Answer ... Online wagering: The online wagering sector in Australia has never been more buoyant, with total spend reaching A$6.9 billion in 2020. Wagering operators have heightened their efforts in relation to customer retention and acquisition strategies.
According to an Australian Institute of Family Studies survey of more than 2,000 Australian punters in July 2020, one in three participants – mostly young men – registered new betting accounts during COVID-19 and the number who visited gambling sites more than four times a week grew from 23% to 32%.
According to the findings from the 2021 the Australian Communications and Media Authority (ACMA) Annual Consumer Survey into Online Gambling Australia (February 2022), more than one in 10 Australian adults (11%) had gambled online in the six months to June 2021, up from 8% in 2020. The 2021 survey also asked respondents to report how frequently they gambled before the pandemic and during the strictest COVID-19-related restrictions in their area. While the majority of online gamblers (77%) reported the same frequency of gambling activity in June 2021 and before the pandemic, 16% indicated a higher frequency in June 2021 than before the pandemic.
Gambling advertising expenditure has also increased significantly in recent years. According to Nielsen Media Research, the gambling industry’s spending on advertising increased from A$90 million in 2011 to A$252 million in 2020. Australia’s largest online bookmaker, Sportsbet, spent A$139 million in 2020, accounting for 55% of total gambling industry advertising spend.
Casinos: Systemic issues have been identified across the casino sector regulatory framework and operator conduct at large, particularly in relation to the Crown and The Star casinos. The casino industry, including regulatory bodies, will remain an area of focus for governments and other stakeholders, and further reforms for the sector are likely given the number and extent of established and alleged governance and compliance failures. These are set out below.
New South Wales Inquiry: This inquiry, overseen by former Supreme Court judge Patricia Bergin SC, was established in August 2019 by the Independent Liquor and Gaming Authority (ILGA) in New South Wales (NSW). It was largely concerned with alleged anti-money laundering/counter-terrorist financing (AML/CTF) and governance-related shortcomings across Crown’s Melbourne and Perth casinos and did not focus on the NSW jurisdiction or the only operational casino in NSW, The Star Casino.
The inquiry received and heard extensive submissions and evidence, including from the public and via public hearings involving Crown executives, directors, regulators and others. Australian Transaction Reports and Analysis Centre, Australia’s anti-money laundering regulator, is principally responsible for compliance and enforcement of the AML/CTF Act and has ongoing inquiries on foot involving major Australian casino operators.
Commissioner Bergin found Crown unsuitable to operate its Sydney Barangaroo casino. The commissioner did, however, leave open a pathway for Crown to achieve suitability should sufficient changes occur, including board renewal, the preparation and delivery of a detailed remediation plan to ILGA and the strengthening and monitoring of anti-money laundering controls that ILGA might consider when making its decision.
The NSW Inquiry report made 19 recommendations, including proposed reforms to the regulation of casinos in NSW, including the creation of a standalone independent Casino Commission with extensive powers akin to those of a standing royal commission. A further significant recommendation was that NSW legislation be amended to ban NSW casinos dealing with junket operators. The NSW government announced that it accepts all recommendations and will move to implement revised regulatory structures in the state.
After undertaking various remedial activities, Crown was granted a provisional permit to open its gaming floor in June 2022.
Victorian Royal Commission: Given the nature of the issues aired during the NSW Inquiry, in late February 2021, the governor of Victoria appointed Ray Finkelstein AO KC as commissioner and chairperson of a Victorian Royal Commission into the casino operator and licence in that state. Crown Resorts operates the Crown casino and entertainment facility in Melbourne, which is one of the city’s most visited attractions for tourists and residents alike and is a significant employer.
Crown admitted to various matters raised during the commission, including:
- underpaying state gaming taxes;
- allowing what was purported to be money for hotel services to be used for gambling;
- allowing customers to gamble for a prolonged period; and
- not cooperating as required with the Victorian gambling regulator.
