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RACING AND BETTING LEGISLATION AMENDMENT BILL (Serial 168) Bill presented and read a first time. Mr STYLES (Racing, Gaming and Licensing): Madam Speaker, I move that the bill be now read a second time. The purpose of this bill is in relation to the Northern Territory being the premier jurisdiction in Australia for corporate sports bookmakers, with 13 operators currently holding licences issued to the NT Racing Commission under the Racing and Betting Act. A sports bookmaker accepts bets directly from a client over the Internet and telephone on thoroughbred, harness and greyhound racing, sporting events and other approved events such as betting on the winners of various reality TV shows such as The Voice and My Kitchen Rules. In 2014-15 NT sports bookmakers paid almost $5m in direct taxes to the Northern Territory government. Betfair Australia, a wholly-owned subsidiary of Crown Resorts Ltd, currently operates Australia’s only betting exchange in Hobart, Tasmania. Crown Resorts Ltd is also the majority owner of the CrownBet Pty Ltd, a name most of you will be familiar with for its association with this government’s very successful tourism promotion, Million Dollar Fish. CrownBet also holds an NT sports bookmaker licence. A betting exchange is an online platform where customers effectively bet against one another, including setting the odds and the size of the bet. It operates in a similar way to a normal bookmaker, however the client is not betting against the betting exchange operator but another client or a number of clients. The operator makes money by deducting a commission from the winning bet. A betting exchange operator provides a range of races and events for their clients to bet on, similar to that of a sports bookmaker. Betfair is looking to relocate from Hobart in Tasmania. While the Northern Territory tax and fee regime is an attractive lure, Betfair recognises the benefits of the superior regulatory approach taken by the Territory which offers a quicker response to operational issues than the Tasmanian regulator. This does not mean the Northern Territory is a pushover when it comes to approval process, but our smaller size allows us to move with greater speed. In a sector as competitive as the online gambling sector, any additional time taken to obtain the necessary approvals can result in lost revenue and customers. The Racing and Betting Act does not currently provide for a specific betting exchange license. Betfair’s business operations cannot be conducted under the existing sports bookmaker licensing regime. ___________________________ Statement by Speaker Queen’s Birthday Madam SPEAKER: Minister could you please pause for a moment. I advise honourable members that at 11.10 am specifically, Darwin time, 90 years ago Her Majesty the Queen was born in Mayfair, London. I invite honourable members to join be in congratulating Her Majesty on her birthday, noting her continued dedication to the Commonwealth and as our head of state. We will be sending a formal note Her Majesty. Members: Hear, hear! ___________________________ Mr STYLES: The Racing and Betting Act does not currently provide for a specific betting exchange license. Betfair’s business operations cannot be conducted under the existing sports bookmaker licensing regime. The bill before the Assembly proposes a specific betting exchange licensee be established in the Racing and Betting Act. This will allow entities such as Betfair to set up operations in the Northern Territory. It removes the legal uncertainty that is currently present. It is anticipated that having a specific betting exchange license will act as a catalyst to attract other international betting exchange operators to the Northern Territory. The betting exchange license will be regulated in the same way as the current sports bookmaker license. Applications will be made to the Northern Territory Racing Commission that will undertake assessments on the suitability of the persons involved in the business, whether there is sufficient financial support in place to ensure the business remains viable, whether the business’s operating systems meet the appropriate technical standards and the business has responsible gambling policies and practices in place. The tax regime for a betting exchange license will mirror that of the sports bookmaker license. Currently being 10% of gross monthly profits to a maximum of 500 revenue units per annum. In acknowledging the more complex regulatory work required in association with the systems and any disputes that may arise, the application fee and annual licence fee for a betting exchange licence have been set at 200 000 revenue units. The issuing of a licence to Betfair Australia will provide an increase in direct government revenue of approximately $805 000 per year. Apart from direct taxes and fees, the presence of a betting exchange operator will have wider benefits for the Northern Territory economy. It is understood that Betfair will, in its stages of operations, have about 12 staff based more than likely in Darwin. This is expected to increase over time if the business meets expected growth targets. Today’s bill will also act to formalise an existing informal arrangement between the Territory racing controlling bodies, Thoroughbred Racing NT, the Darwin Greyhound Association and interstate wagering operators by establishing the power for Northern Territory racing and sporting control bodies to change a product fee. A product fee is levied by a horse, trotting or greyhound club, or a sporting body on a wagering operator for accepting bets on their product. The product fee is charged for the information provided by the respective bodies, which is then used by the bookmaker to frame its betting markets. In racing the information is known as a ‘race field’, and includes the names of horses or greyhounds, their positions, weights, form and other racing data. In 2006 New South Wales introduced legislation that provided the power for race clubs to charge bookmakers for the