Lottoland Australia Pty Ltd v Australian Communications and Media Authority

[2019] NSWSC 1041

Supreme Court

New South Wales

Medium Neutral Citation:	Lottoland Australia Pty Ltd v Australian Communications and Media Authority [2019] NSWSC 1041
Hearing dates:	26 July 2019
Decision date:	16 August 2019
Jurisdiction:	Equity - Expedition List
Before:	Sackar J
Decision:	See para [177]
Catchwords:	GAMING AND WAGERING – prohibition of interactive gambling services – meaning of ‘bet’ – meaning of ‘game’   STATUTORY INTERPRETATION – Literal meaning – Natural and ordinary meaning – extrinsic materials
Legislation Cited:	Acts Interpretation Act 1901 (Cth) Interactive Gambling Amendment (Lottery Betting) Act 2018 (Cth) Interactive Gambling Amendment Act 2017 (Cth) Interactive Gambling Act 2001 (Cth) Interactive Gambling (Moratorium) Act 2000 (Cth) Racing and Betting Act 1983 (NT)
Cases Cited:	Adcock v Wilson [1967] 2 QB 683 Adcock v Wilson [1969] 2 AC 326 Amaca Pty Ltd v Novek [2009] NSWCA 50 Armstrong v DPP [1965] 1 AC 1262 Automatic Totalisators Ltd v Federal Commissioner of Taxation (1920) 27 CLR 513 Beckwith v R (1976) 135 CLR 569 Carlill v Carbolic Smoke Ball Company [1892] 2 QB 484, Cody v JH Nelson Proprietary Ltd (1947) 74 CLR 629 DPP v Regional Pool Promotions [1964] 1 QB 244 Earl of Ellesmere v Wallace [1929] 2 Ch 1 House of Peace Pty Ltd v Bankstown City Council (2000) 48 NSWLR IFX Investment Company Ltd v The Commissioners for Her Majesty’s Revenue and Customs Commissioners [2017] 1 All ER 45; [2016] 1 WLR 3952 Krakouer v R (1998) 194 CLR 202 Maunsell v Olins [1975] 1 All ER 16 Petranker v Brown (1984) 2 NSWLR 177 Pinner v Everett [1969] 3 All ERD 257 R v Adams (1935) 53 CLR 563 Re Bolton; Ex parte Beane (1987) 162 CLR 514 Sandoval v Minister for Immigration and Multicultural Affairs (2001) 194 ALR 71; [2001] FCA 1237 Thacker v Hardy (1878) 4 QBD 685 Thompson v His Honour Judge Byrne & Ors (1999) 196 CLR 141 Tote Investors Ltd v Smoker [1968] 1 QB 509 Waterhouse v Racing Appeals Tribunal [2002] NSWSC 1143
Texts Cited:	Explanatory Memorandum to the Interactive Gambling Amendment Bill 2016 (Cth) Explanatory Memorandum to the Interactive Gambling Bill 2001 ( Cth) Explanatory Memorandum to the Interactive Gambling (Moratorium) Bill 2000 (Cth) Explanatory Memorandum to the Interactive Gambling Amendment(Lottery Betting) Bill 2018 (Cth) Macquarie Dictionary Oxford English Dictionary Senate, Commonwealth of Australia, Parliamentary Debates (Hansard) Thursday 28 June 2001, pg 25334-25337 Senate, Commonwealth of Australia, Parliamentary Debates (Hansard) Thursday 10 November 2016, pg 3453-3455 Supplementary Explanatory Memorandum to the Interactive Gambling Bill 2001 (Cth) Supplementary Explanatory Memorandum to the Interactive Gambling (Moratorium) Bill 2000 (Cth) Revised Explanatory Memorandum to the Interactive Gambling (Moratorium) Bill 2000 (Cth)
Category:	Principal judgment
Parties:	Lottoland Australia Pty Ltd (ACN 602590429 (Plaintiff) Australian Communications and Media Authority (Defendant)
Representation:	Counsel: N Hutley SC, S Hartford Davis, T Rogan (Plaintiff) Ms A Mitchelmore SC, Ms S Patterson (Defendant)   Solicitors: Addisons (Plaintiff) Australian Government Solicitor (Defendant)
File Number(s):	2019/177128

Judgment

Procedural Background

1. On 31 January 2019, the Defendant (the Australian Communications and Media Authority)(ACMA) wrote to the Plaintiff (Lottoland Australia Pty Ltd)(Lottoland) informing them that they were investigating whether the Plaintiff was, by offering particular gambling products, contravening Part 2 of the Interactive Gambling Act 2001 (Cth) (IGA). On 27 May 2019, the Defendant wrote to the Plaintiff communicating its ultimate findings to the effect that many of the Plaintiff’s gambling products contravene Part 2 of the IGA.

2. By summons filed 6 June 2019, the Plaintiff sought:

1. A declaration that the Impugned Products are not “prohibited interactive gambling services”, within the meaning of s 5 of the Interactive Gambling Act 2001 (Cth);

2. Further or alternatively, a declaration that the Impugned Products are “excluded wagering services”, within the meaning of s 8A of the Interactive Gambling Act 2001 (Cth);

3. Further or alternatively, a declaration that the Impugned Products are not “services for the conduct of a game” within the meaning of s 8A(5)(c)(iv) of the Interactive Gambling Act 2001 (Cth);

4. Further or alternatively, a declaration that the Impugned Products are not “services relating to betting on the outcome of a game or chance or of mixed chance and skill” within the meaning of s 8A(5)(c)(v) of the Interactive Gambling Act 2001 (Cth);

5. Costs; and

6. Such further or other orders as the Court sees fit to make.

3. The Impugned Products are the gambling products offered by Lottoland through its website; “Mon & Wed Jackpot”, “Tue Jackpot”, “Thu Jackpot”, “US Millions” and “US Power” (together the Impugned Products).

4. On 7 June 2019, I fixed the matter for expedited hearing. The matter was heard over one day on 26 July 2019.

The parties

5. The Lottoland Group is an online lottery betting company. The Plaintiff is a subsidiary of Lottoland Holdings Ltd, a company registered in Gibraltar.

6. The Plaintiff was incorporated on 29 October 2014 and commenced trading in Australia in January 2016. The Plaintiff holds a sports bookmaker licence issued by the Northern Territory of Australia under the Racing and Betting Act 1983 (NT). Under the terms of the licence, betting services can only be provided if they relate to “bets on approved sporting events”, this includes “other declared betting events”. The Northern Territory government publishes a list of approved sporting events on their website.

7. When the Plaintiff commenced operations in Australia it offered a number of products which allowed consumers to bet on the outcome of lotteries. The Interactive Gambling Amendment (Lottery Betting) Act 2018 (Cth) came into effect on 9 January 2019 and prohibited “lottery betting services”. In response to the legislative change, Lottoland launched a different range of betting products in late 2018, early 2019. Approval for these new products was obtained from the Northern Territory Government (Northern Territory Racing Commission) (NTRC).

8. ACMA is a statutory body empowered under the IGA to investigate complaints, write investigation reports, and undertake enforcement and compliance monitoring activities.

The Impugned Products

9. There was little to no factual dispute about how the Impugned Products operated and no controversy in the evidence. One witness from the Plaintiff and one witness from the Defendant each gave evidence on the operation of the Impugned Products. Neither witness was cross-examined.

10. I note that the use of the word ‘bet’ or ‘game’ or ‘win’ is not intended to be a conclusion as to the particular questions of fact in issue here. Rather, the terms are used as a matter of convenience.

11. There are five particular Impugned Products that are the subject of these proceedings:

1. Mon & Wed Jackpot

2. Tue Jackpot

3. Thu Jackpot

4. US Millions

5. US Power

12. Lottoland offers one other product called the “Daily Millions’. ACMA did not declare that this product breached the prohibition against interactive gambling, and thus the product was not the subject of the litigation.

General features of the Lottoland products

13. Prior to placing any ‘bet’ on a product, a customer must create an account with Lottoland. A customer cannot create an account until they have accepted the terms and conditions.

14. In each of the products offered by Lottoland, the payout amount is fixed, independent of how many customers participate. Generally speaking, customers will ‘win’ when their chosen number (their ‘Customer Number’) matches designated parts of specified financial indices at the appointed time (the ‘Winning Result ID’).

15. Lottoland obtains insurance policies that will respond to larger jackpot wins.

16. As part of the Homepage on the Lottoland Website, is a tab and link to the page “What is Jackpot Betting?”. At the time of ACMA’s investigation, by clicking on the link, a customer was taken to a page which included the following information:

How do I choose my numbers?

Because the outcome of the bet is unknown to all players and the winning combination can’t be manipulated, choosing your numbers is totally up to you! They can be sentimental such as important dates or your lucky numbers. If that doesn’t suit, simply opt for one of our Quickies, thus leave the selection up to chance.

17. At the time of hearing, by clicking on the link, a customer is taken to a page which includes the following information:

How do I choose my numbers?

How you choose your numbers is totally up to you! They can be sentimental, such as important dates or lucky numbers. Or, if you think you know what the outcome of the various stock indices will be, then you can use our Result Generator Tool to provide you with the corresponding numbers to bet on. The Result Generator Tool is available on each of the jackpot pages and can be viewed by navigating to the Results section and clicking on “see details how the results are generated”

18. These words were changed at some point between June and late July 2019.

Mon & Wed Jackpot

19. Entries for the Mon & Wed Jackpot close every Monday and Wednesday at 11pm.

20. Customers place ‘bets’ on opening value of designated financial indices as recorded at 9:30am Eastern Time each Monday and Wednesday morning. A customer is paid the jackpot if their ‘Customer Number’, ‘matches’ the ‘Winning Result ID’. The Winning Result ID is determined as follows:

1. The first and second Result ID digits are taken from the first two decimals of the opening value of the Dow Jones Industrial Average,

2. The third and fourth Result ID digits are taken from the first two decimals of the opening value of the NASDAQ Composite,

3. The fifth and sixth Result ID digits are taken from the first two decimals of the opening value of the S&P 500,

4. The seventh and eighth Result ID digits are taken from the first two decimals of the opening value of the NYSE Composite, and

5. The ninth and tenth Result ID digits are taken from the first two decimals of the opening value of the Russell 1000.

21. A ‘division’ prize is won when there is a partial match between a participant’s chosen Customer Number and the Customer Number associated with the Winning Result ID.

22. The customer places a ‘bet’ by choosing a ‘Customer Number’, a string of six numbers. A customer is shown a box or a ‘bet slip’ of numbers 1 to 45. A customer can choose which number each of the six places in the ‘Customer Number’ should be. Alternatively, by selecting the ‘Quicky’ option a randomly generated sequence of six numbers is selected for them.

23. Each ‘bet slip’ and each ‘customer number’ represents a wager of $1.00. By selecting “Double Jackpot”, this can be doubled to $2.00. A customer can make multiple entries by choosing different customer numbers.

24. There is also the option for a customer, to use the “Number Shield” tool. This enables a customer (for a fee) to guarantee the entire Jackpot, regardless of the number of customer(s) who also choose the winning Customer Number.

