager, the bettor usually does not participate in
the actual event or contingency. In contrast, interactive gaming involves the
bettor in the game.
Paragraph 5(3)(ab) distinguishes an
‘event’ from a ‘series of events’. This is consistent
with the anti-hoarding provisions in Part 10A of the Broadcasting Services
Act 1992, which also distinguish between ‘events’ and a
‘series of events’.
The distinction between an
‘event’ and a ‘series of an events’ can be explained by
way of example. For example, in the case of the game of cricket, the
‘event’ would be characterised as a single cricket match. However,
the test series would be characterised as a ‘series of events’. In
the game of tennis, an individual tennis match would be an ‘event’.
However a tennis tournament, such as the Australian Open, would be characterised
as a ‘series of events’.
Wagering services on either an
‘event’ or a ‘series or events’ is excluded from the
moratorium by proposed new paragraph 5(3)(ab). However this exclusion is
limited by subclause 5(3A) which provides that the moratorium will cover
wagering services on an event (that is an individual match as opposed to a
series or tournament) after the event has begun (see discussion below on
subclause 5(3A)).
Subclauses 5(3A) and 5(3B) limit the types of wagering services that are
exempt from the moratorium. In effect subclause 5(3A) provides that wagering
services on a sporting event after the event has begun are subject to the
moratorium. This amendment will ensure that ‘ball-by-ball’ betting
services will not be exempt from the moratorium.
This type of continuous
wagering is of particular concern as it goes beyond a mere extension of the
telephone betting services currently offered. There is a concern
that potential new forms of interactive wagering services, such as
real-time ‘ball-by-ball’ betting on interactive television, could
evolve, with a potential risk of this ‘continuous’ wagering being
highly addictive.
Subclause 5(3A) provides that the wagering services
exemption in paragraphs 5(3)(aa) and 5(3)(ab) does not apply to wagering
services on sporting events where the bets are placed, made, received or
accepted after the beginning of the event.
Paragraph 5(3A)(a) excludes
betting services on the outcome of a sporting event after the event has begun
from the wagering exclusion in paragraphs 5(3)(aa) and 5(3)(ab). For example, a
service that enables the placing of a bet on the result of a cricket match after
the first ball has been bowled comes within paragraph 5(3A)(a) and therefore
would be subject to the moratorium.
Paragraph 5(3A)(b) excludes a
service relating to betting on a contingency that may or may not happen in the
course of the sporting event after the event has begun from the wagering
exclusion in proposed new paragraphs 5(3)(aa) and 5(3)(ab).
Examples of
what would be covered by ‘a contingency that may happen during the course
of the event’, include who is going to take the most wickets in a cricket
match, whether the next ball in a cricket match will take a wicket, or who will
serve the next ace in a tennis match. Such wagering services would be subject
to the moratorium.
However paragraph 5(3A)(b) does not cover services
relating to betting on extraneous events, unrelated to the official course of an
event, after an event has started. For example, betting on the likelihood of
rain during a cricket match, after the match has begun, would not be categorised
as a ‘contingency that may or may not happen in the course of a
‘sporting event’. Consequently this would mean that such a wagering
service would not be covered by the moratorium.
Nor would subclause 5(3A)
cover betting services on the outcome of a tournament or series after the first
match within that tournament or series has begun. Subclause 5(3A) only covers
wagering on a ‘sporting event’ after the event has begun. A
‘sporting event’ refers to an individual event. It does not cover
wagering on a ‘series of sporting events’, such as a tournament or
series, after an individual event has begun. Paragraph 5(3)(ab) clearly
distinguishes between an ‘event’ and a ‘series of
events’ (see discussion above on paragraph 5(3)(ab)). Consequently,
betting services on the final outcome of a cricket test series after the first
cricket match has begun would not be covered by subclause 5(3A) and therefore
would be excluded from the moratorium.
Subclause 5(3B) provides that a service that relates to betting on the
conduct or outcome of a lottery or game is not an excluded service under
paragraph 5(3)(ab). This means that a wagering services on a game or lottery
does not come within the exemption in paragraph 5(3)(ab). For example, an
interactive gambling service which involved a bet on the outcome of the spin of
a virtual roulette wheel would not come under paragraph 5(3)(ab) and would not
be an excluded service for the purpose of the moratorium. This ensures that
services which are properly characterised as interactive gaming or lottery
services do not come within the exemption provided in paragraph
5(3)(ab).
