Northern Territory Second Reading Speeches

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RACING AND BETTING AMENDMENT BILL 2004

Bills presented and read a first time.

Mr STIRLING (Racing, Gaming and Licensing): Madam Speaker, I move that the bills be now read a second time.

The purpose of the two bills is to amend the Racing and Betting Act and the Unlawful Betting Act following the National Competition Policy or NCP review of the Territory’s racing and betting legislation. Given the interdependency of the two acts, it is my intention to introduce the amending legislation together.

The amendments presented today address the key recommendations requiring legislative change. Some of the review’s recommendations proposed further legislative change, but have been deferred because they form part of a broader change to gambling legislation as a whole. Specifically, the deferred aspects to broader recommendations to develop a new legislative framework based on two principal sets of legislation, one covering the licensing and operations of the industry itself, and the other covering the gambling and wagering control aspects and possible changes to the regulatory administration itself. Both of these recommendations require further research before further legislative amendment can be contemplated.

One other issue not referred to in these amendments is that of minimum wager obligations. As agreed by the Australian racing ministers at the meeting of 31 October 2003, minimum wager obligations will apply to all bookmakers. The minimum wager obligations require bookmakers to take bets that expose them to a potential loss to the minimum ceiling. The new prescribed license conditions will include a requirement for all bookmakers to adhere to the minimum wager obligations.

You would be aware from the introduction of earlier legislative amendments following similar reviews, the NCP review was undertaken in accordance with government commitment to the Competition Principles Agreement to examine and remove anti-competitive requirements or restrictions that cannot be justified to achieve the legislation’s objectives.

The overall objective of the review was to make reforms that will enable the racing and wagering industry to operate in an environment as free from bureaucratic restrictions as possible whilst ensuring industry regulation upholds the aims of harm minimisation and the amenity of community life.

A consultative paper was produced that identified the issues relevant to the review and sought public comment on those issues. The issues on which comment was sought included the objectives of the legislation, the regulatory structure of the industry, the administrative regime in the industry, industry licensing, racing activity and event management, bookmaking operations, betting activity, betting management and problem gambling.

I wish to thank those organisations and individuals that made submissions to the review, including the Darwin Turf Club, Northern Territory TAB Pty Ltd, Centrebet, IAS Bet Limited, Northern Territory Gaming and Wagering Advisory Forum, Mr Marshall Perron and Punting Partners. The submissions contained a variety of views from which the following recommendations, based on competition principles, were developed. The review found that the strong and prescriptive regulatory approach for this industry is justified and that identified restrictions are generally in the public interest.

For example, the review found that licensing of industry participants, including racing and betting operators, is widely accepted as the most effective and efficient means of protecting consumers and that weaker forms of regulation are unlikely to be as effective in delivering the required probity outcomes.

The review noted two significant considerations, being the need to counter the high potential for industry participants to manipulate racing and betting activity and outcomes, and the adverse public consequences which can arise through problem gambling. Both of these issues provide strong argument for tight regulatory controls over the related activities. The review found that, whist continuants of a strong licensing regime for the industry is justified and in the public interest, the easing of a number of restrictive provisions, particularly those involved in the control of bookmaking activity and prohibitions on specific codes of racing and racing organisation, should improve competitive positioning and industry efficiency. Net public benefits are expected from the continuing strong industry controls and the increased consumer choice that can potentially result through expansion of racing codes.

I turn now to the proposed amendments. The majority of the amendments relate to the Racing and Betting Act. There are also two amendments to the Unlawful Betting Act. I shall deal firstly with the bill that introduces the amendments to the Racing and Betting Act.