25. In the Mon & Wed Jackpot, the opening values of the designated financial indices are transposed into the ten-digit Winning Result ID. The numbers are determined by the opening values of particular financial market indices. Because the Result ID is made of 10 numbers, there are 10 billion possible combinations. The Customer Number is made up of six numbers and there are 8 million possible combinations. Every possible Result ID is linked with a single Customer Number, and every Customer Number is linked to 1227-1228 Result IDs. The link between the Customer Numbers and Result IDs is fixed and unchanging. The correlations are fixed, in the sense that a given Customer Number will always link with the same set of Result IDs; and a given Result ID will always link with the same Customer Number.

26. Essentially, the possible combinations of Result IDs are listed in ascending numerical order, and a Customer Number (also listed in ascending numerical order) is assigned to each Result ID. When the combination of Customer Numbers is exhausted the list of Customer Numbers commences again. This process was referred to as ‘mapping’ by the parties.

27. These correlations are ascertainable using the “Result Generator” tool on the Lottoland website.

28. The jackpot is paid if the Winning Result ID matches one of the correlating 1226 or 1227 Customer Numbers chosen by a particular customer. That is, the Customer Number chosen by an individual does not correspond directly to the parts of the opening values of the financial market indices. If two or more customers choose the winning Customer Number, they will share the Jackpot unless the “Number Shield” tool is used.

29. Division payouts are given in the Tue & Wed Jackpot for ‘partial matches’. For the purpose of determining partial matches two ‘bonus’ numbers are added to a Customer Number. The addition of the bonus numbers in effect extends a Customer Number from 6 to 8 numbers, and thus increases the odds of a partial match. The Results ID has a corresponding set of 8 numbers of which 6 correspond to the Customer Number and the 2 additional “Bonus” numbers exist only for the purpose of settling the lesser payout tiers. The relationship between the Winning Result ID and the Bonus Numbers is also fixed and ascertainable using the Result Generator tool.

30. Payouts are settled automatically by a computer program described as a “settling engine”. For larger payouts and jackpot payouts, the entry will be reviewed manually before payment into an account.

31. Initially, there was no direction to the Result Generator tool when the Customer was using the product. Now, when the customer is choosing numbers on the bet slip, there is text at the bottom of the page noting; “To use our Result Generator tool, navigate to Mon & Tue Jackpot Results tab above and click on “see details on how the results are generated””.

Tue Jackpot

32. The Tue Jackpot operates in substantially the same way as the Mon & Wed Jackpot, however there are several small differences between the products.

33. Entries for the Tue Jackpot close on Tuesday night. The Customer Number in the Tue Jackpot is comprised of seven numbers. The standard ‘bet’ is $2, but a customer can place a “Double Jackpot” of $4. Customers can make as many entries as they want.

34. A customer is paid the jackpot if their ‘Customer Number’, ‘matches’ the ‘Winning Result ID’. The Winning Result ID is determined by the opening values of the various financial indices. There are approximately 45 million different combinations of Customer Numbers. Therefore, each Customer Number is linked with 220 or 221 different Result IDs. The ‘mapping’ process operates in the same way as the Mon & Wed Jackpot. The link between the Customer Numbers and the Result IDs is fixed and unchanging.

35. ‘Division’ payouts are also made for partial matches.

36. Initially, there was no direction to the Result Generator tool when the Customer was making an entry. Now, as in the Mon & Wed Jackpot, there is information directing a customer to the Result Generator tool.

Thu Jackpot

37. The Thu Jackpot operates in substantially the same way as the Mon & Wed Jackpot, however there are several small differences between the products.

38. Bets for the Thu Jackpot close on Tuesday night. The Customer Number in the Thu Jackpot is comprised of seven numbers between 1 and 20. The standard ‘bet’ is $3, but a customer can place a “Double Jackpot” of $6. Customers can make as many entries as they want.

39. A customer is paid the jackpot if their ‘Customer Number’, ‘matches’ the ‘Winning Result ID’. The Winning Result ID is determined by the opening values of the various financial indices. There are approximately 135 million different combinations of Customer Numbers. Therefore, each Customer Number is linked with 74 or 75 different Result IDs. The ‘mapping’ process operates in the same way as the Mon & Wed Jackpot. The link between the Customer Numbers and the Result IDs is fixed and unchanging.

40. ‘Division’ payouts are also made for partial matches.

41. Currently, there is no direction to the Result Generator tool when the customer is using the product. However, according to the Affidavit of Oliver Scott, dated 23 July 2019, Lottoland is in the process of including directions to the Result Generator tool, similar to the other products.

US Power

42. The US Power operates in substantially the same way as the Mon & Wed Jackpot, however there are several small differences between the products.

43. Entries for the US Power close every Tuesday and Thursday night. The Customer Number in the US Power is comprised of five numbers between 1 and 69, as well as a ‘super number’ between 1 and 26. The standard ‘bet’ is $5, and there is no “Double Jackpot” option. Customers can make as many entries as they want.

44. A customer is paid the jackpot if their “Customer Number”, ‘matches’ the ‘Winning Result ID’. The Winning Result ID is determined by the opening values of the various financial indices. There are approximately 292 million different combinations of Customer Numbers. Therefore, each Customer Number is linked with 34 or 35 different Result IDs. The ‘mapping’ process operates in the same way as the Mon & Wed Jackpot. The link between the Customer Numbers and the Result IDs is fixed and unchanging.

45. ‘Division’ payouts are also made for partial matches.

46. Initially, there was no direction to the Result Generator tool when the customer was making a bet. Now, as in the Mon & Wed Jackpot, there is information directing a customer to the Result Generator tool.

US Millions

47. The US Millions operates in substantially the same way as the Mon & Wed Jackpot, however there are several small differences between the products.

48. Entries for the US Millions close every Wednesday and Friday night. The Customer Number in the US Millions is comprised of five numbers between 1 and 70, as well as a ‘super number’ between 1 and 25.

49. A customer is paid the jackpot if their “Customer Number”, ‘matches’ the ‘Winning Result ID’. The Winning Result ID is determined by the opening values of the various financial indices. There are approximately 302 million different combinations of Customer Numbers. Therefore each Customer Number is linked with 33 or 34 different Result IDs. The ‘mapping’ process operates in the same way as the Mon & Wed Jackpot. The link between the Customer Numbers and the Result IDs is fixed and unchanging.

50. Initially, there was no direction to the Result Generator tool when the customer was using the product. Now, as in the Mon & Wed Jackpot, there is information directing a customer to the Result Generator tool.

Daily Millions

51. The Daily Millions was not one of the Impugned Products and thus not the subject of the litigation, however it is appropriate to briefly set out the product here.

52. Again, the Daily Millions allows customers to place bets on the value of various pre-defined stock market indices at a set point in time. Entries close for the Daily Millions Jackpot every weekday evening at 11 pm.

53. Again customers place a ‘bet’ by choosing their Customer Number. Each Customer Number represents a separate bid of $2.50, this can be doubled by selecting the “Double Jackpot” option. There is no limit to the number of entries a customer can make.

54. A jackpot is paid if a customer’s Customer Number exactly matches a set of 8 numbers determined from the financial indices. That is, there is no ‘mapping’ process.

55. Division payouts are made if there is a partial match between a Customer Number and the numbers of the various financial indices.

History of the Legislation

56. In 1999, the Productivity Commission released its Australian’s Gambling Industries Report (Report), which provided a detailed overview on the social and economic impact of the gambling industries in Australia. In particular the Report highlighted the impact of the internet on the way that Australian’s gamble and raised concerns about the increasingly easy access to internet gambling (Volume 1; 50-51):

Online gambling and interactive TV potentially represent a quantum leap in accessibility to gambling, and will also involve new groups of people. They will thus pose new risks and uncertainties for problem gambling. However, there are also some moderating features, such as the greater potential for proximity of family members, and scope for more effective consumer protection mechanisms and controls.

•   Risks to minors, a major concern for many, are probably not significant for licensed sites — given screening requirements, ease of monitoring of accounts and the inability to gain access to any winnings.

•   Supplier integrity can be monitored domestically, if not internationally, and could become largely self-enforcing to the extent that gamblers have access to and are informed about preferred reputable sites where payment of any winnings is assured

57. Further (Volume 2; 18-11-12):

On the other hand, the new technologies may create more manipulative environments for gamblers. It is possible that virtual intelligence will be used to influence the behaviour of the individual gambler in ways that are far more subtle than existing gaming machines. This reflects the fact that, through electronic trails, the new technologies are able to collect more information about participants than was previously possible in the gambling industry. A computer, for example could record the type of play (and if the person has used a membership card, look closely at the history of the play) and interact with the player accordingly. It could also record the nature of that person’s involvement with other internet services to build up a picture of their customer profile.

Internet and interactive gambling offers the prospect, therefore, of an infinitely flexible gaming machine in every Australian household.

58. The Report also considered the possibility of regulating such online gambling (Volume 2; 18-54):

There are a number of relatively strong arguments for prohibition. Online gambling presents the risk of a quantum leap in accessibility to gambling and presents new risks for problem gambling. Unlike physical gambling technologies, it is hard to gradually increase access, because the number of gambling opportunities is determined by the number of internet-ready computers rather than by the number of gambling websites. It is unlikely that any Australian regulatory agency would be content to approve 1.5 million new gambling venues, but that is what access to online gambling incidentally achieves.

The taxation revenue consequences also represent a gamble for state governments. They may make more revenue, but under worst-case scenarios, may lose significant sources of revenue if Australians divert gambling to online sites in offshore tax havens, or if tax competition between jurisdictions erodes rates.

The grounds for bans are strongest for gaming technologies (casino-type games such as roulette and virtual gaming machines). The case for banning internet wagering (sports betting and racing) or traditional lotteries are weaker, reflecting likely lower risks and the fact that other mediums for making these gambles, such as phone-betting, are close substitutes for the internet.

59. In response, and as a precursor to the eventual IGA, the Interactive Gambling (Moratorium) Act 2000 (Cth) (Moratorium Act) prohibited the launch of new interactive gambling services for one year from 19 May 2001.

60. The Explanatory Memorandum to the Moratorium Act (EM Moratorium), begins (at pg 1-2):

The Commonwealth Government is concerned that new interactive technology, such as the Internet and datacasting, has the potential to put a virtual ‘poker machine’ in every home. This ‘quantum leap’ in accessibility to gambling has the potential to expand both the amount of gambling available in Australia as well as to exacerbate problem gambling.

…

The Interactive Gambling (Moratorium) Bill 2000 (the Bill) proposed to impose a 12-month moratorium on the development of the interactive gambling industry in Australia by creating a new criminal offence, the provision of an interactive gambling service. The new offence prohibits a person from providing an interactive gambling service unless the person was already providing the service when the moratorium commenced on 19 May 2000. Consistent with the Government’s decision to impose a moratorium for twelve months, the offence ceases to have effect at midnight on 18 May 2001.

The moratorium is intended to pause the development of the Australian-based interactive gambling industry while an investigation into the feasibility and consequences of banning interactive gambling is conducted. The investigation is intended to be completed during the course of the moratorium.

The Bill provides a definition of what is an interactive gambling service. An interactive gambling service has four essential elements:

•   The service is a gambling service; and

•   The service is provided in the course of carrying on a business; and

•   The service is provided to customers using any of the following communications services:

o   An Internet carriage service or any other listed carriage service; or

o   A broadcasting service or any other content service; or

o   A datacasting service provided under a datacasting licence and

•   The service is linked in a specific way to Australia.