A service that relates to the entering into of contracts that, under the
Corporations Law, are exempt from a law relating to gaming or wagering is not an
interactive gambling service. Subclause 5(4) sets out those
contracts that are exempt, under the Corporations Law, from gaming or wagering
laws. It includes option contracts covered by subsection 778(1) of the
Corporations Law, relevant agreements covered by subsection 778(2) of the
Corporations Law, futures contracts covered by subsection 1141(1) of the
Corporations Law, and Chapter 8 agreements covered by subsection 1141(2) of the
Corporations Law. These contracts and agreements may, for example, involve
speculation on whether the price of a share may rise or fall or on what level of
a Stock Exchange Index a share may be at a particular time in the future.
Exempting such services from the moratorium is consistent with the exemption,
under the Corporations Law, from a law relating to gaming or wagering.
Paragraph 5(3)(c) also provides that an “exempt service” is not
an interactive gambling service for the purposes of the Bill.
Subclause 5(5) provides the Minister with a power to determine that each service
in a class of services is an exempt service and therefore is taken not to be an
interactive gambling service for the purposes of the
Interactive Gambling (Moratorium) Act 2000.
This
Ministerial determination power has been included in the Bill to ensure that, if
there is a service in a class of services that would arguably be an
interactive gambling service as a result of subclause 5(1), but
the service is not the kind of service that should be covered by the moratorium,
the Minister may determine that each service in the class of services is exempt
and therefore is taken not to be an interactive gambling
service.
The Ministerial determination power is intended to be
used only in extraordinary circumstances to ensure that the moratorium does not
apply to services to which it was never meant to apply. The Ministerial
determination may not specify that a particular provider is taken not to provide
an interactive gambling service. The determination
must be a general rule of application, which relates to each service included in
a specified class of services.
Subclause 5(7) provides that a determination under subsection 5(5) is a disallowable instrument for the purposes of section 46A of the Acts Interpretation Act 1901. Any determination will therefore be required to be published in the Commonwealth Gazette, tabled in both Houses of Parliament, and will be subject to Parliamentary disallowance.
Clause 6 provides that unless the contrary intention appears, a reference in
the Interactive Gambling (Moratorium) Act 2000 to the use
of a thing is a reference to use of the thing either in isolation or in
conjunction with one or more things. Section 24 of the Telecommunications
Act 1997 is the same as clause 6.
Clause 6 has been included because
paragraph 5(1)(b) of the Interactive Gambling (Moratorium) Act 2000
refers to an interactive gambling service being provided to
customers using an Internet carriage service, any other listed carriage service,
a broadcasting service, any other content service, or a datacasting service.
Clause 6 ensures that it is clear that a customer would be considered to use an
Internet carriage service for example if the customer uses the Internet carriage
service in conjunction with another listed carriage service.
Subclause 7(1) provides that the Interactive Gambling (Moratorium) Act
2000 binds the Crown in right of the Commonwealth, and each of the States
and Territories.
Subclause 7(2) provides that the Interactive Gambling
(Moratorium) Act 2000 does not make the Crown liable to be prosecuted for an
offence.
Subclause 7(3) provides that the protection in subclause 7(2)
does not apply to an authority of the Crown.
Clause 8 provides that the Interactive Gambling (Moratorium) Act 2000
extends to every external Territory. The external Territories include
Norfolk Island, Christmas Island and Cocos (Keeling) Islands.
Clause 9 provides that, unless the contrary intention appears, the
Interactive Gambling (Moratorium) Act 2000 extends to act, omissions,
matters and things outside Australia.
This clause has been included to
displace the general rule in paragraph 21(1)(b) of the Acts Interpretation
Act 1901 which provides that, unless the contrary intention appears,
references to localities, jurisdictions and other matters and things shall be
construed as references to matters and things in and of the
Commonwealth.
The effect of this general rule is that, if not for clause
9, all references in the Bill to matters and things would be construed as
matters and things in and of the Commonwealth. For example, in clause 5, the
provision of a gambling service to customers using an Internet
carriage service would be interpreted as the provision of a gambling
service to customers using an Internet carriage service in
Australia.