1. Objectives of the act. The bill proposes that an object section be included in the act. The reason for this is to make clear the purpose of the legislation, which is to ensure probity and integrity in racing and betting and to reduce the adverse social impact of betting in the Territory. As the NCP Review noted:

The Productivity Commission in its report into Australia’s gambling industries found the two objectives providing the strongest rationales for special gambling policies are to ensure the probity of gambling and to reduce its adverse social impact. Accordingly, in proposing to insert an object section in the Racing and Betting Act, prominence is given that the probity and integrity of the industry and of those persons engaged in the industry and to reduce the impact of problem betting activities. The proposed objects are therefore:

· to promote probity and integrity in racing and betting in the Territory;

· to maintain the probity and integrity of persons engaged in racing and betting in the Territory;

· to promote fairness, integrity and efficiency in the operations of persons engaged in racing and betting in the Territory; and

· to reduce the adverse social impact of betting.

2. Functions of the Racing Commission. The review noted that the very nature of the racing industry creates an inherent risk of criminal exploitation of racing and betting activity, and that the operation of an effective regulatory framework is an essential element to protect against such infiltration. Section 17 of the act describes the functions of the Racing Commission. To that end, section 17 has been amended through the insertion of a new clause setting out the principles that the commission must have regard to in the performance of its functions. Those principals are:

Minimum regulatory intervention by government and maximum cooperation between industry and government;

Section 17 is also amended by the leading reference to a ‘bookmaker’s clerk’ and substituting the term ‘key employees’. The reason for this amendment has been touched upon in referencing the amendments to the definitions section of the act.

3. Licenses and permits. Until now, it has been the practice to grant annual permits to registered bookmakers who operate on-course and authorised race meetings whereas, sports bookmakers, commonly referred to as corporate bookmakers, have been granted licenses that are valid for multiple years. The review has found this practice to be unsustainable against National Competition policies and has recommended that the annual permit system for registered bookmakers be revoked and replaced with the licensing system that operates along the same lines as that in place for sports bookmakers.

With this in mind, section 24 of the act has been amended to refer to licenses issued under either section 90 or 102, and that such licenses will remain in force for the period determined by the commission. Such a licence will be renewable but not transferable and subject to the payment of an annual fee. Penalties for non-payment of the annual fee have been inserted into section 80 of the principal act which allow for suspension of a license if not paid within 30 days of the due date, and possible cancellation should the fee still be outstanding after three months.

4. Criminal history checks. Madam Speaker, as I stated earlier, the National Competition Review of this legislation saw the regulation of the racing industry as necessary to achieve the fundamental objectives of probity and integrity, including protection from infiltration by criminal elements. In achieving these objectives, this bill introduces probity checks similar to the high level of investigation into applicants for gaming licences under the Gaming Control Act, including those for on-line and land-based casinos. Section 8 of this bill creates a part of that new probity level by introducing into the principal act a new clause that requires all persons of natural applicants for a licence or renewal, and officers of corporate applicants for a licence or renewal, to under a police criminal history check. This officers of any corporate applicant shall include all company directors, the secretary or executive officer of that corporation, and any other person who has control or influence over the corporation’s affairs.

5. Repeal of restrictions on probity racing. The principal act has until now precluded private enterprise from carrying on racing in the Northern Territory through what is known as propriety racing; that is, the conducting of a race meeting for profit. The National Competition Review Report found that the reasons for the blanket restrictions on propriety racing - that is, concerns over the manipulation of privately run racing events - are no longer appropriate and should be removed if the industry in Australia is to remain commercially competitive on a global basis. Sections 26, 27 and 29 of the principal act effect a current ban on propriety racing, and section 9 of the bill repeals those sections allowing propriety racing in the Northern Territory. Section 30 of the principal act is also repealed, as it has no real meaning in the absence of section 29. Propriety racing must still meet strict regulations and controls imposed on the racing industry generally, notwithstanding these amendments.

6. Person to whom licence or permits under this part may not be granted. Clause 9 of the bill continues the theme of increased probity in the granting of licences under the principal act by adding a new subsection that prohibits the grant of a licence to a person who is not a fit and proper person to hold such a licence. The bill then defines a person who is not fit and proper as being someone who has been found guilty of an offence under the principal act, the Unlawful Betting Act, the Gaming Control Act or the Gaming Machine Act, has been convicted within 10 years of the application of a disqualifying offence prescribed under the Racing and Betting Regulations, or is a person who does not satisfy the probity requirements under the principal act.