…

The Bill specifically excludes from the definition of interactive gambling service services for telephone betting; services relating to the entering into of contracts that, under the Corporations Law, are exempt from a law relating to gaming or wagering; and services that the Minister determines are exempt services…

61. The EM Moratorium, then goes on to address the issue of interactive gambling in Australia (pg 3):

These two factors underlie the Commonwealth and community’s concern about the potential for interactive gambling to exacerbate the negative social impacts of excessive gambling by potentially enabling casino or bookmaker services in every Australian home. Interactive gambling gives users access to gambling 24 hours a day, 365 days a year. The Productivity Commission describes this as a ‘quantum leap’ in accessibility. This increase in accessibility could contribute to an associated growth in problem gambling.

62. And further notes on the definition of ‘interactive gambling service’ (at pg 18-19):

Clause 5 – Interactive Gambling Services

Clause 5 sets out what an interactive gambling service is for the purposes of the Interactive Gambling (Moratorium) Act 2000. Essentially four elements must be satisfied for a service to be an interactive gambling service:

•   The service must be a gambling service (within the meaning of the definition of that term in clause 4);

•   The service must be provided in the course of carrying on a business (paragraph 5(1)(a));

•   The service must be provided to customers using a specified communications service such as an Internet carriage service (paragraph 5(1)(b)); and

•   The service must have a specified link to Australia (paragraph 5(1)(c)).

Subclause 5(3) specifically excludes certain services from being interactive gambling services. These services are telephone betting services, services relating to option contracts, futures contracts and various other specified contracts that are excluded under the Corporations Law from gaming and wagering laws, and services that the Minister determines are exempt services under subclause 5(3).

What is a gambling service

Subclause 5(1) provides that an interactive gambling service is a gambling service where the service satisfied all of the conditions in paragraphs (5)(1)(a) to 5(1)(c), and the service is not an excluded service set out in subclause 5(3).

A gambling service is defined in clause 4 as:

(a) a service for the placing, making, receiving or acceptance of bets;

b) a service the sole or dominant purpose of which is to introduce individuals who wish to make or place bets to individuals who are willing to accept or receive those bets;

(c) a service for the conduct of a lottery;

(d) a service for the supply of lottery tickets;

(e) a service for the conduct of a specified kind of game; or

(f) any other gambling service (within the ordinary meaning of the expression gambling service) that is not covered by paragraphs (a)-(e)

…

Service for the conduct of a game

Paragraph (e) of the definition of gambling service in clause 4 provides that a service for the conduct of a specified game is a gambling service. The kind of game specified is one in which all of the following conditions are satisfied:

•   The game is played for money or anything else of value;

•   The game is a game of chance or of mixed chance and skill; and

•   The customer of the service gives, or agrees to give, consideration to play or enter the game.

A game played for money or anything else of value is a game played for some kind of prize which is of monetary value. An example of a game of chance is Roulette. There is no skill involved in a game of Roulette. An example of a game of mixed chance and skill is Blackjack.

63. The EM Moratorium then makes clear that certain products are not prohibited interactive gambling services, specifically telephone betting services and services which relate to entering into contracts that are, under Corporations Law, exempt from a law relating to gaming or wagering (at pg 22).

64. There were subsequent amendments to the Moratorium Act. The Revised Explanatory Memorandum to the Moratorium Act (REM Moratorium), outlines some of these changes, in particular comments on the expanded definition of excluded services (at pg 22):

Wagering services

Paragraphs 5(3)(aa) and (ab) provide that certain wagering services are not an interactive gambling service and consequently not subject to the moratorium. While the effect of paragraphs (5)(3)(aa) and 5(3)(ab) is to exclude certain wagering services for the moratorium, subclause 5(3A) limits the wagering services exclusion so as not to cover certain wagering services on sporting events after the event has begun (see discussion below on subclause 5(3A)).

Paragraph 5(3)(aa) specifically excludes a service that relates to betting on a horse race, harness race, greyhound race or a sporting event, or a series of these races or sporting events, from the meaning of interactive gambling service. ‘Sporting event’ is to be given its ordinary meaning.

Paragraph 5(3)(ab) ensures that other wagering services which relate to betting on an event, a series of events, or a contingency are also excluded services for the purposes of the Interactive Gambling (Moratorium) Act 2000. While the most common forms of wagering relate to betting on a sporting event or horse race, a wager includes a bet on any outcome or event. For example, a bet on the weather for a particular day would be a wager and would be excluded from the moratorium.

It is intended that a service that introduces individuals who wish to make or place bets to individuals who are willing to receive or accept bets on the events or contingencies specified in paragraphs 5(3)(aa) and (ab) would also be covered by the exclusion. Such a service would be a ‘service that relates to betting’ on these events or contingencies.

Wagering services are different to gaming services. Wagering is focused on a bet on an event or contingency while gaming is focused on playing games of chance for money or something else of value. In a wager, the bettor usually does not participate in the actual event or contingency. In contrast, interactive gaming involves the bettor in the game.

…

Wagering Services which are not excluded from the moratorium

Subclauses 5(3A) and 5(3B) limit the types of wagering services that are exempt from the moratorium. In effect subclause 5(3A) provides that wagering services on a sporting event after the event has begun are subject to the moratorium. This amendment will ensure that ‘ball-by-ball’ betting services will not be exempt from the moratorium.

This type of continuous wagering is of particular concern as it goes beyond a mere extension of the telephone betting services currently offered. There is a concern that potential new forms of interactive wagering services, such as real-time ‘ball-by-ball’ betting on interactive television, could evolve, with a potential risk of this ‘continuous’ wagering being highly addictive.

…

Subclause 5(3B) provides that a service that relates to betting on the conduct or outcome of a lottery or game is not an excluded service under paragraph 5(3)(ab). This means that a wagering services on a game or lottery does not come within the exemption in paragraph 5(3)(ab). For example, an interactive gambling service which involved a bet on the outcome of the spin of a virtual roulette wheel would not come under paragraph 5(3)(ab) and would not be an excluded service for the purpose of the moratorium. This ensures that services which are properly characterised as interactive gaming or lottery services do not come within the exemption provided in paragraph 5(3)(ab).

65. Following, there were additional changes and a Supplementary Explanatory Memorandum to the Moratorium Act (SEM Moratorium) which further specified that certain ‘ball-by-ball’ betting services where not excluded from the moratorium (pg 4-5).

66. Ultimately, the Moratorium Act defined interactive gambling services and the relevant exclusions as follows:

5 Interactive gambling services

(1)   For the purposes of this Act, an interactive gambling service is a gambling service, where:

(a)   the service is provided in the course of carrying on a business; and

(b)   the service is provided to customers using any of the following:

(i)   an Internet carriage service;

(ii)   any other listed carriage service;

(iii)   a broadcasting service;

(iv)   any other content service;

(v)   a datacasting service; and

(c)   any of the following conditions is satisfied:

(i)   the service is provided in the course of carrying on a business in Australia;

(ii)   the central management and control of the service is in Australia;

(iii)   the service is provided through an agent in Australia.

(2)   Subsection (1) has effect subject to subsection (3).

Excluded services

(3)   For the purposes of this Act, none of the following services is an interactive gambling service:

(a)   a telephone betting service;

(aa)   a service to the extent to which it relates to betting on, or on a series of, any or all of the following:

(i)   a horse race;

(ii)   a harness race;

(iii)   a greyhound race;

(iv)   a sporting event;

(ab)   a service to the extent to which it relates to betting on:

(i)   an event; or

(ii)   a series of events; or

(iii)   a contingency;

that is not covered by paragraph (aa);

(b) a service to the extent to which it relates to the entering into of contracts that, under the Corporations Law, are exempt from a law relating to gaming or wagering (see subsection (4));

(c)  an exempt service (see subsection (5)).

(3A)   Paragraphs (3)(aa) and (ab) do not apply to a service to the extent to which:

(a)   the service relates to betting on the outcome of a sporting event, where the bets are placed, made, received or accepted after the beginning of the event; or

(b)   the service relates to betting on a contingency that may or may not happen in the course of a sporting event, where the bets are placed, made, received or accepted after the beginning of the event.

(3B)   Paragraph (3)(ab) does not apply to a service to the extent to which the service is:

(a)   a service for the conduct of a lottery; or

(b)   a service for the supply of lottery tickets; or

(c)   a service relating to betting on the outcome of a lottery; or

(d)   a service for the conduct of a game, where:

(i)   the game is played for money or anything else of value; and

(ii)   the game is a game of chance or of mixed chance and skill; and

(iii)   a customer of the service gives or agrees to give consideration to play or enter the game; or

(e)   a service relating to betting on the outcome of a game of chance or of mixed chance and skill.

Contracts exempt under the Corporations Law

(4)   A reference in this section to contracts that, under the Corporations Law, are exempt from a law relating to gaming or wagering is a reference to any of the following:

(a) option contracts covered by subsection 778(1) of the Corporations Law;

(b) relevant agreements covered by subsection 778(2) of the Corporations Law;

(c) futures contracts covered by subsection 1141(1) of the Corporations Law;

(d) Chapter 8 agreements covered by subsection 1141(2) of the Corporations Law.

Exempt services

(5) The Minister may, by writing, determine that each service included in a specified class of services is an exempt service for the purposes of this section.

(6)   A determination under subsection (5) has effect accordingly.

(7) A determination under subsection (5) is a disallowable instrument for the purposes of section 46A of the Acts Interpretation Act 1901.

67. In 2001, the Commonwealth Government introduced the IGA.

68. Explanatory Memorandum to the IGA (EM) emphasises that the Government is ‘concerned that new interactive technology, such as the Internet and datacasting has the potential to greatly increase the accessibility to gambling and exacerbate problem gambling among Australians’. There are several key sections of the document set out below. With regards to the definition of ‘gambling service’, the EM notes (at pg 26-27):

Two individuals merely having a bet over the Internet would not be a gambling service.

The question of what is the sole or dominant purpose of a service for the purposes of paragraph (b) is a question of fact, which would be determined by a Court in the event of legal proceedings under the Bill.

A service that merely provides lottery results is not a service for the conduct of a lottery for the purposes of paragraph (c).

For the purposes of paragraph (e) a game played for money or anything else of value is a game played for some kind of prize which is of monetary value. An example of a game of chance is Roulette. There is no skill involved in a game of Roulette. An example of a game of mixed chance and skill is Blackjack.

The reference to a game of mixed chance and skill is not intended to include games that would generally be regarded to be games of skill even though it could be argued that the outcome of the game might be affected by chance. For example an on-line competition on knowledge of Australian history should be regarded as a game of skill even though it could be argued that there is an element of chance in relation to the questions that are asked. Similarly an interactive television based quiz game which requires competitors to answer general knowledge questions will not be covered as it does not involve mixed chance and skill. It should be regarded as a game of skill.

Similarly a network electronic game like Quake, a game for one or multiple players, should be regarded as a game of skill even though it could be argued that there is an element of chance in relation to game play. For example there are elements of chance in that a player won’t be aware of what another player might do and then may act in anticipation of what the other player might do.

