Overview
Addisons acted for Lottoland in Lottoland’s recent successful application to the Supreme Court of New South Wales in which it sought declarations that various of its products were not “prohibited interactive gambling services” under the Interactive Gambling Act 2001 (Cth) (IGA). The decision of Sackar J., which was handed down on 26 July 2019, is the first time that provisions of the IGA have been considered by a superior court in Australia. The decision is contrary to the earlier findings made by the Australian Communications and Media Authority (ACMA) that the relevant products of Lottoland contravened the IGA.
Legal Background to IGA
The IGA is a statute introduced into the Australian Federal Parliament in 2001 targeting offshore gambling operators. Until 2017, the IGA attracted limited attention due to the relative inaction on the part of the Australian authorities. Also, the prohibitions were of limited effect as they did not prohibit offshore gambling operators providing betting services (save for in-play betting services) and online lottery services (save for online instant lotteries) to Australian customers. Indeed, the principal actions taken by the ACMA prior to 2017 were to ensure that Australian licensed online wagering operators did not provide betting services considered to be contrary to the policy prohibiting online in-play betting on sports and TV stations did not promote offshore gambling sites.
The focus changed in 2017 following the passage of the Interactive Gambling Amendment Act. Since then, the ACMA now targets offshore gambling operators providing services to Australians. Indeed, the ACMA has announced in its quarterly reports that its activities have been successful in causing many leading overseas gambling operators to cease providing services into Australia.
Despite this, there have been continued efforts by the Australian authorities in targeting the Australian based licensed online wagering operators providing services viewed as inconsistent with new policy underlying the IGA. The most recent amendment to the IGA, which came into effect on 9 January 2019, was to prohibit the supply of lottery betting services online. Indeed, Lottoland’s previous business (being derived principally from lottery betting services) ceased upon the enactment of this prohibition.
Accordingly, Lottoland commenced supplying other forms of betting products, which were reviewed by the ACMA and found to constitute prohibited interactive gambling services. To the authors’ knowledge, this finding was the first finding made by the ACMA relating to the betting services of an Australian licensed wagering operator.
Until Lottoland’s application, there had been no judicial consideration of the provisions of the IGA and the interpretations given by the ACMA in its determinations and findings was unchallenged.
Lottoland’s Application
As a result of the application brought by Lottoland, for declarations that its services did not contravene section 5 of the IGA, clarity has now been given in the Court’s judgment to various provisions (and definitions) in the IGA judicially.
In essence, in finding for Lottoland, the Court has stated:
a) provisions within the IGA are not easy to construe;
b) it is clear that the IGA does not in fact prohibit many forms of gambling;
c) the extensive exceptions to the prohibition (on providing prohibited interactive gambling services) means that only a select number of services are intended to be restricted;
d) when interpreting a penal statute (like the IGA), it is arguably appropriate to give relevant prohibitions a restricted meaning;
e) the exclusion from exclusion process in the IGA is cumbersome; and
f) in the context and the absence of any specific clarity being given, the natural and ordinary meaning of the terms used in the IGA (for example, in the definitions) should be given.
The questions asked by the Court in considering Lottoland’s application were:
a) were Lottoland’s products an excluded wagering service?
b) do they fall outside the scope of this exception by virtue of being:
i) services for the conduct of a game; or
ii) services relating to betting on the outcome of a game of chance.
This lead to considerable analysis by the Court of the distinction between a “bet” and a “game” in the context of the history of the legislation, the wording of the legislation and the cases (being principally Australian and British cases), where these terms (and any distinction) had been considered previously.
The Court held that the relevant provisions had to be given their natural meaning and stated:
a) both “bet” and “game”, should be given their normal meaning;
b) their use in the IGA meant that they should be construed in a manner to ensure a clear distinction; and
c) a broad construction of the concept of a “game” would remove any meaningful distinction between a “game” and a “bet”.
This lead to the Court’s conclusion that Lottoland’s products were in fact excluded wagering services. This meant that they fell outside the scope of the prohibition in section 5.
The Court’s decision, is, to date, the only Court ruling relating to the IGA. The Court has given a narrower interpretation of the scope of the prohibitions on the supply of prohibited interactive gambling services than the interpretation given by the ACMA in its findings relating to Lottoland’s products. However, following the Court’s interpretation of the IGA, it should not be assumed necessarily that the IGA will not apply to other categories of online gambling services provided by offshore gambling operators.
The decision offers clarity to some of the torturous provisions in the IGA which set out the scope of the prohibitions on various online gambling services. The decision is also of interest as it is one of the few decisions globally to give a judicial interpretation of the difference between a “bet” and a “game”.
For further information, please do not hesitate to contact any member of Addisons’ Media and Gaming team.
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