7. Offences by bookmakers. Section 79 of the principal act is an offence clause that precludes bookmakers from undertaking a number of activities. Included in that list is an offence relating to betting tax imposed under the Stamp Duties Act, and an offence of paying out on a winning bet based on a totalisator declared dividend. These offence clauses are no longer relevant to the industry and are being removed from the act. Separate steps have previously been initiated to remove the latter offence relating to totalisator based dividends. Clause 10 of the bill deletes section 79D of the principal act which relates to totalisator based betting.

8. Suspension or cancellations of licence. Clause 11 of the bill broadens the Racing Commission’s power to suspend or cancel a licence granted to a bookmaker where the bookmaker fails to pay the applicable annual licence fee. Suspension of a licence may be invoked where the fee is not paid within 30 days of the due date, and cancellation may occur if the fee is still not paid after 90 days that it falls due.

9. Commission may grant licence. Clause 12 of the bill again strengthens the probity requirements of the licensing process under the principal act by directing the Racing Commission to have regard to certain matters when determining whether to grant or refuse a licence. Those matters are listed in an amendment to section 9 of the principal act and relate to the character, honesty and integrity of the applicant; the applicant’s financial capacity and viability; the structure of corporate applicants; the business expertise of the applicant; and the integrity and character of directors, officers and associates of a corporate application.

Concerns have been expressed in the past that the strict probity approach to industry licensing that includes strident consideration of an applicant’s financial capacity, leads to an expectation by government that a licensee will be financially viable for the term that a licence has been granted. This perceived expectation is not the intended position of government and so, to remove any such view, a new section has been inserted at the end of section 90 of the principal act specifically disclaiming any such perception.

Section 90(4) of the principal act has also been amended to provide for a licensee to abide by the licence conditions prescribed under the regulations, as well as any such further conditions that the commission sees fit to include in a particular licence.

10. Recovery of probity investigation costs from applicants. It is a basic principle of the National Competition Policy that regulated industries that benefit from regulation should incur the costs of administering that regulation. Clearly, the racing industry is one of those industries. With this in mind, it is proposed that the cost of the increased probity investigations into proposed licensees be borne by the applicant. Clause 13 of the bill introduces a new section in to the act which allows the Racing Commission to recover the costs it incurs in carrying out the investigation into the probity of an applicant under section 90 of the principle act, as discussed above.

11. Licence Renewals. I made reference earlier to a recommendation made in the review of the legislation, that the licensing activities under the act should be made more uniform in their application. Logically then, this uniform approach to licensing processes and procedures should extend to the renewal of all licences issued under the act. Consequently, clause 14 of the act introduces an amendment to section 91 of the principal act, authorising the Racing Commission to renew a licence granted under the provisions of the act, subject to similar probity requirements for the granting of a new licence, including a review of the licensee’s financial standing and new criminal history checks for persons relevant to the renewal application. As a consequence of the renewal provisions for all licences under the act being dealt with separate to the granting of a licence, it has been necessary to delete reference to ‘licence renewals’ in the definition of the term ‘licence’.

12. Licence Conditions. This bill introduces a new provision whereby standard licence conditions will be prescribed under the regulations. The Racing Commission also has the power to impose further conditions. Clause 15 of the bill has been introduced to amend section 92 of the principal act, to make it clear that, whilst the commission may impose further conditions on a licence, it may not impose a condition that would have the effect of varying a prescribed condition.

13. Repeal of Restrictions to Hours of Trade. In keeping with the National Competition Council principles of reducing regulation as far as possible without increasing the risk of harm, the review found restrictions on hours of trade and limited use of venues were anti-competitive and recommended those restrictions be removed. Clause 16 of the bill does this by repealing sections 94, 95, 98 and 101 of the principal act. That is, those provisions that restrict the hours of trade, use of venue facilities for other purposes and the type of betting activities that bookmaker may make bets on.