Paragraph (f) is intended to ensure that any gambling service not specifically provided for in paragraphs (a)-(e) is subject to the Bill.

Guidance as to the ordinary meaning of “gambling” can be obtained from the Encyclopaedia Britannica which defines “gambling” as “the betting or staking of something of value, with consciousness of risk and hope of gain, on the outcome of a game, contest, or an uncertain event whose result may be determined by chance or accident or have an unexpected result by reason of the bettor’s miscalculation.”

…

A gambling service is an integral part of the meaning of an ‘Australian-based interactive gambling service’ in clause 5. This in turn is an integral part of the offence provision in clause 15.Consequently if a service does not come within the meaning of a gambling service in clause 4, then it cannot be an Australian-based interactive gambling service and therefore will not be covered by the offence provision in clause 15 of the Bill.

69. Section 8A was not initially included in the first draft of the IGA. However under clause 10, the Minister was able to determine that each service in a specified class of services is an exempt service for the purposes of the Bill (EM pg 36). After the Bill had been read, there were a number of proposed amendments.

70. A consequential Supplementary Explanatory Memorandum (SEM) was read into Parliament. Section 8A was added to the new Bill providing that certain services or products would be ‘excluded’ from the prohibition. The SEM outlined the proposed Government amendments to the first version of the Bill (pg 1-2):

The proposed Government Amendments to the Interactive Gambling Bill 2001:

•   Exempt lotteries from the scope of the Bill;

•   Exempt wagering from the scope of the Bill;

•   Clarify that television games and trade promotions are exempt from the scope of the Bill;

•   Clarify that linked jackpot gaming machines and other gaming services that are provided to customers who are in a public place are exempt from the scope of the Bill;

…

Exemption of lotteries

The proposed amendments to Part 1 of the Bill…give effect to the Government decision to exempt lotteries by clarifying that a gambling service does not include a service for the conduct of a lottery or a service for the supply of lottery tickets. The exemption of lotteries reflects the majority report on the Bill by the Senate Legislation Committee on Environment, Communications, Information Technology and the Arts, which recommended that the Bill by the Senate Legislation Committee on Environment, Communications, Information Technology and the Arts, which recommended that the Bill be amended to exclude lotteries and lotto. The exemption also reflects the 1999 Productivity Commission report on gambling industries, in which the Commission found that there is minimal problem gambling behaviour associated with lotteries.

The lottery exemption does not, however, cover electronic forms of scratch lotteries or other instant lotteries…This reflects Government concerns that electronic forms of instant lottery products offer a potential avenue for ‘instant’ gambling which is not unlike Internet-based poker machines, and therefore should be banned by the Bill.

Exemption of wagering

The proposed amendments to Part 1 of the Bill...give effect to the Government decision to exempt wagering from the scope of the Bill, with the exception of ball-by-ball or micro-event wagering, which will continue to be within the scope of the prohibition. This reflects the operation of the Interactive Gambling (Moratorium) Act 2000, which exempted wagering before an event had commenced from the operation of that Act. The removal of wagering from the Bill recognises that Internet wagering is essentially a substitute for telephone betting, and the racing industry – one of Australia’s largest employers- already relies on the delivery of services through Internet wagering, especially in regional areas.

71. Of the new clause 8A and the definition of ‘excluded wagering service’ the SEM noted (pg 10-12):

For the purpose of new clause 8A, wagering services are different to gaming services. Wagering is focused on a bet on an event or contingency while gaming is focused on playing games of chance for money or something else of value. In a wager, the bettor usually does not participate in the actual event or contingency. In contrast, interactive gaming involves the bettor in the game.

Paragraphs 8A(1)(a) provides that an excluded wagering services is a service that relates to betting on a horse race, harness race, greyhound race or a sporting event, or a series of those races or sporting events. ‘Sporting event’ is to be given its ordinary meaning. Therefore, for example, a completed match of tennis is a sporting event, but if only a part of that match is completed, for example just one game or set, then it is not a sporting event for the purposes of subclause 8A(1).

Paragraph 8A(1)(b) provides that other wagering services that relate to betting on an event, a series of events, or a contingency are also excluded wagering services. In this context, a wager includes a bet on any outcome or event. For example, a bet on the weather for a particular day would be a wager for the purposes of this paragraph.

Paragraph 8A(1)(b) distinguishes an ‘event’ from a ‘series event’…For example, in the case of the game of cricket, the ‘event’ would be characterised as a single cricket match. However, the test series would be characterised as a ‘series of events’. In the game of tennis, an individual tennis match would be an ‘event’. However a tennis tournament, such as the Australian Open, would be characterised as a ‘series of events’.

…

Subclause 8A(2) is intended to exclude from the definition of ‘excluded wagering service’ types of continuous wagering, such as real-time ‘ball-by-ball’ betting on interactive television, that could evolve into highly addictive and easily accessible forms of interactive gambling. Another type of continuous wagering is ‘betting on the run’, where a person bets after an event has commenced on the outcome of that event. An example of betting on the run is where a person bets on who will win a football match after that match has already started (for instance, at half time).

….

Paragraphs 8A(3)(a) and (b) provide that a service for the conduct of a scratch lottery or other instant lottery, or the service for the supply of tickets in a scratch lottery or other instant lottery is not an excluded wagering service for the purposes of clause 8A. Paragraph 8A(3)(c) provides that a service relating to the betting on the outcome of a scratch lottery or other instant lottery is not an excluded wagering service for the purposes of clause 8A. Paragraphs 8A(3)(a) to (c) relate to excluded lottery services in the new clause 8D and ensure that services which are properly characterised as interactive lottery services do not come within the exemption provided in new paragraph 5(3)(aa) of the Bill. For example, the betting on the outcome of an electronic instant scratch ticket service would not be excluded wagering service and will still be subject to the offence provision in clause 15 of the Bill.

Paragraph 8A(3)(d) provides that a service for the conduct of a game covered by paragraph (e) of the definition of ‘gambling service’ in clause 4 of the Bill is not an excluded wagering service for the purposes of clause 8A. Games relevant to this paragraph are games played for money or anything else of value, which are of chance or mixed skill and chance and involve the customer giving consideration to play or enter the game. Examples of such games include roulette and games played on poker machines. There is no skill involved in these games.

Paragraph 8A(3)(e) provides that a service that relates to betting on the outcome of a game of chance or of mixed chance and skill is not an excluded wagering service for the purposes of clause 8A.

For example, an interactive gambling service which involves a game of virtual roulette, or bet on the outcome of the spin of a virtual roulette wheel, would not be an excluded wagering service and will still be subject to the offence provision in clause 15 of the Bill. This ensures that services which are properly characterised as interactive gaming services do not come within the exemption provided in new paragraph 5(3)(aa) of the Bill.

72. The Second Reading Speech on the amended Interactive Gambling Bill 2001 given 28 June 2001 noted (pg 25334):

…With the Interactive Gambling Bill 2001, the government is taking a stand to prevent the escalation of the harmful effects of gambling on the Australian community. Australia is already a world leader in the problem gambling stakes and, of course, among the number of serious problem gamblers are many of the states of Australia. In 1999, the Productivity Commission found that there were some 290,000 problem gamblers in Australia with 130,000 classified as severe and the likelihood of the introduction of interactive services was regarded as constituting a quantum increase in accessibility.

…

The government is very concerned about the potential for interactive gambling services to increase problem gambling in Australia. While it is a matter for individual countries to decide how they will approach interactive gambling, Australia's status as one of the world's leading problem gambling nations demands that we take decisive action to protect the most vulnerable in the community. It is fair to say that over recent weeks and months there has been enormous public discussion about the ramifications of the government's approach and about precisely what constitutes serious forms of gambling, to what extent they are repetitive and addictive, and to what extent they will exacerbate social misery…

We have made some modifications that have recognised that there are degrees of social seriousness in what can occur through interactive technology. Certainly, sports betting or wagering comes into the category of activities in which a lot of people might kid themselves that they have more skill than is demonstrated in the real world—nonetheless, we all live in hope. Many sporting activities do not fall into the mindlessly repetitive category. Similarly, one can draw a significant distinction between products like instant scratchies and keno type activities in which there is a very high turnover and in which you are able sometimes to win but, more often, lose a lot of money in a very short time. Accordingly, the government is prepared to draw those distinctions and to focus on the serious area of social misery, where there are very few redeeming features and where people are almost certain to lose their money. They might win in the short term—I suppose that everyone has had the experience of cracking a jackpot—but, if you stay around for a bit longer, you will normally give it all back. There is no doubt at all that the billions of dollars that are lost from that sort of activity are lost because of the proliferation of mindless and repetitive activity.

…

There have been a number of people on our side who have made very sensible contributions and refinements, and I pay tribute to Senator Tambling for his willingness to address this issue in a way that I think does achieve the central outcomes. We are not in the business of simply protecting people because of the pressure that is brought to bear; we are in the business of trying to identify what the social problems are and what governments can do about them. I would also say that people like Senator Boswell and Cameron Thompson, the member for Blair, have also been very active in taking a very close look at the difference between general lottery activities and things like scratch-its. Whilst there might be a benefit to some from the decision to exempt those products from the exemption, the fact remains that there is a very significant qualitative difference.

The bill will make it an offence for gambling operators to provide their services to persons located in Australia, and fines of over $1 million a day will apply to bodies corporate. The bill will also establish a complaints scheme for interactive gambling services hosted offshore. Australians will be able to make complaints to the Broadcasting Authority about offshore gambling services on the Internet and have these services added to approved Internet content filtering devices. The ban will apply to online casino gaming and similar services, and these include current and future services such as Internet casinos, Internet poker machines, ball by ball wagering on sporting events via a digital broadcast and online instant lotteries. All of these services have repetitive and potentially addictive qualities which are associated with problem gambling. Interactive betting after a sporting event has commenced will be within the prohibition. This means, for example, that customers will not be able to place bets on a football, tennis or cricket match after the match has commenced. We are all familiar with spread betting and ball by ball activities, which I think are just a manifestation of antisocial behaviour.

73. The IGA was amended several times over following years. Although not necessary to detail all the amendments in full, it is helpful to outline some of the more substantial changes.

74. In 2017, the IGA was amended by the Interactive Gambling Amendment Act 2017 (Cth), the amendments were primarily directed at enhancing ACMA’s enforcement of the IGA and introducing a civil penalty regime. The Explanatory Memorandum to that Bill noted (pg 51):

Section 5 of the IGA contains a number of excluded services that are not interactive gambling services and are therefore not prohibited under the IGA. One of these is an excluded wagering service, as defined in section 8A of the IGA.

Section 8A of the IGA currently defines an excluded wagering service as a service to the extent to which it relates to betting on, or on a series of, or on a contingency that may or may not happen during, any or all of the following: a horse race; a harness race; a greyhound race; or a sporting event (see subsection 8A(1)). However, under subsection 8A(2), an excluded wagering service will not include a service which relates to betting on the outcome of a sporting event, where the bets are placed, made, received or accepted after the beginning of the event; or betting on a contingency that may or may not happen in the course of a sporting event, where the bets are placed, made, received or accepted after the beginning of the event.

Item 26 would repeal the current definition of excluded wagering services under section 8A and insert a new definition.