use of their race field information. This was in response to the explosion of corporate bookmakers and the money being made by the online wagering sector. Given it was its product, the racing sector felt it was appropriate that it received a cut of the action. Despite a number of legal challenges, all jurisdictions, aside from the Northern Territory, have now legislated the power for racing control bodies to levy a product fee. The payment of a product fee is now seen as a necessary expense in conducting wagering operations. In March 2013, Thoroughbred Racing NT managed to secure an informal agreement with all of Australia’s licensed wagering operators to make an ex gratia payment similar to that of a product fee. The Darwin Greyhound Association secured a similar deal in October 2014. In March 2015 the NT Racing Commission made it a condition of all NT licensed sports bookmakers that they were required to make a payment to the NT racing control bodies for use of their racing information; however, this did not apply to interstate operators, who still continue to make the payment under the informal agreement in place since March 2013. While there appears to be no imminent danger of the interstate operators reneging on the agreement in place, at least one makes their payment under protest. For the period of March 2013 to 30 June 2015, Thoroughbred Racing NT has received just over $2.6m through payments of this fee, with over 70% coming from interstate operators. Without the legislative amendments proposed in this bill, this money could potentially be lost, with government the likely source of replacement funding. The amendments proposed in the bill will protect this revenue. It is not anticipated that introduction of this legislation will come as a surprise to Australia’s wagering operators, as the product fee is seen as a necessary cost of doing business. While the proposed legislation also provides the power for an NT sporting body to levy the fee, the reality is that the majority of these bodies are already covered by national agreements in place between the peak body, such as the AFL, NRL and Cricket Australia, and the wagering operators. Unfortunately this legislation will not impact on those bets accepted by offshore operators accepting bets illegally on Northern Territory racing and sporting events. The new legislation will provide an appeal process for a person aggrieved by a decision of a Northern Territory controlling body in relation to the product fee. The first step will be a review carried out by the chief executive officer of the relevant department, and will focus on whether the controlling body has made the decision in line with its powers and any prescribed regulations relating to conditions of the approval. ___________________________ Visitors Madam SPEAKER: Honourable members, I advise of the presence in the gallery of a Year 5/6 class from Wulagi Primary School, accompanied by Mrs Penthea Carmichael. Welcome to Parliament House. I hope you enjoy your time here. Members: Hear, hear! ___________________________ Mr STYLES: A special welcome to all my students from Wulagi. It is great to see you here.While we have recently moved away from having the chief executive officer of departments review such decisions, in this instance it was considered inappropriate for a minister to review the decision, due to the commercial nature of the bodies involved in the process. Further, one of the owners of the information is, on behalf of the greyhound sector, the Northern Territory Racing Commission, whose members are appointed by the minister. If the person remains dissatisfied following the chief executive officer’s review, the decision can be referred to the Northern Territory Civil and Administrative Tribunal. Given the product fee only applies to a specific sector where all the existing operators are already paying this fee, albeit under a gentleman’s agreement, it is envisaged that the need for reviews will be minimal. I ask the Assembly to note that offences created as a result of the bill have not, despite government’s general approach to do so, been made compliant with the criminal responsibility provisions of Part IIAA of the Criminal Code Act. This is because there is insufficient time to consider the wider policy implications of such revisions on the offences, given the urgent need to introduce and debate this bill. Drafting so only the new offences will be compliant may have resulted in an imbalance in penalties against betting exchange licensee when compare to a sports bookmaker. Instead, all offences in the Racing and Betting Act will be reviewed at a later stage and updated to ensure they are compliant with Part IIAA of the Criminal Code Act. The unapproved use of racing or sporting information by a waging operator is serious as it robs the NT of the associated revenue, and as such has been made an offence with the commensurate penalty. The penalty of 100 penalty units of 12 months imprisonment for an individual is in line with other Australian jurisdictions. I ask the Assembly to note that the existing penalties in the Racing and Betting Act are very old and out of step with more recent Northern Territory legislation and will be updated at the time the offences are made compliant with Part IIAA of the Criminal Code Act. In this case, the penalty fits the crime. The bill before the Assembly will reinforce the Northern Territory as the premier online wagering jurisdiction in Australia by providing a specific betting exchange licence that will result in at least one international company relocate its operations to Darwin. This will provide direct and indirect benefits to the Northern Territory economy, and it is hoped it will attract other international operators. The bill also protects revenue for the racing sector by formalising an existing informal arrangement to provide the Northern Territory racing and sporting control bodies the ability to levy a product fee. Madam Speaker, I commend the bill to the House and I table the explanatory statement accompanying the bill. |