As the intention of the Bill is to pause the development of
the Australian-based interactive gambling industry, which includes
provision of services to persons outside Australia, the general Acts
Interpretation Act 1901 rule needs to be displaced. As a result of its
displacement, the reference to provision of a gambling service to
customers using an Internet carriage service in clause 5 refers equally to the
provision of a gambling service to customers using an Internet
carriage service inside Australia and outside Australia.
The links to
Australia specified in paragraph 5(1)(c) of the Bill are an example of a
contrary intention referred to in clause 9.
Clause 10 is the offence provision of the Interactive Gambling
(Moratorium) Act 2000.
Subclause 10(1) provides that a person is
guilty of an offence if the person intentionally provides an interactive
gambling service. The meaning of interactive gambling service
is set out at clause 5 of the Bill.
The penalty for the offence
is 2,000 penalty units. A penalty unit is currently $110, so the current
maximum penalty is $220,000. Under subsection 4B(3) of the Crimes Act 1914,
if a body corporate is convicted of an offence against a Commonwealth law,
the Court may impose a penalty of up to 5 times the amount of the maximum
penalty that could be imposed on a natural person. As a result, the current
maximum penalty that could be imposed on a corporation is $1.1 million.
Internet Service Providers will not be prosecuted for the offence of
intentionally providing an interactive gambling service, unless
they themselves are the providers of the content of an interactive
gambling service. The offence relates specifically to the provision of
an interactive gambling service and does not apply to a person who
carries the service – an Internet Service Provider. Similarly, the
offence will not result in the prosecution of any person who provides services
ancillary to an interactive gambling service, such as bill payment
in relation to an interactive gambling service, unless the person
is also the provider of the content of the interactive gambling
service.
Subclause 10(2) provides that a person who contravenes the offence provision
in subclause 10(1) is guilty of a separate offence in respect of each day
(including a day of a conviction for the offence or any later day) during which
the contravention continues. The effect of subclause 10(2) is that the maximum
possible penalty that may be imposed for contravention of the offence in
subclause 10(1) is, for an individual, 2,000 penalty units multiplied by the
number of days during which the contravention continues. If a contravention
continued for 10 days, the current maximum penalty would be $2.2 million. If a
body corporate contravened the offence provision in subclause 10(1) for 10 days,
the maximum penalty would be $11 million.
As clause 2 of the Bill
provides that the Bill commences the day after the Bill receives the Royal
Assent, the penalty in relation to the offence does not apply until the day
after the Bill receives Royal Assent.
Subclause 10(3) provides that
section 10 ceases to have effect at the end of 18 May 2001. The Interactive
Gambling (Moratorium) Act 2000 only intends to impose a moratorium on the
provision of an interactive gambling service for 12 months
commencing on 19 May 2000.
Clause 11 provides for a defence to the offence in section 10 of the
Interactive Gambling (Moratorium) Act 2000. The defence is intended to
allow continuity of provision of a pre-19 May 2000 interactive gambling
service, not an expansion of a pre-19 May 2000 interactive
gambling service.
An example is useful to illustrate clause 11. If OzGaming Pty Ltd was
prosecuted for providing an interactive gambling service under the
name OzCasinos on 1 January 2001, it would be a defence to the offence of
intentionally providing an interactive gambling service if
OzGaming Pty Ltd proved that:
(a) on any day or days before 19 May 2000,
OzGaming Pty Ltd provided an interactive gambling service;
and
(b) the service as at 1 January 2001 is substantially the same as the
pre-19 May 2000 service; and
(c) the pre-19 May 2000 service was provided
under the name OzCasinos; and
(d) the pre-19 May 2000 had at least one paying
customer sufficiently removed from OzGaming Pty Ltd to be a genuine paying
customer.
Burden of proof
In order to prove the defence, the
defendant bears the legal burden of proving each element of the defence on the
balance of probabilities. A legal burden requires proof of the existence of the
matter. This means that the defendant must prove that they were providing the
particular interactive gambling service in relation to which they
have been prosecuted before 19 May 2000. Generally a defendant bears an
evidential burden only in proving a defence. An evidential burden only requires
the defendant to adduce or point to evidence that suggests a reasonable
possibility that the matter exists or does not exist.