The amendments to the definition of excluded wagering services in section 8A are largely intended to simplify the drafting of the definition, without substantially changing the effect of the provisions, other than as described below.

Under existing subsection 8A(1A), regulations may specify additional conditions for what constitutes an excluded wagering service for the purposes of subsection 8A(1). Under the amended definition, the Minister would be empowered to determine conditions for that purpose by legislative instrument under proposed subsections 8A(2) (in relation to racing), 8A(4) (in relation to sporting events) and 8A(6) (in relation to other events and contingencies).

Proposed subsection 8A(7) would provide that for the purposes of the application of paragraph 8A(5)(a), which provides that a service is an excluded wagering service to the extent that it relates to betting on an event, series of events or a contingency, and is not covered by subsection 8A(1) or 8A(2), it is to be assumed that no conditions have been determined under subsection 8A(2) or 8A(4), and paragraph 8A3(b) is to be disregarded.

75. The Second Reading speech noted (pg 3454):

The bill will prohibit a person providing regulated interactive gambling services to Australians unless the person holds a licence under the law of an Australian state or territory. This amendment will clarify the licensing requirements for interactive gambling services in Australia and will provide a simple to establish key criterion for enforcement agencies when investigating whether to take action against unlicensed services. It is expected that reputable gambling organisations will obtain a licence in Australia or cease providing illegal services.

76. Following this amendments were made to the Bill, primarily exempting ’on-course bookmakers’ from the general prohibition from wagering operators (page 2 of the Supplementary Explanatory Memorandum to the Bill). The Act passed and amended the IGA, clarifying the definition of ‘excluded wagering service’ under s 8A.

77. In 2018, the IGA was amended by the Interactive Gambling Amendment (Lottery Betting) Act 2018. The Explanatory Memorandum to that Bill, explains that the amendment is intended to prohibit the betting on the outcome, or a contingency that may or may not happen in the course of the conduct, of a lottery (pg 2):

Lottery betting services (also referred to as ‘synthetic lotteries’) allow customers to bet on the outcome of a lottery draw without the need to purchase a ticket in the official lottery draw. These services will match prizes for each tier including the jackpot that the official lottery operator would have paid to a customer if they had won with an official lottery ticket through that service. Unlike official lottery draws, ticket sales will not cover major payouts; instead these are covered by insurance policies.

…

Lottery draws are permitted under the IGA as there is a small number of draws conducted each week with a considerable break between each draw. On the contrary, lottery betting services allow consumers to bet on the outcome of up to 25 lottery draws being conducted around the word on a weekly basis, with the promise of massive jackpots up to hundreds of millions of dollars, which could lead to problem and at-risk gambling.

78. On the amendments to the IGA (pg 4-5):

The Bill repeals subparagraph 8A(5)(c)(iii) of the IGA and substitutes two new subparagraphs ((5)(c)(iii) and (5)(c)(iiia)) referring to: a service relating to betting on the outcome of a lottery service; and, a service relating to a betting on a contingency that may or may not happen in the course of the conduct of a lottery. It also inserts new paragraphs 8AA(1)(aa) and (1)(ab), which would provide that a service is only a telephone betting service to the event that it is not: a service for betting on the outcome of a lottery; and, the services does not relate to betting on a contingency that may or may not happen in the course of the conduct of a lottery.

A ‘contingency that may or may not happen in the course of the conduct of a lottery’ would include, for example, the drawing of a particular number at a particular position, the first three numbers drawn, or the drawing of a particular ‘bonus’ number.

…

The effect of the Bill is that to the extent that a service relates on betting on the outcome of any lottery, or a contingency that may or may not happen in the course of the conduct of a lottery, these services will be prohibited interactive gambling services under the IGA.

79. The Second Reading Speech to the Bill notes (pg 3054):

The intent of the Interactive Gambling Act is to minimise the scope of problem gambling in Australia by limiting the types of interactive gambling services to Australians. Lottery betting services allow consumers to bet on the outcome of up to 25 lottery draws being conducted around the world each week, with the promise of massive jackpots ranging in the hundreds of millions, which could lead to problem and at-risk gambling.

This bill will prohibit the provision of lottery and keno betting services to customers physically present in Australia. It will also prohibit the betting on a ‘contingency that may or may not happen in the course of the conduct of a lottery’ to ensure that bets cannot be accepted on the outcome, or any aspect, of a lottery or keno draw.

80. Subsequently, the IGA was amended, adding ss 8A(5)(c)(iii) and (iiia).

Legal principles

81. Before addressing some of the operative sections of the legislation, it is important to set out some of the relevant definitions:

Bet includes wager

Gambling service means:

(a)   a service for the placing, making, receiving or acceptance of bets; or

(b)   a service the sole or dominant purpose of which is to introduce individuals who wish to make or place bets to individuals who are willing to receive or accept those bets; or

(c)   a service for the conduct of a lottery; or

(d)   a service for the supply of lottery tickets; or

(e)   a service for the conduct of a game, where:

(i)   the game is played for money or anything else of value; and

(ii)   the game is a game of chance or of mixed chance and skill; and

(iii)   a customer of the service gives or agrees to give consideration to play or enter the game; or

(f)   a gambling service (within the ordinary meaning of that expression) that is not covered by any of the above paragraphs

Game includes an electronic game

Wagering service meaning a service covered by paragraph (a) or (b) of the definition of gambling service

82. Section 15 of the IGA, operates to prohibit interactive gambling services in Australia:

15 Prohibited interactive gambling services not to be provided to customers in Australia

(1)   A person commits an offence if:

(a)   the person intentionally provides a prohibited interactive gambling service; and

(b)   the service has an Australian-customer link (see section 8)

Penalty:   5,000 penalty units.

(2)   A person who contravenes subsection (1) commits a separate offence in respect of each day (including a day of a conviction for the offence or any later day) during which the contravention continues

(2A)   A person must not provide a prohibited interactive gambling service that has an Australian-customer link (see section 8).

Civil penalty:   7,500 penalty units.

(2B)   A person who contravenes subsection (2A) commits a separate contravention of that provision in respect of each day during which the contravention occurs (including the day the relevant civil penalty order is made or any later day).

(3)   Subsections (1) and (2A) do not apply if the person:

(a)   did not know; and

(b)   could not, with reasonable diligence, have ascertained;

That the service had an Australian-customer link.

…

83. Section 8 describes an Australian-customer link:

8   Australian-customer link

For the purposes of this Act, a gambling service has an Australian-customer link if, and only if, any or all of the customers of the service are physically present in Australia.

84. Section 5 provides the definition of prohibited interactive gambling services:

5   Prohibited interactive gambling services

(1)   For the purposes of this Act, a prohibited interactive gambling service is a gambling service, where:

(a)   the service is provided in the course of carrying on a business; and

(b)   the service is provided to customers using any of the following;

(i)   an internet carriage service;

(ii)   any other listed carriage service;

(iii)   a broadcasting service;

(iv)   any other content service;

(v)   a datacasting service.

(2)   Subsection (1) has effect subject to subsection (3)

(3)   For the purposes of this Act, none of the following services is a prohibited interactive gambling service:

(a)   a telephone betting service;

(aa)    an excluded wagering service (see section 8A);

(ab)   an excluded gaming service (see section 8B);

(aba)   a place-based betting service (see section 8BA);

(ac)   a service that has a designated broadcasting link (see section 8C);

(ad)   a service that has a designated datacasting link (see section 8C);

(ae)   an excluded lottery service (see section 8D);

(b) a service to the extent to which it relates to the entering into of contracts that are financial products within the meaning of Chapter 7 of the Corporations Act 2001;

(ba)   a wholesale gambling service;

(bb)   a trade promotion gambling service (see section 8BB);

(c)   an exempt service (see section 10).

85. As noted above, a ‘gambling service’ is defined in the Dictionary in s 4.

86. For the purposes of this matter, the dispute concerns whether the Impugned Products are an excluded wagering service under s 8A. If they are an ‘excluded wagering service’ they will not be an interactive gambling service and not be in breach of the prohibition:

8A   Excluded wagering service

(1)   For the purposes of this Act, a service is an excluded wagering service to the extent which the service relates to betting on, or on a series of, any or all of the following:

(a)   a horse race;

(b)   a harness race

(c)   a greyhound race;

So long as the other conditions (if any) determined under subsection (2) have been satisfied.

(2) The Minister may, by legislative instrument, determine one or more conditions for the purposes of subsection (1)

Sporting events

(3)   For the purposes of this Act, a service is an excluded wagering service:

(a)   to the extent to which the service relates to betting on, or on a series of, sporting events; and

(b)   to the extent to which the service is not an in-play betting service;

So long as the other conditions (if any) determined under subsection (4) have been satisfied.

(4)   the Minister, may, by legislative instrument, determine one or more conditions for the purposes of subsection (3)

Other events or contingencies

(5)   For the purposes of this Act, a service is an excluded wagering service:

(a)   to the extent to which the service relates to betting on:

(i)   an event; or

(ii)   a series of events; or

(iii)   a contingency;

That is not covered by subsection (1) or (3); and

(b)   to the extent to which the service is not an in-play betting service; and

(c)   to the extent to which the service is not covered by any of the following subparagraphs:

(i)   a service for the conduct of a scratch lottery or other instant lottery;

(ii)   a service for the supply of tickets in a scratch lottery or other instant lottery;

(iii)   a service relating to betting on the outcome of a lottery;

(iiia)   a service relating to betting on a contingency that may or may not happen in the course of the conduct of a lottery;

(iv)   a service for the conduct of a game covered by paragraph (e) of the definition of gambling service in section 4;

(v)   a service relating to betting on the outcome of a game of chance or of mixed chance and skill;

So long as the other conditions (if any) determined under subsection (6) have been satisfied

(6) The Minister may, by legislative instrument, determine one or more conditions for the purposes of subsection (5).

(7)   For the purposes of paragraph (5)(a):

(a)   assume that no conditions have been determined under subsection (2) or (4); and

(b)   disregard paragraph (3)(b).

87. Of particular interest in the case is the relevant definition of ‘bet’ and ‘game’. Absent detailed or technical definitions in the Act, it is appropriate, in my view, to read the words in their natural and ordinary meaning within the context of the Act.

88. It is a common rule of statutory construction that “In determining the meaning of any word or phrase in a statute the first question to ask always is what is the natural or ordinary meaning of that word or phrase in its context in the statute” (Pinner v Everett [1969] 3 All ERD 257 per Lord Reid at 258) (see also Thompson v His Honour Judge Byrne & Ors (1999) 196 CLR 141 at 158 per Gaudron J; Maunsell v Olins [1975] 1 All ER 16 at 18 per Lord Reid; Cody v JH Nelson Proprietary Ltd (1947) 74 CLR 629 at 646-648 per Dixon J).

89. In such a situation, it is helpful to turn to the Dictionary definitions to ascertain the natural and ordinary meaning. I note briefly, the comments of Mason P in House of Peace Pty Ltd v Bankstown City Council (2000) 48 NSWLR (at [28]):

A dictionary may offer a reasonably authoritative source for describing the range of meanings of a word, including obsolete meanings. Dictionaries recognise that usage varies from time-to-time and place-to-place. However, they do not speak with one voice, even if published relatively concurrently. They can illustrate usage in context, but can never enter the particular interpretive task confronting a person required to construe a particular document for a particular purpose.

