On 22 August 2011, the Federal Court of Australia granted a declaration sought by online corporate bookmaker Sportsbet that certain provisions of the Gambling Regulation Act 2003 (Vic) (the GRA) were invalid.1 This decision, if upheld on appeal,2 has significant ramifications as it casts doubt on the validity of prohibitions in all state and territory gambling legislation that restrict interstate operators from offering services (such as by prohibiting computer terminals in pubs and clubs).
In this case, Sportsbet challenged provisions of the GRA which the Victorian regulator relied upon to seize a betting kiosk (known as a "betbox") in a Melbourne hotel. The Court agreed with Sportsbet that the provisions were invalid due to inconsistency with section 49 of the Northern Territory (Self Government) Act 1978 (Cth) (NTSGA)3. Section 49 uses similar language to section 92 of the Australian Constitution and the interpretation of that section of the Constitution was relevant in determining this case.
In determining that the provisions of the GRA were invalid, Justice Gordon made the following findings:
|Did the provisions of the GRA apply to the betbox?||Yes, they did because they prohibited "instruments of betting" and the betbox was an "instrument of betting".|
|Did the use of the betbox constitute interstate trade and commerce?||Yes, it did because the customer was located in Victoria while Sportsbet was licensed in the Northern Territory and had its principal place of business there.|
|Did the provisions of the GRA impose a burden on interstate trade and commerce?||Yes, they did because they prevented Sportsbet from operating the betbox|
|Did the burden operate in a discriminatorymanner?||Yes, it did because it prevented Sportsbet from having a presence in Victoria which Tabcorp and Victorian bookmakers enjoyed.|
|Did the burden operate in a protectionist manner?||Yes, it did because the provisions entrench Tabcorp's position as the sole supplier in Victoria of betting facilities of a kind which Sportsbet seeks to supply and impose a competitive disadvantage on Sportsbet (as an interstate trader)|
On the basis of these findings, it was up to the State of Victoria and Tabcorp to prove that the provisions were appropriate and adapted to achieving objectives which were consistent with section 92 of the Constitution. Justice Gordon found that they had not.
Avenues of Appeal
Possible avenues of appeal are that one or more of the following findings were mistaken:
- the finding that the betting which took place at the betbox was part of interstate trade and commerce;
- the finding that the provisions of the GRA burdened Sportsbet in a discriminatory way;
- the finding that the discriminatory burden was protectionist; and
- the finding that the discriminatory burden was not justified.
Applicability to Other Scenarios
We consider that these arguments may be used by affected parties in other gambling industry contexts. For example, we have no doubt that legal challenges will be made to the provisions in the gambling legislation of other states and territories which entrench the rights of a statutory monopolist or other licensees. However, it is important to note that Justice Gordon did not find that a statutory monopoly in and of itself amounted to discriminatory protectionism. This means that restrictions in state legislation on other parties (even interstate licensees) will not necessarily amount to discriminatory protectionism and may be enforceable.
Although not fundamental to the decision, the judgement of Justice Gordon makes a number of important additional points:
- a private telephone and a private computer are not "instruments of betting" under the GRA;
- a public computer may not be an "instrument of betting" to the extent that it is not a device for the sole and dedicated purpose of facilitating bets;
- "place" in the context of the GRA is identifiably by reference to a defined area (arguably this means that the Internet is not a "place" for the purposes of the GRA); and
- the placement of a bet on a computer that transmits a message to another jurisdiction where that bet is accepted can still constitute an act for the "purposes of betting" which attracts the provisions of the GRA in relation to that act.
1 Sportsbet Pty Ltd v The State of Victoria  FCA 961.
2 Tabcorp, one of the respondents, has already indicated that it will appeal the decision. An appeal will be heard by the Full Federal Court, likely toward the end of the year or early next year.
3 Section 49 of the NTSGA confers benefits on the Northern Territory similar to those conferred on the States under section 92 of the Constitution (that is, that trade between the Territory and the States should be free). A state law which is inconsistent with the NTSGA is invalid by virtue of section 109 of the Constitution (which ensures the supremacy of Federal law over State law).
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.