The commissioner’s report was delivered to the governor of Victoria on 15 October 2021. Among the key findings and recommendations, the commissioner determined that Crown was unsuitable to operate its flagship Melbourne resort but did not recommend that Crown’s licence be cancelled, citing the considerable harm to the Victorian economy and innocent third parties that would arise from a cancellation and noting significant steps taken towards reform, including the appointment of a new board and senior executive team. Instead, the commissioner effectively provided Crown with two years in which to prove that it is suitable to operate that casino.
Ultimate decision making during this period now rests with a ‘special manager’ appointed to oversee Crown’s operations and to report to the Victorian regulator at regular intervals on Crown’s performance against reform efforts. Following the conclusion of the two-year period, the regulator will make its decision as to whether it is “clearly satisfied” that Crown has returned to suitability, having regard to the reports from the special manager and the other inquiries mentioned in this article.
The Casino and Gambling Legislation Amendment Bill 2021 (Vic) establishes, among other things, the position of special manager, the supporting regime around the role and the new Victorian Gambling and Casino Control Commission. The bill was passed by both houses of the Victorian Parliament on 2 December 2021.
Perth Casino Royal Commission: On 5 March 2021 a royal commission into Crown Perth and its suitability to continue to hold a casino gaming licence in Western Australia was established. The commissioners – Neville Owen AO, Lindy Jenkins and Colin Murphy PSM – examined the regulatory framework in Western Australia for casino gaming and assessed the performance of the Gaming and Wagering Commission, the regulatory body with responsibility for monitoring Crown Perth’s compliance.
In an interim report tabled in the Parliament of Western Australia in August 2021, the commissioners advised that they were investigating alleged conflicts of interest between departmental officers and casino employees, in addition to whether criminal organisations were likely to have laundered money at Crown Perth and other matters.
A final report with findings and recommendations was presented to the minister on 4 March 2022 and then tabled in Parliament. Crown has been found to be unsuitable to hold a gaming licence in Western Australia; but rather than its licence being revoked, the Royal Commission has proposed a number of changes which Crown Perth must undertake. These are significant reforms.
Review of The Star (Sydney): A review of The Star and its Sydney casino commenced in November 2021 and was undertaken by Adam Bell SC. Adam Bell’s findings and recommendations were handed down on 31 August 2022.
The terms of reference for the review included an assessment of suitability and an examination of the extent to which The Star was compliant with legislation, licence conditions and related agreements and an assessment of the administration of systems to ensure that operations were conducted honestly and free from criminal influence or exploitation. The review also assessed, among other things, the implementation and administration of gaming harm minimisation programs and the management of VIP patrons, high rollers and international patrons at The Star.
In finding that Star Entertainment was not suitable to be concerned in or associated with the management and operation of a casino in NSW, Adam Bell SC cited a number of practices including the use by high roller patrons of CUP debit cards to fund gambling which was in breach of Chinese laws and not appropriately disclosed to banking partners, permitting the Suncity junket to operate in the casino, including with a cash cage, and giving rise to money laundering risks and in breach of casino licence conditions and an inappropriate approach to governance and risk. The review also noted evidence of patrons gambling at The Star for long periods of time, including for more than 24 hours, with no intervention contributing to a recommendation that carded play by compulsory at The Star for all gambling (requiring that patrons are identified and that their exclusion status (if any) is enforced.
External review of the Queensland operations of The Star Entertainment Group: At the time of writing, Robert Gotterson AO KC has delivered his report to government following a review into The Star’s Gold Coast and Treasury Brisbane casinos. The inquiry followed the New South Wales review referenced above and received evidence regarding The Star’s anti-money laundering processes, approach to gambling hard minimisation, management of VIP patrons, high rollers and international patrons, the use of CUP credit card facilities to facilitate gambling by Chinese nationals and whether patrons excluded in NSW were encouraged or incentivised to attend The Star’s Queensland casinos.