90. ‘Bet’ is defined in the Macquarie Dictionary as; (1) to pledge as a forfeit to another who makes a similar pledge in return, in support of an opinion; stake; wager; (2) to predict (a certain outcome); (3) to lay a wager. The term is defined in the Oxford English Dictionary as; (1) the backing of an affirmation or forecast by offering to forfeit, in case of an adverse issue, a sum of money or article of value, to one who by accepting, maintains the opposite, and back his or her opinion by a corresponding stipulation; the staking of money or other value on the event of a doubtful issue; a wager; also, the sum of money or article staked; an amount staked on the result of a card-game; (2) to stake or wager (a sum of money, etc.) in support of an affirmation or on the issue of a forecast; to lay wager.

91. Of particular note, ‘bet’ as defined in the IGA Dictionary includes a ‘wager’. ‘Wager’ is defined in the Macquarie Dictionary as; (1) something staked or hazarded on an uncertain event; a bet; (2) the act of betting; (3) the subject of a bet. ‘Wager’ in the Oxford English Dictionary is; (1) a solemn pledge or undertaking; (2) something (esp. a sum of money) laid down and hazarded on the issue of an uncertain event; a stake; the prize to be won in a contest; (3) an agreement or contract under which each of the parties promises to give money or its equivalent to the other according to the issue of an uncertain event; a betting transaction; (4) to stake or hazard (something of value) on the issue of an uncertain event or on some question to be decided, to bet.

92. ‘Game’ is defined in the Macquarie Dictionary as; (1) an amusement or pastime; (2) the apparatus employed in playing any of certain games; (3) a contest for amusement in the form of a trial of chance, skill, or endurance, according to set rules; a match. It is further defined in the Oxford English Dictionary as; (1) amusement generally; amusement, sport, fun, pleasure, enjoyment; (2) an activity which provides amusement or fun; (3) jest, sport.

93. Although the primary matter for determination before me concerned the statutory construction of the relevant provisions, I consider some assistance can be gleaned from the older authorities as to the determination of particular definitions in question. Of course the particular sections in question here have not been subject to judicial consideration.

94. There was significant discussion on the history of the interpretation of ‘bet’, beginning with the traditional understanding that all contracts for bets were to be regarded as null and void; Thacker v Hardy (1878) 4 QBD 685 (at 695):

The essence of gaming and wagering is that one party is to win and the other party to lose upon a future event, which at the time of the contract is of an uncertain nature - that is to say, if the event turns out one way A will lose, but if it turns out the other way he will win.

95. In Carlill v Carbolic Smoke Ball Company [1892] 2 QB 484, one of the issues in dispute was whether the contract was in fact a ‘bet’ and therefore void. Hawkins J found that the contract was not a ‘wagering’ contract (at 490):

It is not easy to define with precision what amounts to a wagering contract, nor the narrow line of demarcation which separates a wagering from an ordinary contract; but, according to my view, a wagering contract is one by which two person, professing to hold opposite views touching the issue of a future uncertain event, mutually agree that, dependent upon the determination of that event, one shall win from other, and that other shall pay or hand over to him, a sum of money or other stake…It is essential to a wagering contract that each party may under it either win or lose, whether he will win or lose being dependent on the issue of the event, and therefore, remaining uncertain until that issue is known.

96. This position has not been without controversy however. The High Court in Automatic Totalisators Ltd v Federal Commissioner of Taxation (1920) 27 CLR 513, did not consider that it was essential that one party must either win or lose (at 518):

A person investing on the totalisator selects the horse on which he wishes to invest his money, and, presumably, in doing so forms a judgment to the best of his ability, having regard to his knowledge and experience, and to such information as he may acquire, as to the probability of that horse winning the race. In such a transaction the investor exercises his own volition with respect to the horse which he desires to back, and eliminates all chances except those inseparable from the event of the race and the amount of the dividend. The transaction undoubtedly amounts to a bet, and substantially only differs from a bet made with a bookmaker in that in the one case the fund out of which the winner is to be paid is made up by mutual contributions of investors and the rate of odds is determined by the amounts invested on the respective horses, while in the other case the winners are paid the amount of their winnings out of the money of the bookmaker and the bookmaker determines the rate of odds.

97. Carlill has further had a mixed reception in subsequent English authorities in relation to the meaning of ‘bet’; see e.g.; Earl of Ellesmere v Wallace [1929] 2 Ch 1 at 25-26 per Lord Hanworth HR; at 36 per Lawrence J and 49 per Russell LJ; Tote Investors Ltd v Smoker [1968] 1 QB 509 at 516 per Denning MR; at 158 per Wilberforce L.

98. In the NSW Court of Appeal in Petranker v Brown (1984) 2 NSWLR 177, the judgement exposed divergent understandings of the term ‘bet’. There Samuel JA focused on whether there was one party that won and another that lost (at 181), whereas Priestly JA considered that to ‘profess a view’ was the essential element (at 195).

99. One particular case which was drawn to my attention was Waterhouse v Racing Appeals Tribunal [2002] NSWSC 1143. In that case, Young CJ in Eq considered the concept of a ‘bet’ and discussed the previous authorities on the matter (at [35]-[37]):

As to the modification required by the High Court's judgment in the Totalisator case, it is odd that outside Victoria the Totalisator case has been ignored. In Attorney General v Luncheon & Sports Club Ltd [1929] AC 400, the House of Lords was not referred to the Totalisator case and came to the opposite opinion, that is, that if a club operates a totalisator, it is not betting with the person who makes the investment. The same view was reached by the English Court of Appeal in Tote Investors Ltd v Smoker [1968] 1 QB 509. Again, the Totalisator case was not cited to the court. This line of case was followed in a lotto case in the New South Wales Court of Appeal in Petranker v Brown [1984] 2 NSWLR 177, again without any reference to the High Court or Victorian authorities in either arguments or judgment. I believe I have to follow what the High Court said and on this basis the definition given by Hawkins J has to be modified, but in this respect it does not affect the current case.

If there is an essential element in a bet, it is that "a bet is something staked to be lost or won on the result of a doubtful issue …": the Luncheon & Sports Club case at 405.

Accordingly, what one must look for is a situation where there are two sets of persons professing to hold opposite views touching the issue of a future uncertain event mutually agreeing that dependent upon the determination of an event one shall win from the other or from a pool and the other or the pool shall lose.

Mr Brereton accepts that there must be a bipartite transaction where the parties profess different views about the outcome of an uncertain event. As to professing he says that it was common ground before the Panel (although not before the Stewards), that it mattered not that the parties subjectively held the same view as the outcome, or probable outcome, of the event as the word "profess" connotes an assertion, not a belief. He cites Petranker v Brown at 181 and 195 to support this view, but I'm not too sure that it does. However, I would agree with the general proposition that when one is making a bet on a horse in a race one does not necessarily have to be convinced in one's heart that the horse is going to win. One may, if a punter, have picked the horse by intuition, or it may be that the betting on the horse is part of a system in order to control possible losses.

There are two prime dictionary meanings to the word "profess", the first is "pretend" which obviously does not fit in the current context, and the second is "to declare openly, announce or affirm, avow or acknowledge" (Macquarie Dictionary). Even if one does not subjectively believe in the validity of the cause, the word "profess" carries with it the idea that one must actually say it or acknowledge it. Indeed, this point was made by Priestley JA in the Petranker case at 195 that, for instance, a machine providing six numbers for a lotto coupon was not a bet because no-one was professing that those six numbers would win.

Mr Brereton says that there is no difficulty about the bookmaker as agent professing the opinion that a horse will win and the bookmaker as bookmaker professing that it will not and making a bet. He points by way of analogy to the decision of the English Court of Appeal in Limako BV v Hentz & Co Inc [1979] 2 Ll LR 23. That was a commercial case involving options to purchase cocoa on the cocoa market where the rules were that if certain things happened, a broker was able to buy from itself as agent for the principal in order to make a contract. The English Court of Appeal perceived no difficulty with that concept. I should add that it is certainly not unusual for a party such as a mortgagee to be given power of attorney by the mortgagor to act in certain events even though that may involve the mortgagee as principal making a contract with itself as agent.

Mr Brereton also draws attention to LR94 which contemplates that a bookmaker may take a commission or request for the placement of a bet on a horse. I do not think that this takes us very much further because the commission is to place a bet on a horse, not for the bookmaker as agent to be authorised to select the horse.

Mr Brereton then says that in DPP v Coster, Supreme Court of Victoria, Ashley J, 8 August 1994, his Honour held that a magistrate's dismissal of a charge of using premises for betting was correct in a case where a licensed bookmaker received phone requests to place bets on course. The punter provided the names of the horses and the amount, but was not provided with any odds or prices. Mr Brereton says this case shows it is unexceptional practice of a bookmaker placing with himself bets on behalf of a punter with the punter's authority when the odds are not known.

I appreciate the strength of all these arguments, but it does seem to me that to accept them would be to get completely away from the basal concept of a bet, that is where A professes that a certain event will happen and stakes money on his or her profession and B accepts that he or she will lose money to A if that event happens. I can understand the situation where the odds on which the bet is to be placed are left up to the bookmaker but I consider that where the event is left to the agent as well as the amount and the odds, then there is not a transaction that would come within the definition of bet. I do not consider that one can improve the situation by dealing with cases where an agent has authority to complete a transaction on behalf of a principal even though the transaction is with the agent himself.

100. It should be noted however that the decision in Waterhouse was based on a particular set of factual circumstances quite different from the situation currently before me.

101. In addition there are several English authorities on the definition of ‘game’ that were referred to me by the parties. In Armstrong v DPP [1965] 1 AC 1262, the House of Lords held that a weekly postal bingo was not a ‘game’ because obtaining a set of numbers and then waiting for a result did not involve the degree of participation necessary to characterise the activity as a game. Relevantly Lord Pearson held (at 1283):

The only choice made by a member in relation to the weekly operation would be to enter for the lottery with one or more of its cards. Similarly, a person might choose to enter for a sweepstake, buying one or more tickets. There was nothing at this stage which could reasonably be regarded as the playing of a game.

…

The members could, if they so desired, hear on Radio Luxembourg the purported game of bingo, which was in effect, as the magistrates have found, only a dramatic form of announcing the sequence of numbers which had been drawn on a previous day. This could not reasonably be regarded as the playing of a game by the members. The game was already finished. The members hearing the radio programme were being given the information from which each one could ascertain whether he had won or not. He would not be any more or less of a winner by reason of his hearing or not hearing the programme.

114. The Impugned Products will not be considered an ‘excluded wagering service’ if they fall within one of the categories in s 8A(5)(c). The Impugned Products are clearly not for the conduct of, or supply of tickets in a scratch lottery or other instant lottery (ss 8A(5)(c)(i) or 8A(5)(c)(ii)). The products are further not a service relating to betting on the outcome of a lottery, or a contingency that may or may not happen in the course of a lottery (ss 8A(5)(c)(iii) or 8A(5)(c)(iiia)). There are no relevant conditions to be determined under ss 8A(6).

