Two corporate bookmakers, Sportsbet and IASbet were found to have committed a number of offences following the offering of inducements to open betting accounts.
This case highlights the attention being given by Australian authorities to forms of advertising by betting operators involving inducements.
Facts
In Victoria, sports bookmakers are prohibited from offering to Victorian residents inducements to open a betting account. This is governed under section 4.7.10 of the Gambling Regulation Act 2003 (VIC) (the "Act"), which states:
In October 2010, the Victorian Commission for Gambling Regulation (VCGR) initially laid charges against three wagering operators relating to betting inducements. These charges were issued after VCGR's investigator, David Leadbetter, accessed the wagering operators' websites in September and October 2010.
Luxbet and Betstar admitted the breaches and were placed on good behaviour bonds. On the other hand, Sportsbet and IASbet pleaded not guilty and contested the charges on the basis that there was an ambiguity in the word "offer".
The charges issued by the VCGR related to:
- Sportsbet's offer of "Join now get $100 in free bets on the races" and "Up to $200 free bet for first time deposits"; and
- IASbet.com's offer of"$1000 free – 15% sign up bonus".
Decision
Magistrate Fitz-Gerald held that Sportsbet and IASbet.com had advertised on their websites an "offer" rather than an "invitation to treat". Accordingly, Sportsbet and IASbet.com were found guilty of four charges and six charges respectively. The parties were fined a total of $7,500.00.
Judgment
Amongst other issues raised, the key points of the case are:
- An "invitation to treat" refers to an expression of willingness to negotiate under contract law. However, Magistrate Fitz-Gerald found that section 4.7.10 of the Act creates a criminal offence and that the word "offer" is not used in the contractual sense.
- Magistrate Fitz-Gerald stated that the process of accessing or downloading the websites, from information on servers in the Northern Territory, where Sportsbet was licensed, was at the heart of the charges;
- Even though the communication of material in the form of a webpage was instigated at the request of the consumer, the process involves the sending of communication from the server in Darwin to the computer located in Melbourne. Magistrate Fitz-Gerald held that this process of downloading amounted to the defendants making an "offer" in Melbourne;
- Magistrate Fitz-Gerald considered that stipulations accompanying the offers (which included being over the age of 18, providing an address and first making a deposit into a betting account) did not alter the situation that a reward of a free bet or bonus was being made as an inducement to open a betting account.
Implications
The case shows an increased willingness on VCGR's behalf to enforce restrictions on betting inducements. When advertising free bets or prizes (either with respect to opening accounts or existing customers), wagering operators should be aware that any advertisement is likely to be considered an offer as opposed to an invitation to make an offer for a contract.
Further, the case illustrates how the concept of jurisdiction is determined in the context of online advertising. The case suggests that the location of the server hosting the advertisement (or from which it is uploaded) is not relevant when assessing the relevant jurisdiction. The significant factor is the location at which the advertisement is accessed or downloaded. If the advertisement is accessed or downloaded in Victoria, then Victorian gambling law would apply. This is consistent with the principles set out by the High Court of Australia in Dow Jones & Co Inc v Gutnick (2002) 210 CLR 575 in relation to defamation, but is the first time that an Australian Court has applied a similar principle in the context of Australian gambling law offences.
As each State and Territory has different requirements with respect to betting inducements, a wagering operator should familiarise itself with all relevant legislation to ensure that it is compliant in each State and Territory. The inconsistencies and difficulties involved in complying with these different requirements highlight the need to harmonise the regulation of betting inducements. It is particularly impracticable in a global and digital economy for wagering operators to be subject to inconsistent advertising and betting inducement restrictions in Australia (and globally).
The assistance of Mary Huang, Graduate, of Addisons in the preparation of this article is noted and greatly appreciated.
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.
