Last week's High Court decisions in the Betfair and Sportsbet appeals (see our FocusPaper entitled "Round 3: High Court Dismisses Challenges to NSW Race Fields Legislation by Betfair and Sportsbet") have received widespread publicity. They appear, on initial reading, to slam the door shut on the ability of wagering operators licensed in one Australian state or territory from challenging, on constitutional grounds, legislative provisions imposed by another Australian state or territory which place restrictions on their business activities. Certainly, commentary from various parties have suggested that these decisions are a watershed and justify legally, and without exception, the imposition of race fields fees (and sports fixture fees) on a turnover basis without any restriction.
But it is important to consider whether it is appropriate to give a broad interpretation of this nature to the decisions.
In light of various comments, it is necessary to distil the decisions and set out a number of the principles that emerge:
- The 2008 decision of the High Court in Betfair & Anor v Western Australia1 (see our FocusPaper entitled "Internet Regulation - End of Cross-Border Restrictions on Gambling Activities?" ) remains in place. This is clearly supported by last week's decisions of the High Court. In essence, this means that any State/Territory legislative restriction which is discriminatory in its application in respect of a class of businesses conducting business interstate where that restriction is protectionist and not reasonably appropriate to the issue being addressed, is still at risk of being declared unconstitutional.
The clearest example of a restriction which remains at risk is any law which prohibits a specific service being supplied (where that service is supplied by interstate operators) where that restriction warehouses the services of an intrastate business.
- Many constitutional cases brought by wagering operators remain on foot. These fall into three categories, namely:
- challenges to race fields legislation;
- challenges to promotional restrictions;(the VCGR Prosecutions) and
- challenges to the provision of services in venues (the Betbox decision).
Each of these give rise to different issues. The principles set out in last week's decisions will be taken into account by the parties bringing these challenges and it will be interesting to see the extent to which these claims are pursued. However, what is certain is that a number of these challenges will remain on foot and they will continue to be ongoing challenges brought by wagering operators to the effect that certain restrictions contained in State and Territory gambling laws are unconstitutional.
- There will continue to be challenges brought on other legal grounds by and against wagering operators. This will be the same as any other industry sector. Of specific interest will be the possible involvement of the ACCC, as well as prospective claims being brought by one wagering operator against another in respect of misleading and deceptive conduct.
- Racing and sports bodies have viewed the High Court's decisions as providing complete justification for the calculation of product fees by reference to a turnover benchmark. There has already been considerable discussion that all product fees should be calculated on this basis and pressure will be applied to increase the fees that should be chargeable for the use of race fields and sports fixture information. It is important to note that the High Court's decisions are dependent very much on the way in which the cases were argued and there remains the possibility that, in addition 9 to the race field cases already on foot, other challenges may be brought in the future.
Dangers also exist if the rates imposed are uncommercial. This will give rise to the risk that different business strategies will be pursued by wagering operators which may include making a decision to cease to provide wagering in respect of certain races and sporting events.
- Consideration may be given to separating the product fee and integrity elements of the current race fields and sporting fixtures arrangements.
- The decisions of the High Court and responses illustrate the inherent difficulties posed by the current legislative regime. The rules relating to race fields and sports fixtures are administered on a completely dysfunctional basis, with different rules applying in respect of each state or territory and most racing and sports bodies. As initially signalled by the Productivity Commission in its June 2010 report, it is in all parties interests that consistency be achieved in respect of the regulatory regime that applies to race fields and sporting fixtures with common standards and a coordinated approach adopted (possibly with a single body responsible) for the supervision of integrity and collection of product fees.
Last week's High Court decisions present a unique opportunity for all interested parties to adopt a coordinated approach. Indeed, with the imminent release of the report from the Department of Broadband, Communications and the Digital Economy (DBCDE) into online gambling, it is also appropriate for the Government to take an active role in this regard.
1Betfair Pty Limited v Racing New South Wales  HCA 12
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