Submissions

Plaintiff

122. The Plaintiff submits that the Impugned Products are not in contravention of the prohibition against interactive gambling services in s 15(2A) because they fall within the definition of ‘excluded wagering services’ found in s 8A (Plf sub [29]).

123. At the outset, the Plaintiff notes that as the provisions in question are part of a penal provision and should be construed strictly (Plf subs in reply [3]).

The Impugned Products are services that relate to betting on an event, a series of events or a contingency (s 8A(5)(a))

124. The Plaintiff submits that the Impugned products relate to betting on ‘an event, series of events or contingency’ within s 8A(5)(a), in particular the products relate to betting on a ‘series of events’ (Plf subs [33]). The ‘series of events’ is the opening values of the relevant financial indices. Movements in the levels of financial indices are generally acknowledged as ‘events’ (Plf subs [35]).

125. The Plaintiff submits that the term ‘bet’ in the IGA does not require that a person profess a view, it is merely the ‘hazarding of money upon a contingency’ (T5/29). It is in fact common practice to make random wagers were no particular view is held. (Plf subs in reply [11]). The Plaintiff refers to the ‘mystery trifecta’ that involves betting on horse racing without expressing any view (Plf subs in reply [13]). In particular the Plaintiff notes that the SEM makes it clear that there was no intended limitation on the kinds of outcomes or events which could be made the subject of bets by virtue of s 8A(5)(a) (Plf subs [34]).

126. The Plaintiff states that the dictionaries provide only “illusory comfort” as to common usage, and do not provide a basis for a conclusion as to the legal meaning of a term (Plf subs in reply [12]).

127. Further, the structure of s 8A does not suggest that ‘bet’ involves ‘professing a view’. In particular a ‘scratch lottery or other instant lottery’ cannot be said to involve ‘professing a view’, yet the draftsperson clearly contemplated that a ‘service relating to betting’ may encompass a ‘service for a scratch lottery’. This is apparent from text of s 8A(5)(c) which notes “to the extent which the service is not covered by any of the following paragraphs”, all of the subparagraphs are therefore logically matters which, but for the carve out, would be regarded as betting services under s 8A(5)(a) (Plf subs in reply [15]). This is further supported by the term ‘betting’ used in 8AA(1) with respect to a lottery (T5/34).

128. The Plaintiff points to the somewhat ambiguous definition of ‘bet’ in various English and Australian authorities. The Plaintiff submits that based on the authorities, the court should not consider that to ‘profess a view’ is an essential element of bet (Plf subs in reply [26]).

129. In any case, if ‘bet’ does require one to form a view, the Plaintiff submits that customers using the Impugned Products do possess such a view. The Plaintiff notes that there is no evidence that customers do not turn their mind to the outcome of the financial indices. Moreover, when using the products the website now does invite customers to consider the financial markets (Plf subs [29]-[33]).

The Impugned products do not fall within ss 8A(5)(c)(iv) or 8A(5)(c)(v)

130. The Plaintiff submits that the Impugned Products cannot be captured under ss 8A(5)(c)(iv) or 8A(5)(c)(v) because the products cannot be characterised as ‘games’ within the meaning of the IGA (Plf subs [42]).

131. The Plaintiff notes that there is no definition of ‘game’ in the IGA (aside from ‘game including an ‘electronic game’) but notes that the dictionary definitions of the term involve three elements; a contest, players, and rules. The Plaintiff submits that the Impugned Products do not involve any of these elements (Plf subs [43]).

132. The Plaintiff supports this construction by reference to the EM and SEM, as well as several English cases. The Plaintiff notes that the specific examples of games given in the EM, such as roulette, blackjack, or an interactive television-based quiz game, demonstrate the legislature was not striving towards a catch-all definition of ‘game’ (Plf subs [45]). These examples share certain features regarded as typical in games; there is interaction, the game is dynamic, and the game is run according to set rules or procedures (Plf subs [45]). Further these features have been considered important by various English authorities (Plf subs [46]-[52]).

133. The Plaintiff further notes that the SEM draws a specific contrast between a ‘game’ and a ‘wager’. The Plaintiff submits that when a customer does not participate in the actual event or contingency, the activity is properly characterised as a bet or wager, rather than a game (Plf subs [55]).

134. The Plaintiff notes that in the Impugned Products there is no interaction between ‘players’, and there is no communication between different customers. Customers are not able to ascertain any other customers’ selected numbers, nor are any winnings contingent on participation of other customers. There is no participation by ‘players’ in the activity which is the subject of the wager (that is the financial market indices). Further, there are no rules or procedures that govern the outcome of the wager, only the terms and conditions of Lottoland which only relate to the actual placing of the bet (Plf subs [56]). The absence of features common to games in the Impugned Products, such as participation, interaction and rules, supports a finding that the products cannot be characterised as ‘games’ (Plf subs [57]).

135. In particular, the Plaintiff submits that the process of ‘mapping’ is not rules that govern a game, but is rather a long list of correlations. The correlation between the Result IDs and the Customer Numbers are fixed and ascertainable (Plf subs [59]).

136. The Plaintiff submits that the background and legislative history of the IGA indicate that the Act was concerned only with prohibiting ‘continuous’ or ‘instant’ betting, and micro-wagering. The legislature made specific ‘carve outs’ of the sort of ‘instant’ gambling that was to be exempt from the exclusion. This background militates against an expansive definition of ‘game’ (Plf subs [63]-[69]). The Plaintiff submits that the Impugned Products do not have these ‘instant’ and ‘continuous’ features, rather bets placed using the products are on events that only happen at most once per day. The products are not, therefore, the type of gambling that the prohibition was intended to cover (Plf subs [70]), and a broad construction of the term ‘game’ would therefore not be consistent with the legislative purpose behind the IGA (Plf subs in reply [37]).

137. The Plaintiff points to significant differences between the Impugned Products and roulette; namely roulette involves a croupier, a spinning wheel, and significant fanfare (Plf subs in reply [45]).

138. The Plaintiff submits that the issue is not advanced by analysis of whether the Impugned Products are “games of chance” or “games of mixed chance or skill”. Rather it is the content of the term ‘game’ which is significant (Plf subs in reply [35]).

139. The Plaintiff further submits, that the broad definition contended for by ACMA, would devoid s 8A(5) of meaning. Under the broad definition, nearly any activity would be capable of being described as ‘game’. Moreover virtually any bet involves some kind of choice and some mechanism for determining a winner, but every bet should not be considered a game. The words of an act must be given some meaning (Plf subs in reply [40]-[42]). Further there is a clear distinction between a ‘game’ (as in s 8A(5)(c)(iv)) and ‘betting on the outcome of a game’ (s 8A(5)(c)(v)). It follows that the legislature did not conceive that a bet on the outcome of a game was, in and of itself, a game (Plf subs in reply [46]). This is fatal to ACMA’s definition of ‘game’ as betting on the outcome of game is undoubtedly a pastime with rules and a winner (Plf subs in reply [48]).

Defendant

140. ACMA submits that the Impugned Products are in breach of the prohibition against interactive gambling in s 15 of the IGA. ACMA contends that the Impugned Products are not ‘excluded wagering services’ under s 8A as the products are not services that relate to ‘betting on an event’ for the purposes of s 8A(5)(a). Further the Impugned Products are services that fall within s 8A(5)(c)(iv) or 8A(5)(c)(v) (Def subs [9]).

The Impugned Products are not services that relate to betting on an event, a series of events or a contingency (s 8A(5)(a))

141. The Defendant contends that ‘betting on an event’ and ‘betting on a series of events’ refers to a situation where a person can be said to have professed a view as to the outcome of an event or events, and where the person stakes money on that view (Def subs [19]).

142. The Defendant states, that in the absence of a definition in the Act (aside from ‘bet includes wager’), the term must therefore bear its ordinary and usual meaning (Def sub [19]). The Defendant refers to the dictionary definition of ‘bet’, as well as the case of Waterhouse to support their view (Def sub [20];[22]).

143. The Defendant also points to the context of the subsection. They note that the other ‘excluded wagering services’ (as in ss 8A(1) and 8A(3)) are typical examples of ‘betting on events’, e.g. horse racing or sporting events. Viewed in that context, s 8A(5) was intended to apply to services which are similar to the kinds of wagering services specified in ss 8A(1) and 8A(3), that is events on which one could effectively form an opinion on (Def sub [21]).

144. The Defendant submits that the Impugned Products do not involve customers ‘betting on’ particular parts of the opening values of financial market indices in a manner that is consistent with the ordinary meaning of that phrase (Def sub [23]). Customers do not profess any view about the particular indices for the following reasons;

1. The Customer Numbers chosen by the customers are not the Result ID (Def subs [24]),

2. In presenting the Impugned Products to its customers, Lottoland does not suggest that customers choose their number by reference to the financial market indices. Customers are not directed to the Result Generator Tool when choosing a Customer Number (Def subs [25]),

3. The process by which Lottoland determines division prizes depends on partial matches between a winning Customer number and a customer’s chosen Customer Number, rather than a partial match between Result IDs and the Winning Result ID (Def subs [26]), and

4. The use of the financial market indices is not done for the purpose of customers ‘betting on’ those indices. Rather they are used to generate a random and objective set of numbers (Def subs [27]).

145. The Defendant also highlights the difference between the Impugned Products and the Daily Millions, the product that was not found to be in breach. In particular, because the Winning Result ID correlates exactly with a participant’s chosen Customer Number, the participant forms a view about the opening values of the financial indices and thus makes a bet (T46/21).In the Impugned Products, there is no correlation between the Customer Number and the financial indices, and customers do not profess a view about the financial markets. Therefore, there is no bet on an ‘event’ being the financial markets (T50/35; T52/30).

The Impugned products do fall within ss 8A(5)(c)(iv) or 8A(5)(c)(v)

146. The Defendant submits that the Impugned Products are a service for the conduct of a ‘game of chance’ or a service relating to betting on the outcome of a game of chance operated by Lottoland, and accordingly fall within ss 8A(5)(c)(iv) or 8A(5)(c)(v) of the IGA (Def subs [29]).

147. The Defendant submits that the meaning of ‘game’ for the purposes of a ‘gambling service’ in paragraph (e) of the definition, is construed by the textual limitations in sub-paragraphs (i)-(iii) (Def subs [30]). In particular, a game must constitute a “game of chance” or a “game…of mixed chance and skill”. ‘Game’ therefore means a pastime or activity which has rules, and whereby the winner is determined either by chance or by mixed chance and skill.

148. The Defendant submits that the Impugned Products can be analogised to ‘roulette’ a well-known game, as identified by the legislature (Def subs [32]). In the Impugned Products, as in roulette, the players or customers choose a set of numbers, and the winning number is randomly generated (Def subs [33]).

149. The Defendant submits that as the Impugned Products are played for monetary prizes, and because customers give consideration to play or enter, both sub-paragraphs (e)(i) and (e)(iii) are satisfied. Therefore the Impugned Products are games of chance within the meaning of paragraph (e) of the definition of ‘gambling service’ in s 4 of the Act and fall within s 8A(5)(c)(iv) (Def subs [35]).

