Overview
Last month, Ladbrokes announced that it had purchased Gaming Investments, an Australian betting operator that owns bookmaker.com.au. At the same time, www.ladbrokes.com.au was launched, complete with an announcement on its homepage that Ladbrokes had offices in Sydney, Melbourne and Brisbane.
Ladbrokes paid AUD22.5 million (13 million pounds) for Gaming Investments. This acquisition follows William Hill's $40 million acquisition of the Tom Waterhouse online betting business in August. In March this year, William Hill completed its AUD660 million acquisition of Sportingbet, which had itself purchased recently the Centrebet business.
One significant difference in the path taken by Ladbrokes into the Australian market is that it has purchased a betting business licensed in Norfolk Island. This contrasts with the jurisdiction where Australian bookmakers associated with other leading UK/European bookmakers (William Hill, Paddy Power (which acquired Sportsbet in 2010) and bet365) are licensed. Each of these has a subsidiary licensed by the Northern Territory Racing Commission.
The Northern Territory is recognised as the leading online betting jurisdiction in Australia, and the latest statistics show that the Northern Territory corporate bookmaking sector generated AUD5.7 billion of turnover in the year to 30 June 2013.
Ladbrokes is licensed by the Norfolk Island Gaming Authority (NIGA) (see: www.gaming.gov.nf). Along with Ladbrokes, NIGA has issued eight wagering licenses (see below), including to Topbetta and The Odds Broker, and three gaming licences and is in a position to grant licences to other betting operators seeking to enter the Australian market. Although a small gaming jurisdiction, NIGA's licensees have a combined annual turnover of AUD $750 million.
It will be interesting to see whether Ladbrokes' acquisition of bookmaker.com results in overseas betting operators seeking licences in Norfolk Island.
Any betting operator seeking to obtain a betting licence in Australia to enter the Australian market should consider Norfolk Island following Ladbrokes announcement. Set out below are some FAQs.
- Where is Norfolk Island?
Norfolk Island, which is widely known as a tourist destination, is located in the southwest Pacific Ocean, a 2.5 hour flight east of Sydney, a 2 hour flight east of Brisbane and a 1.5 hour flight north of Auckland, New Zealand.
- Is Norfolk Island part of Australia?
Yes, it is a self-governing territory of the Commonwealth of
Australia
Australia is a Federation comprising the following
States/Territories: New South Wales, Victoria, Queensland, South
Australia, Tasmania, Western Australia, Northern Territory and the
Australian Capital Territory.
Norfolk Island is acknowledged as an external territory and its status as an Australian Territory differs from the status of either the Northern Territory or the Australian Capital Territory as Commonwealth law extends to Norfolk Island only so far as Australian Federal law is accepted by Norfolk Island. For this reason, its constitutional status is different.
- What currency is used on Norfolk Island?
Australian dollars.
- What types of licence are available?
- Bookmaking/totalisator/betting exchange licence
- Interactive home gaming licence
- On-line lottery licence
These are granted on application by NIGA.
- Does my company need to be incorporated on Norfolk Island to obtain a gambling licence?
No. However, all companies that apply for a gambling licence from NIGA need to be registered under the Companies Act 1985 (NF). A non-Norfolk Island company (for example, an Australian company) can be registered under this legislation as a "foreign company."
- What are the applicable gaming taxes?
The holder of a Norfolk Island bookmaking/totalisator/licence must pay tax calculated at a rate equivalent to 0.25% of monthly turnover, capped annually at AUD300,000. However, NIGA may be willing to allow a lesser rate of taxation to apply, particularly where the applicant for a licence is a start-up company or where a flat rate is more applicable.
Holders of an interactive home gaming licence must pay tax calculated at a rate equivalent to 1% of gross gambling yield (gross gaming revenue less play winnings). Care needs to be taken by prospective interactive home gaming licensees – they must not target the Australian market.
(The Interactive Gambling Act 2001 (Cth) (IGA) prohibits the provision and promotion of interactive gambling services to Australian residents irrespective of whether the services are conducted under a licence.)
- Do Norfolk Island companies pay corporate tax?
Any Norfolk Island licence applicant should seek tax advice prior to determining its corporate structure as Australian taxation may apply.
- Does a sales tax apply?
No. The Australian GST does not extend to Norfolk Island. Norfolk Island does have a local GST but Companies licenced under the Gaming Acts are excluded. On the other hand, Northern Territory licensed operators are subject to GST.
- What about the servers?
Game servers must be located on the Island. However, graphic servers and other back-end systems may be located outside Norfolk Island.
- What does the probity process involve?
"Key persons" will be investigated as part of the application process and at the cost of the applicant. A "key person" is any person able to control, manipulate or affect the operations of the licence holder in any significant manner affecting operational integrity.
NIGA has indicated that, where an applicant for a gambling licence has already been investigated by another jurisdiction, NIGA will speak to these jurisdictions and then determine whether any additional investigation is required.
Addisons personnel have been working with the NIGA for over a decade. The authors would like to thank Rod McAlpine, the Director of the Norfolk Island Gaming Authority, for his assistance with this article.
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.