Independent review into SkyCity: Following the commissions of inquiry undertaken in NSW, Victoria and WA, the South Australian regulator announced in July 2022 that an independent review would be taken into SkyCity, the operator of the Adelaide casino. The review will investigate, among other things, the suitability of SkyCity to hold the casino licence and of its parent company to be a close associate of the licensee and related matters. A written report of Brian Martin AO QC’s findings is due to be delivered by 1 February 2023. Fallout: The consequences for Crown Resorts and The Star have been, and are likely to continue to be, significant. Significant changes have been made to the board, management and staff. Changes have also occurred at the regulators, including:
- Western Australia’s chief casino officer standing down; and
- the break-up the Victorian Commission for Gambling and Liquor Regulation and the implementation of a new gambling and casino control commission with a dedicated division for the casino – the Victorian Gambling and Casino Control Commission (VGCCC).
An A$8.9 billion bid was made by Blackstone for the company following the rejection of an initial approach in 2021. Blackstone subsequently took control of Crown in July 2022.
The Australian Securities and Investments Commission publicly announced in March 2022 that the directors and senior executives of Crown would not be legally pursued for potential breaches of corporate law because the claims were too old and there was a lack of hard evidence to bring a winning legal case, despite the royal commissions lambasting their misconduct.
New developments: The Casino and Liquor Legislation Amendment Bill 2022 (Vic) has recently been passed, granting Victoria’s casino regulator, the VGCCC, enhanced powers. The legislation incorporates some of the recommendations from the Royal Commission into Crown Melbourne, with key changes including the following:
- Casino inspectors have been given greater access to casino records and surveillance equipment;
- Casino staff are now required to assist inspectors to access and operate surveillance equipment monitoring the gaming floor’
- The powers of the VGCCC in relation to gambling harm minimisation have been enhanced;
- The VGCCC can now take action against Crown Melbourne for a single breach of the Code of Conduct; and
- Liquor regulation has been transferred to the Department of Justice and Community Safety.
These reforms are in addition to legislation passed in 2021 which increased the maximum penalty that the VGCCC can impose for disciplinary action, with fines increasing from A$1 million to A$100 million.
Legislation to address Royal Commission recommendations passed through the Western Australian Parliament in September 2022 in the form of the Casino Legislation Amendment (Burswood Casino) Act 2002 (WA). The legislation provides the Minister and Gaming and Wagering Commission with greater powers to implement the recommendations, significantly increases maximum penalties for non-compliance to A$100 million and provides for an Independent Monitor to oversee remediation processes within the casino. We anticipate similar changes in relation to casino legislation in New South Wales and Queensland.
Sports Wagering Scheme: Sports Integrity Australia released the Australian Sports Wagering Scheme (ASWS) Consultation Regulatory Impact Statement on 30 November 2021.
The objectives of the ASWS are to:
- streamline sport integrity aspects of sports wagering regulation to provide clarity, transparency and consistency at a national level and ensure that sports wagering occurs within a framework that protects the integrity of sport;
- strengthen the link between Commonwealth government funding and sport integrity outcomes;
- encourage the development of integrity capability within sporting organisations and facilitate sporting organisations’ access to revenue streams from wagering on their sport; and
- develop a robust integrity framework for national sporting organisations, event controllers and wagering providers.
The purpose of a statement is to undertake a rigorous process to reach an evidence-based policy solution to an issue with a clear rationale for government intervention to address the problem with the current situation.
National Self-Exclusion Register: One of the most eagerly awaited aspects of the National Consumer Protection Framework, the introduction of a national self-exclusion register, remains to be implemented despite being due for delivery in mid 2022. This follows the passing in December 2019 of the Interactive Gambling Amendment (National Self-exclusion Register) Act 2019 (Cth) and the National Self-exclusion Register (Cost Recovery Levy) Act 2019 (Cth), which enabled the establishment and operation of the register and addressed important issues, including the security of information.