Placing a higher standard of proof on the defendant is necessary in the
context of the Interactive Gambling (Moratorium) Act 2000 because all the
elements of the defence are matters that are peculiarly within the knowledge of
the defendant. It would be almost impossible for the prosecution to disprove
the elements of the defence raised by the defendant, whereas it would be
possible for the defendant to prove the elements on the balance of
probabilities. For example, the provider of an interactive gambling
service would be in a position to bring forward evidence to prove, on
the balance of probabilities, that they commenced providing a new
interactive gambling service before 19 May 2000.
Similarly, the
defendant will be in a position to bring forward evidence to prove that the
service was the same or substantially the same as the pre-19 May service and how
many, if any, paying customers were using the service prior to 19 May 2000.
When a service is the same or substantially the same
In
relation to when a post-19 May 2000 service would be regarded to be the same or
substantially the same as a pre-19 May 2000 service, it is intended that a
service which is either identical to the earlier service, or identical with
respect to the essential elements of the service, would be regarded as the same
or substantially the same as the earlier service.
In considering when a
service is the same or substantially the same as a pre-19 May 2000 service, it
is essential to keep in mind that the intention of the moratorium is to pause
the Australian based interactive gambling industry in the state it was on 18 May
2000, the day before the moratorium was announced. This intention applies to
the number and kind of interactive gambling services provided
prior to 19 May 2000.
In relation to the kind of services provided, a
number of aspects of an interactive gambling service are so
central to what kind of service the service is, that if a service is different
from a pre-19 May 2000 service in respect of any of those aspects, it is
intended that the service would not be regarded to be the same or substantially
the same as the pre-19 May 2000 service. These central aspects of an
interactive gambling service are:
• the type of betting
offered on the service;
• the restrictions, if any, on customers who
may access the service;
• the type of communications service used to
provide the service to customers; and
• the subject matter of the
service.
Non-central aspects of an interactive gambling service
could vary in relation to a post-19 May 2000 service and it is intended
that the service would still be regarded be the same or substantially the same
as a pre-19 May 2000 service. The non-central aspects of the service include
aesthetic changes to the service, such as a change to the appearance of a
service or the addition of music to the service, or changes to ancillary aspects
of the interactive gambling service such as billing procedures or
application procedures.
For example, if a service on 1 January 2001 is
the same as the interactive gambling service provided before 19
May 2000 in all respects other than its appearance, it is intended that the
later service would be regarded as the same or substantially the same as the
pre-19 May 2000 service. In contrast, if an interactive gambling service
is provided on 1 January 2001 using a datacasting service, and that
service is the same as a service provided before 19 May 2000 in all respects
other than that before 19 May 2000 the service was provided by an Internet
carriage service, it is intended that the later service would not be regarded as
the same or substantially the same as the earlier service.
Examples
in relation to casino games
In the case of an interactive
gambling service providing betting on a casino game, it is intended that
a service would be regarded as the same or substantially the same as a pre-19
May 2000 service if the service offered a game with the same rules, even if the
presentation of that service is different from the presentation pre-19 May 2000.
For example, if a pre-19 May 2000 service offered Blackjack with black and white
graphics and no music, a service that on 1 January 2001 offered Blackjack with
colour graphics and music would be regarded as the same or substantially the
same as the pre-19 May 2000 service. In contrast, a service that pre-19 May
2000 offered Blackjack would not be regarded as the same or substantially the
same as a service that on 1 January 2001 offered Baccarat. The rules of
Blackjack and Baccarat are quite different.
In the case of a pre-19 May
2000 interactive gambling service that offered both Blackjack and
Baccarat, it is intended that a service that on 1 January 2001 still offers
Blackjack, but no longer offers Baccarat, would be regarded as the same or
substantially the same as the pre-19 May 2000 service in relation to the
provision of Blackjack. For example if the provider of an interactive
gambling service that offers Blackjack is being prosecuted for providing
an interactive gambling service, it would be a defence if the
provider of the service could prove that he or she was providing an
interactive gambling service pre-19 May 2000 that included
Blackjack.
It is intended that a service provided prior to 19 May 2000 which
specifically restricted access to the service to certain customers would not be
the same or substantially the same as a post-19 May 2000 service that provided
the interactive gambling service to people to whom access had
previously been specifically restricted. Restrictions on access to a service
might be technical restrictions or practical restrictions, such as a policy not
to take bets from persons in specific locations or under a certain age. It is
intended that a decision taken by the provider of a service to increase
restrictions on access to the service, would not, however, prevent a service
being regarded as the same or substantially the same as a pre-19 May 2000
service. This is because increasing any restrictions on access to a service is
consistent with the intention of the moratorium being to pause the development
of the industry.