150. The Defendant submits that the Plaintiff’s narrow construction of ‘game’ should be rejected. The authorities on which the Plaintiff relies do not establish that ‘interaction’ between players is a defining feature of a game nor that interaction is particularly important (Def subs [37]-[42]). Further, the Plaintiff’s contention that the Impugned Products do not involve any participation should also be rejected. Rather, the customers must select a set of numbers to participate in the products, in that way, the customers actively participate in the operation of the products (Def subs [43]).

151. The Defendant submits that the relevant ‘rules’ with respect to the Impugned Products, are simply the Terms and Conditions for the Impugned Products (Def subs [45]).

152. The Defendant submits that, the Plaintiff’s contention that the Impugned Products were not intended to be captured by the prohibition because they are not ‘continuous’ or ‘instant’ is not supported by the actual text of the statute (Def subs [46]-[47]). There is no textual indication in paragraph (e) or in s 8A(5)(c)(iv) that show they were intended to be limited to situations where games are played ‘continuously’ (Def subs [48];[53]). Further, there is no evidence in the legislative history of the IGA that the legislature only intended games played instantly or continuously should fall within the prohibition (Def subs [53]; [59]-[66]). Looking at the exclusions contained within the Moratorium Act, it is clear that the legislature wanted to exclude from the exclusion certain lotteries, which would not necessarily be considered ‘continuous gambling’ (Def subs [60]). Further, the SEM does not make any indication that the ‘game’ must be continuous. Rather, what was intended to be excluded from the prohibition was particular industries such as the racing industry, which was thought important for Australia’s economy (Def sub [64]-[65]).

153. The legislature deliberately chose to include specific words of limitation in relation to in-play betting and in relation to instant lotteries, it is clear that the legislature could have included such limitations in respect of ‘games’ if it had chosen (Def subs [53]). It is also not clear whether any limiting words should be read only into the particular section or apply to the Act as a whole (Def subs [54])

154. The Defendant submits that were a customer’s participation in relation to the Impugned Products to be characterised as a ‘bet’, the products would still be captured by s 8A(5)(c)(v).

Consideration

155. Generally, the provisions in the IGA are not all that easy to construe.

156. Looking to the simplified outline of the Act in s 3, it is clear that Act does not in fact prohibit many forms of gambling. While s 15 purports to prohibit all interactive gambling services, the extensive exceptions to this provision indicate rather that only a select number of services are intended to be regulated and/or proscribed. Moreover, determining what an interactive gambling service is, as well as what the various exclusions cover is not an easy task. Of particular interest of course, is the provision the subject of dispute before me, s 8A(5). While first defining certain services as excluded from the prohibition, s 8A5(c)(i)-(v) then operates to exclude from the exclusion certain specified products. It goes without saying that the exclusion from the exclusion process is cumbersome and leads to some difficulty in construction.

157. Section 8A(5) essentially requires that a particular product satisfy three elements if it is to be considered an ‘excluded wagering service’:

1. The service must be a service that relates to “betting on” an event, series of events, or a contingency, that is not covered by s8A(1) or 8A(3);

2. The service must not be an in-play betting service;

3. The service must not be covered by any of the following;

1. A service for the conduct of a scratch lottery or other instant lottery,

2. A service for supply of tickets in a scratch lottery or other instant lottery,

3. A service relating to betting on the outcome of a lottery,

4. A service relating to betting on a contingency that may or may not happen in the course of a lottery,

5. A service for the conduct of a game covered by paragraph (e) of the definition of gambling service in section 4, or

6. A service relating to betting on the outcome of a game of chance or of mixed chance and skill.

158. The form of the important definitions, invites, in my view, the use of the ordinary and natural meaning of the key words. I am not persuaded that the legislature intended to prescribe any technical or specific definition to the key terms. In particular I note in the definition of ‘gambling service’ in s 4(f); a gambling service is… "a gambling service (within the ordinary meaning of that expression)” clearly indicates that the ordinary English parlance was intended to be employed.

159. There were two main issues that required determination. First, whether the Impugned Products involved placing ‘bets’ and secondly whether the Impugned Products could be accurately characterised as ‘games’ for the purposes of the IGA.

160. As noted above, bet is defined to include wager. The various dictionary definitions of both bet and wager are also set out above.

161. As submitted by the Defendant, the term bet, can in some circumstances involve the formation of an opinion, on the part of the person betting. However, in the case of the Impugned Products, the process of selection of the Customer Number appears somewhat entirely mechanical, i.e. it is pure guesswork. It is difficult to see how any skill could be involved in selecting the numbers. There is little to no rational basis, it seems, upon which the Customer Numbers are selected. Indeed customers may choose to relinquish all control and have their numbers automatically chosen for them. The process, in my view, is devoid of the notion of an expression of opinion. There is no obvious judgement or skill being employed and it is difficult to say the selection could be based on some belief.

162. Despite the fact that I do not believe choosing the Customer Numbers involves forming an opinion about the various financial indices, I regard that the process by which money is staked using the Impugned Products can nonetheless be defined as a bet. That is, in this context, I do not regard it as essential that one must profess a view in order to make a bet. This to me is clear from the definition in the IGA, that a bet means ‘wager’. As noted above, none of the dictionary definitions of wager require any sort of opinion or view about the outcome of a particular event.

158. It is clear that the purpose of the Act is intended to regulate gambling. There is further nothing in the text of the Act that suggests to me one should read in such limitations as forming an opinion or a view into the term ‘bet’. Rather, there are numerous examples of gambling, many specifically identified by the legislation, in particular various types of lotteries, whereby there could be no reason to presume that a customer would or could form an opinion about the outcome.

159. Turning in particular to the structure of s 8A(5). Section 8A(5)(a) first prescribes that to be excluded the service must relate to ‘betting’. The section then goes on to note; “to the extent to which the service is not covered by any of the following sub-paragraphs…a service for the conduct of a scratch lottery or other instant lottery”. It seems clear then that a “scratch lottery” would be considered “betting” lest the inclusion of s 8A(5)(c)(i) be unnecessary. There is further, no suggestion that one could form a ‘view’ as oppose to hazard a guess about the outcome of a scratch lottery.

160. I am further not satisfied that the Impugned Products can be accurately characterised as a ‘game’ for the purposes of the Act.

161. As I have previously noted, the process by which customers ‘participate’ in the service is limited to say the least. It simply involves the selecting of numbers. Because of the vast number of possible results, the selection is entirely random. The numbers may be chosen randomly by the customer or relate to a sentimental date such as a birth date or anniversary. Given not only the fact of the ‘mapping’ process whereby the Customer Numbers are linked to the various Result IDs, but the fact that the Winning Result ID is in fact chosen by looking at the decimal places of various financial indices, suggests to me that it would be near to impossible to make an accurate and/or informed decision about what the likely Winning Result ID would be. There is no evidence that there is in fact a scientific way or rational methodology of predicting the numbers at all.

162. While it is true that the authorities referred to are taken from diverse statutes in differing contexts, they point to certain features of a game that these services in my view do not share. There are no traditional elements of games present in the Impugned Products. I further note that the definition as contained in s 4 refers particularly to playing a game. The phrase together suggests that the amusement should be borne from the ‘playing’ aspect. Although it may be said some are amused or entertained by simply parting with money, there is no participation or competition with other players that one would usually associate with games. What is intended to encourage people to engage with the products is not so much entertainment, but the possibility, however remote, of winning the jackpot, or some other prize. A game must, in my view, be more than the simple process by which a person parts with his/her money with a chance of financial return.

163. To play a game, further indicates to me, a sense of positive action on the part of the participant. There must be a level of interaction in the sense that a participant’s actions to some extent affect the outcome of the activity. This idea can be seen repeated in some of the extraneous materials (for example see pg 10-12 of the SEM extracted at [72] above). Here there is no participation in the sense that the ongoing actions of the participant can influence the outcome. There is little to no interaction in the sense that nothing that the customer may do will affect the ultimate Wining Result ID.

164. It seems to me, that because the legislature has left the term ‘game’ in effect relatively undefined, alluding to ordinary or historical understandings is permissible. Much attention was given to the potential analogy between the Impugned Products and roulette (either online or at a casino), which had been described at various points in the extraneous materials to be a game of chance. Although indeed in roulette, the process by which a number is selected is random, or because a particular colour or number is perhaps lucky or special to the individual, it has, significantly in my opinion, historically been regarded as a game, particularly because the ‘game’ is played against the house or other ‘participants’, and there is therefore a level of interaction involved.

165. The extremely broad definition contended for by ACMA would seem to me to leave the term ‘game’ virtually meaningless. Any ‘activity’ with ‘rules’ and some limited participation, could effectively capture any sort of bet, wager or gambling as a ‘game’, thus removing any meaningful distinction between the terms. That is not what this legislation does. I further note that the legislature indeed makes a distinction between s 8A(5)(c)(iv) and (v). As emphasised by the Plaintiff, a broad concept of ‘game’ would envelop the concept of ‘betting on the outcome of a game’, thus removing the need for such distinction.

166. The legislature has pointed to particular products to exclude, a choice that seems to some extent based on certain historical or economic concerns. However I am not persuaded that the Plaintiff’s contention that only ‘instant’ or ‘continuous’ games were intended to be regulated and thus the definition should be confined in this way.

167. Section 15AB of the Acts Interpretation Act, of course enables recourse to certain extraneous material when a provision is ambiguous or obscure; or when the ordinary meaning would lead to a result manifestly absurd or unreasonable. It is clear that reading the ordinary meaning of ‘game’ would not render the Act absurd or unreasonable. Here is not a situation where there are two potential meanings that need to be resolved. Rather the confusion if any comes from the lack of specificity to which the legislature has excluded particular gambling products.

168. Ultimately, the use of extraneous material, while helpful in certain situations is limited; it cannot, as the authorities make clear, usurp the meaning of the legislation.

169. Indeed, the EM and SEM appear to refer to virtual ‘roulette’ and internet poker machines as ‘games’, and there is perhaps some analogy that may be made between such activities and the products in question. However, as I have noted above, I am of the view that there is a particular historical context that is employed in characterising roulette and poker machines as ‘games’. As noted by the Plaintiff, in the game of roulette, even online, and indeed in online poker machines, there are lights, graphics, ‘bells and whistles’ so to speak that amount to a degree of fan-fair entirely absent from the Impugned Products. There is nothing in the extrinsic materials that indicates a use beyond the natural and ordinary meaning of the particular term is what was intended.

170. It is worth observing, s 15 is a penal provision. It is arguably appropriate according to some of the authorities to give the section a restrictive interpretation. I have referred to the cases above. In this context if anything, I consider that this rather fortifies the natural and ordinary meaning of the words ‘bet’ and ‘game’.

171. I note finally that it was not particularly clear, on ACMA’s case how the Impugned Products could fall into s 8A(5)(c)(v), even if they were characterised as a game. If the product is to be called a ‘game’, then the bet forms part of the game. The making of the bet is the only, limited participation there is. I cannot see how the product involves betting on the outcome of a game and I do not regard that construction as tenable.

Conclusion

177. In summary, for the reasons above, I find that the Impugned Products are excluded wagering services and are therefore not in breach of the prohibition against interactive gambling in s 15. I invite the parties to prepare short minutes of order to reflect these reasons. I will also deal with any outstanding costs questions should they arise.

Decision last updated: 16 August 2019