As opposed to the current disjointed approach that requires people who want to self-exclude to contact multiple operators, involving undue friction and leaving potential vulnerabilities, the new regime provides for a ‘one-stop shop’ self-exclusion service from all betting operators registered in Australia offering online or telephone betting. The self-exclusion can be temporary (with a minimum period of three months) or permanent. Registered people will also have the option to revoke or extend their period of exclusion.
Under the new regime, licensed betting operators will be prohibited from:
- offering their services to such individuals;
- sending them advertisements/promotions;
- making (or causing to be made) any telemarketing calls to such persons; and
- sharing their private information for marketing purposes.
If a licensee breaches these prohibitions without an available defence, it will face penalties of up to 750 penalty units for corporations per day (equivalent to A$166,500).
The costs of establishing and maintaining the register are to be borne by the industry, with rules having been introduced in July 2022.
Gambling licensing process: Gambling licences issued by the various states and territories of Australia – including for casinos, retail wagering, lotteries and keno – are typically long-dated. As such, licensing opportunities for these types of gambling businesses do not arise regularly and are often contested.
There are two major licensing processes underway in the Australian market, in Victoria and Western Australia.
Wagering in Victoria: The current Victorian wagering and betting licence is held by the Tabcorp group and expires in August 2024. As in some other jurisdictions in Australia, the holder of the current licence was required to make an upfront payment to the government to acquire the licence and to maintain a close contractual and operational relationship with the local racing industry. In Victoria, this takes the form of an unincorporated joint venture arrangement for the conduct of pari-mutuel and fixed-odds betting online, on the course, over the phone and in retail locations. The licensee also offers simulated race wagering but has not taken up the right to operate a betting exchange.
Unlike in some other jurisdictions, apart from on-course bookmaking by licensed bookmakers, due to exclusivity arrangements secured with the relevant government, there has only been one operator in each state and territory permitted to conduct retail betting operations. Some industry participants and potential applicants for the licence advocated for significant regulatory changes in the state, including shifting away from the current approach to exclusivity and sole-licence model.
The licence award process is ongoing at the time of writing.
Wagering in Western Australia: The Western Australian government commenced a long-awaited sale process for the Western Australian Totalisator Agency Board (TAB), the last government-owned TAB in Australia, in late September 2019. A discussion paper issued by the Department of the Treasury noted that the local racing industry relies heavily on the Western Australian TAB for funding, but that the TAB faces several challenges common to incumbent retail operations in other states and territories, including intense competition from larger operators, growth in online betting and customer preferences shifting from the TAB’s traditional strengths. Many of those pressures have intensified as the effects of COVID-19 impact on market dynamics and the operations of retail-exposed wagering operators.
The Western Australian government subsequently announced in October 2021 that a new sale process will commence, with a revised licence structure on offer. Expressions of interest were open until 16 November 2021. Among the key differences in approach under the new framework is that the licensee will not be responsible for funding of the Western Australian racing industry. At the time of writing, no announcement has been made regarding a successful bidder.
Keno: Victoria’s keno licences have recently been granted under a two-licence model to Tabcorp and Lottoland after a competitive tender process. The two licensees can provide keno online for the first time, as well as through traditional retail outlets, backed by harm minimisation and consumer protection measures.
Tabcorp and Lottoland will both be authorised to conduct and distribute the game of keno in eligible hotels, clubs, wagering outlets and electronically throughout Victoria.
Pursuant to the changed legislative structure, the minister issued harm minimisation directions in April 2022, which apply to both Victorian and interstate keno game providers when providing keno to people in Victoria. The directions focus on key areas such as:
- incentives;
- direct marketing;
- account closure;
- deposit limits;
- activity statements;
- responsible gambling messaging; and
- maximum draw frequency.
These directions are based on the National Consumer Protection Framework for online wagering, with additional elements to support online keno specifically.