For example if, prior to 19 May 2000, a provider of an
online interactive gambling service specifically barred access to
persons in the United States, and sometime after 19 May 2000 lifted this
restriction on access, it is intended that the later service would not be
regarded to be the same or substantially the same as the pre-19 May 2000
service. However, if prior to 19 May 2000, the provider of an online
interactive gambling service specifically barred access to persons
in the United States, and after 19 May 2000, specifically barred access to
persons in the United States and persons under the age of 21, it is intended
that this change to the service would not prevent the service from being
regarded as the same or substantially the same as the pre-19 May 2000.
At least one arm’s length customer
In relation to
the requirement that the pre-19 May 2000 service had at least one paying
customer, this has been included to ensure that the defence is only available in
relation to interactive gambling services that were genuinely
being provided to paying customers before 19 May 2000.
A defendant who
provided a service that provided free or trial casino games to Internet users
before 19 May 2000, but did not take payments from the users until after 19 May
2000, would not be able to prove the defence. This defendant’s pre-19 May
2000 service did not have at least one arm’s length paying
customer.
Similarly a service that, before 19 May 2000, had only tested
the planned payment system for the service by debiting the credit card of an
employee of the service would not be regarded to have had at least one
arm’s length paying customer, and the defendant would not be able to prove
the defence.
A defendant who had been licensed to provide an
interactive gambling service on or before 19 May 2000, but did not
provide the service to a paying customer until 1 December 2000, would not be
able to prove the defence. Such a defendant did not have at least one
arm’s length paying customer on 19 May 2000.
Clause 12 provides that Chapter 2 of the Criminal Code applies to an
offence against the Interactive Gambling (Moratorium) Act
2000.
The Criminal Code is contained in the Schedule to the
Criminal Code Act 1995, which was enacted as part of the development of a
nationwide uniform criminal code. Chapter 2 of the Criminal Code
contains all the general principles of criminal responsibility that apply to
any offence against a law of the Commonwealth. For example Chapter 2 sets
out:
• the elements of an offence;
• the circumstances in
which there is no criminal responsibility (for example if a child is under 10,
duress, self defence);
• the general principles of corporate criminal
responsibility;
• offences which deal with extensions of criminal
responsibility (for example attempt and conspiracy); and
• the proof of
criminal responsibility.
While Chapter 2 of the Criminal Code does
not apply to all existing Commonwealth offences until on and after 15 December
2001, the Code is being applied to all new legislation which contain offences,
to ensure that they are consistent with the Code once it comes into operation.
Clause 12 ensures that the general principles contained in the Code will apply
to an offence against the Interactive Gambling (Moratorium) Act
2000.
Clause 13 provides a special rule for the service of summons or process on
foreign corporations for criminal proceedings under the Interactive Gambling
(Moratorium) Act 2000. The special rule is additional to the general rule
for service of documents at section 28A of the Acts Interpretation Act
1901.
The special rule allows a summons or process in criminal
proceedings under the Interactive Gambling (Moratorium) Act 2000 to be
effected by serving the summons or process on an Australian agent of a body
corporate incorporated outside Australia in the following
circumstances:
(a) the body corporate does not have a registered office in
Australia; and
(b) the body corporate has an agent in Australia.
Clause 14 provides that the Interactive Gambling (Moratorium) Act 2000
is not intended to exclude or limit the operation of a law of a State or
Territory to the extent that that law is capable of operating concurrently with
the Interactive Gambling (Moratorium) Act 2000.
Clause 14 has been
included to ensure that any State or Territory law that is capable of operating
concurrently with the Interactive Gambling (Moratorium) Act 2000 is not
affected by the Interactive Gambling (Moratorium) Act 2000.
Clause 15 provides that the Governor-General may make regulations prescribing
matters necessary or convenient to be prescribed for carrying out or giving
effect to the Interactive Gambling (Moratorium) Act 2000.
It is
likely that there will not be a need for regulations to be made under clause 15.
The power to make regulations has been included for completeness.