Australia: Productivity Commission Final Report on Gambling (June 2010)

Addisons FocusPapers: What Does This Mean For The Wagering Sector?
Last Updated: 5 July 2010
Article by Ashleigh Fehrenbach and Andrew Dawson


On 23 June 2010, the Productivity Commission ("Commission") released its Final Report on Gambling1. The Report represents a significant milestone in Australian gambling regulation and follows on from the Draft Report the Commission published in October 2009.2

Key Findings and Recommendations

  • If the race fields legislation which has been introduced in most jurisdictions is unsuccessful over the next three years in terms of preventing free-riding by wagering operators or provide a competitively neutral wagering industry, then a national funding model should be established.
  • The national funding model should be based on Commonwealth legislation and include an independent price-setting body. A single product fee based on gross revenue should be paid by wagering operators,
  • There are no compelling arguments for retaining TAB retail exclusivity


The Commission was requested by the Commonwealth Government to report on various matters relating to the gambling industry including:

  • the effects of the existing regulatory structures – including licensing arrangements, entry and advertising restrictions, application of the mutuality principle and differing taxation arrangements governing the gambling industries, including the implications of differing approaches for industry development and consumers;
  • the implications of new technologies (such as the Internet), including the effect on traditional government controls on the gambling industries; and
  • the effectiveness and success of harm minimisation measures.

This review represents the second inquiry conducted by the Commission, the first being in 1999. However in contrast with the 1999 report which contained no recommendations, the 2010 report makes a number of recommendations concerning Australia's gambling industries, including several specific to wagering.

Current Regulatory Regime

The current regulatory regime is implemented at the State and Territory level and requires wagering operators to, among other things, pay fees as conditions of various licences and approvals. The fees, particularly those relating to "race fields approvals", have been the focus of numerous disputes, including several court challenges, over the past five years3.

To deal with the dangers of an operator based in one jurisdiction offering bets on bets in another jurisdiction (referred to as "free riding")4, governments have implemented legislation prohibiting the use of race field information from a jurisdiction without an approval from that jurisdiction's racing administrator. All jurisdictions with the exception of the Northern Territory now implement some type of race fields regime5.

There is broad agreement between administrators and operators that some sort of contribution should be made by operators. The dispute has largely been in relation to the basis for this contribution. Some jurisdictions require a contributed based on turnover (the amount bet with the wagering operator), some on gross revenues (turnover less winnings to customers) and some utilise a hybrid system where operators can choose the model they prefer.

As competition between totalisators and corporate bookmakers has intensified, a number of corporate bookmakers have offered "tote-odds" products. Tote-odds products allow customers of bookmakers to place bets with reference to the price of a comparable totalisator bet. Totalisator operators and some racing authorities have sought to prevent corporate bookmakers from offering prices that refer to totalisator prices.

The Commission's Findings

The Commission found "free riding" must be prevented in order to:

  • ensure the long term viability of the racing industry;
  • prevent detrimental effects to the communities where racing plays a key role; and
  • prevent adverse impacts on the consumers of wagering and racing products.

However, while the Commission considered that the race fields legislation addressed the "free riding" problem, the Commission found this solution, particularly in NSW and Queensland, was anti-competitive and has led to undue costs to wagering operators in a market that is now national. Furthermore, the Commission found that, if a product fee is required from wagering operators, gross revenues was a more appropriate basis than turnover for the calculation of that product fee.

The Commission has also found that:

  • the risks of tote-odds betting can be dealt with in better ways than prohibition, for example, by further allowing the co-mingling of totalisator pools;
  • to avoid destructive tax competition, there are grounds for State and Territory government cooperation when taxes on wagering-derived income are set; and
  • offering inducements to new customers through discounted prices is not necessarily harmful. The risks for problem gamblers should be assessed. A consistent approach should be adopted nationally, whether the approach be prohibition or managed liberalisation.

The Commission's Recommendations

The Commission recommends in respect of race fields fees that:

  • The NSW and Queensland government should work with the racing authorities in their states to replace the turnover-based fees in those jurisdictions with product fees which are more competitively neutral and efficient. A failure to do so will impact upon the racing industry in those jurisdictions.
  • The Commission had recommended a "wait and see" approach to race fields legislation because it allows for governments, racing authorities and wagering operators to further model and discuss whether a national approach to price setting is feasible and/or attractive.
  • The Commonwealth Government should assess whether the various race fields legislation regimes are legally sustainable and provide competitive outcomes within three years. If not legally sustainable or providing competitive outcomes, the Commonwealth should work with the State and Territory governments to introduce a national statutory scheme with a single product fee for each code, which would replace the State and Territory schemes.
  • The single product fee, which should be determined on the basis of gross revenue, should replace all other product fees currently paid. However, the fee should not replace other funding channels, for example, race sponsorship.
  • The single product fee should be set and intermittently reviewed by an independent national body with the goal of maximising consumer interests in the long-term.

Additionally, the Commission recommends:

  • the ACCC should be asked to examine and report on any adverse implications for competition associated with the ownership of the SKY racing television channel by Tabcorp;
  • retaining the exclusivity arrangements currently conferred on totalisators, that is, the exclusive right to operate a totalisator;
  • the retail exclusivity enjoyed by totalisators should not be renewed; and
  • the impact of credit betting should be further examined in detail by one of two bodies the Commission has recommended be established: the regulator overseeing the national regulatory regime or the national gambling research body. In the interim, credit betting facilities should not be advertised and credit betting should not be extended to TABs.

Differences from the Draft Report

The differences between the Draft Report and the Final Report are minor:

  • the Commission only recommends the development of a national funding model if the Commonwealth Government assesses in three years time that the various race fields legislation regimes are not legally sustainable and/or do not provide competitive outcomes; and
  • while the Commission refers to the creation of an independent national body to set and review product fees, it does not recommend that the body engage in a public consultation process when setting and/or reviewing product fees.

1. See

2. See and Addisons FocusPaper entitled "Productivity Commission Draft Report on Gambling (October 2009) - What does this mean for the wagering sector?"

3. For further information on changes in the wagering sector, see Addisons FocusPapers entitled: "Race fields fees based on 1.5% of turnover: All bets are off? – NSW Race Fields Legislation – Constitutional Challenge by Betfair and Sportsbet – Round 1" at, "What does the IceTV Decision Mean for the Racing Sector?" at and "Race Fields Legislation - Will the New South Wales Legislation withstand a Constitutional Challenge?" at

4. Traditionally, a wagering operator paid fees to the racing administrator in the jurisdiction in which it was licensed. This meant that a racing administrator in one jurisdiction received fees for bets that used information relating to a race in another jurisdiction. This information, commonly referred to as a "race field", includes the names of horses or greyhounds, their positions, weights and other race-related data. This system, commonly referred to as the "Gentlemen's Agreement", began to break down as the wagering industry was deregulated, totalisators were privatised, new entrants such as corporate bookmakers and betting exchanges appeared and the amounts bet with interstate operators grew. Racing administrators became increasingly concerned that a betting operator in one jurisdiction could "free ride" on the races in another jurisdiction.

5. See Racing Administration Act 1998 (NSW), section 33A; Gambling Regulation Act 2003 (Vic), section 2.5.1B; Racing Act 2002 (Qld), section 113C; Racing Regulation Act 2004 (Tas), section 54A; Authorised Betting Operations Act 2000 (SA), section 62E; Betting Control Act 1954 (WA), section 27D; Racing Act 1999 (ACT), section 61F

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Mondaq Advice Centre (MACs)
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.