14. Licensed Bookmakers. As mentioned earlier, it is the intention of this bill to align the licensing provisions of registered bookmakers and sports bookmakers so that there is similar probity in the issuing of licences under the act. To that end, clauses 17 and 18 of the bill introduce amendments to the licensing requirements of registered bookmakers that are identical to those that are being introduced for the licensing of sports bookmakers. Those amendments have been inserted into section 102 of the principal act, including a new section, 102A, relating to cost recovery for investigations by the Racing Commission.

15. Licensing of Key Employees. Another aspect of the introduction of uniform licensing procedures under the principal act is the recognition of key employees of licensed bookmakers and the need for such employees to be licensed. The Definitions section of the act has been amended by omitting the term ‘bookmaker’s clerk’ and replacing it with the phrase ‘key employees’. Clauses 19 and 20 of the bill apply the ‘key employee’ concept to employees of a registered bookmaker by deleting reference to the phrase ‘bookmaker’s clerk’ in sections 103 and 104 of the principal act and replacing it with the term ‘key employee’. Clause 19 also inserts a new section 103(1)(a), which provides for the Racing Commission designated position or function of a bookmaking operation to be a key position or function that will be required to licensed under the act.

16. Appeals to the Local Court. Clause 21 of the bill is a new clause that protects the natural justice rights of an applicant for a new licence, or for the renewal of an existing licence, by permitting an aggrieved applicant to appeal to the Local Court to have a decision of the Racing Commission overturned and to grant or renew the licence sought by the appellant. Government recognises there may be occasions where the Racing Commission will be bound to refuse an application on the ground that an applicant has been convicted of a disqualifying offence but that in all the circumstances it would be inclined to grant the licence. In cases such as this it is seen as reasonable to give the Local Court the power to overturn a decision of the commission and grant a licence or renewal of a licence to the applicant.

17. Codes of Practice. One last important development in the regulation of the racing and betting industry that this bill seeks to introduce is the power of the Racing Commission to bind bookmakers to operate within standards set out in any codes of practice that the commission sees fit to adopt. The use of such codes has been successful in other related areas of social regulation, such as the gaming, liquor and private security industries. This new power of the commission is inserted into the principal act through the insertion of a new section 148A. The new provision also provides sanctions for non-compliance with an adopted code through monetary penalties of up to $2000.

That concludes the proposed amendments to the Racing and Betting Act. I turn now to the bill to introduce the Unlawful Betting Amendment Bill 2004.

The National Competition Review has identified two aspects of the Unlawful Betting Act that require legislative change: restrictions on advertising; and the prohibition on third party betting. The review has found that to subject to the consideration of problem gambling issues, restrictions on the advertising of licensed lawful betting services are unsustainable in the face of national competition principles and should be removed as far as they affect the services of licensed bookmakers.

In order to give effect of that finding, the bill seeks to amend section 22 of the Unlawful Betting Act by rewording section 22(1)(a)(ii) of the act and adding a new clause that permits a licensed bookmaker or their employee to advertise services in such manner that would otherwise be prohibited under the provisions of the act.

With respect to third party betting, the review made the following observations: current legislation makes it illegal for one party to place a bet on behalf of another. This provision is both impractical and difficult, if not impossible, to effectively control and is a restriction of day to day consumer practice of commercial activity. The review then went on to recommend the restriction on third party betting be removed. To this end, the bill seeks to amend section 29 of the Unlawful Betting Act by removing the restriction on third party betting upon unlawful betting activities. This will mean that a person who wishes to engage in third party betting on legal betting activities can do so without fear of prosecution or the need to hold any kind of license whatsoever. Any person who seeks to undertake commercial third party betting activities would be subject to the normal trading conditions imposed by Consumer Affairs and Fair Trading legislation in force in the Territory from time to time.

Madam Speaker, the bills I have today introduced address key recommendations contained within the National Competition Policy Review into the Racing and Betting Industry in the Northern Territory that required legislative attention. This action reaffirms the government’s commitment to National Competition Policy principles and the Competition Policy Reform process. I commend the bills to honourable members.

Debate adjourned.

 

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