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1
Gaming Machine and Other Legislation Amendment
Bill 2003
GAMING MACHINE AND OTHER
LEGISLATION AMENDMENT BILL 2003
EXPLANATORY NOTES
Short Title
Gaming Machine and Other Legislation Amendment Bill 2003
Objectives of the Legislation
The Gaming Machine and Other Legislation Amendment Bill 2003 will
amend the Gaming Machine Act 1991 to provide the legislative backing for
the implementation of the scheme for the re-allocation of gaming machines
in hotels within the state-wide cap on the number of gaming machines in
hotels.
The principal changes proposed in this Bill include:
· Restoring the ability for individuals and corporations to apply for
a gaming machine licence for a category 1 licensed premises
(primarily hotels);
· Restoring the ability for category 1 licensees to apply for an
increase in the approved number of gaming machines;
· Creation of operating authorities (authorities) which gaming
machine licensees will require, in order to install and operate
each gaming machine;
· Provision for the initial allocation of authorities to each existing
gaming machine licensee, on the basis of one (1) authority for
each approved gaming machine attached to the licensee's gaming
machine licence;
· Creation of three (3) geographic regions for the purpose of
conducting tender sales of authorities overseen by the
Government. Trading will only be permitted within each region
to prevent the drift of machines from country areas to city areas;
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Gaming Machine and Other Legislation Amendment
Bill 2003
· Restrictions on the number of authorities licensees may trade
each year which will deter licensees from rapidly exiting the
industry with a commission payable to the Government on sales
to prevent speculative trading in authorities; and
· Transitional dispute resolution arrangements to ensure that
landlords and lessees under the scheme are not worse off than at
present.
Reasons for the Legislation
On 8 May 2001, the Government announced a state-wide cap on the
number of gaming machines in hotels and undertook to develop a scheme
for the re-allocation of machines within that state-wide cap. The state-wide
cap was subsequently given effect via the Gaming Machine Amendment Act
2001.
The cap was a response to community concerns that the proliferation of
gaming machines had led to an increase in the level of harm caused by
gambling. The calls for slowing the growth of the gaming machine
industry prompted the Government to cap the expansion of any further
gaming machines into hotels. As the most significant recent growth in
gaming machine numbers had occurred in hotels, the state-wide cap was
only imposed on hotels.
In introducing the cap, the Government announced that a scheme would
be developed to allow for the re-allocation of gaming machines that
became available within the cap as a result of hotel closures or reductions
in the number of machines in hotels.
The re-allocation of gaming machines via trading in authorities will
complement the current licensing requirements for gaming machines, but
the current licensing processes will not change. Potential licensees will
still be required to make an application for a gaming machine licence.
Similarly, existing licensees will still be required to make an application for
an increase in the number of approved machines. Both types of
applications will continue to require the approval of the Queensland
Gaming Commission. Additionally, potential applicants will also be
required to continue to meet probity and integrity requirements as well as
community impact assessments.
Re-allocation will occur via a tender sale process overseen by the
Government. The Government has developed the scheme to discourage the
drift of machines from country areas to the South-East through the creation
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Gaming Machine and Other Legislation Amendment
Bill 2003
of regions in which trading of authorities will be confined. In addition, the
Government is determined to prevent speculative trading in authorities by
placing limits on the sales process.
Estimated Cost for Government Implementation
The implementation of the scheme will result in additional costs for
Government in relation to the initial allocation of the authorities, the
transitional dispute resolution mechanism and the sale process. Where
possible, the scheme will incorporate cost recovery mechanisms.
There will also be additional ongoing administrative costs associated
with the scheme in relation to reconciling transfers of ownership of
authorities, systems changes and increased audit activity. Consequently, it
is proposed to deduct a small administration fee from the taxes received
from hotels with gaming machines to cover the extra costs incurred on an
ongoing basis by the Queensland Office of Gaming Regulation.
The Government will gain revenue through the imposition of duty on a
number of transactions that involve a transfer of authorities.
Assessment of Bill's Consistency with Fundamental Legislative
Principles
The Bill has been prepared taking into consideration fundamental
legislative principles. The Office of the Queensland Parliamentary Counsel
(OQPC) had identified two potential deviations from fundamental
legislative principles in clause 21 of the Bill which, among other matters,
inserts new section 109E in the Gaming Machine Act.
First, section 109E provides for the treatment of the commission which
will be charged on the sale of authorities and OQPC recommended that the
section should state at least an upper limit of the amount of commission
that will be provided into the Community Investment Fund. The
commission percentages will be prescribed in the associated amendment
regulation and will be 33% for a partial sale of authorities where the
licensee will still retain authorities and 50% for a full sale of all authorities
held by a licensee. The prescribing of the percentages of commission is
similar to the treatment of the sliding scale of tax charged for clubs
(category 2 licensees) or the sliding scale of the major facilities levy for
hotels and therefore it was not considered necessary to change the section.
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Gaming Machine and Other Legislation Amendment
Bill 2003
Second, clause 21 inserts a new section 109G to provide that no
compensation is payable to a licensee where, under particular
circumstances stated in the new section 109F, an authority of the licensee
becomes an authority of the State and stops being an authority of a
licensee. OQPC stated that it seems reasonable to provide for no
compensation in the case of an authority that is initially allocated to the
licensee as it is a potential benefit gratuitously given to the licensee.
However, OQPC recommended that the Department should deal with the
issue of no compensation being payable if an operating authority of a
licensee, that has been bought by the licensee, becomes an operating
authority of the State. In this regard, it is argued that the circumstances
whereby an operating authority becomes an operating authority of the
State, following the commencement of the re-allocation scheme, will be
rare and will occur principally as a result of cancellation, expiry or lapsing
of the gaming machine licence or where an increase in the approved
number of gaming machines lapses. In all possible circumstances which
lead to these actions, the licensee has control of or the ability to rectify the
situation to avert the action being taken and the prospect of no
compensation being forthcoming will induce better compliance and
business planning and management by licensees.
Consultation
Government consultation has taken place with the Department of the
Premier and Cabinet; the Department of Tourism, Racing and Fair Trading;
the Department of Local Government and Planning; the Department of
State Development; the Department of Employment and Training; the
Department of Primary Industries; the Department of Public Works; the
Department of Families and the Department of Justice and Attorney-
General. The Office of the Queensland Parliamentary Counsel has prepared
the Bill.
During October and November 2001, the Queensland Office of Gaming
Regulation (QOGR) held discussions with the Queensland Hotels
Association and conducted discussion sessions with hoteliers in Cairns,
Townsville, Rockhampton, Toowoomba, the Sunshine Coast, the Gold
Coast and Brisbane. As a result of those sessions, a Discussion Paper titled
"A Scheme for Re-allocating Gaming Machines in Hotels" was publicly
released in December 2001.
The Discussion Paper was provided to all Members of Parliament, Local
Councils, Directors-General and industry and community stakeholders.
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Gaming Machine and Other Legislation Amendment
Bill 2003
The Discussion Paper was also published on the QOGR web-site and
QOGR received 50 submissions in response to the Paper.
Following the release of the Discussion Paper, QOGR conducted further
discussion sessions with hoteliers from 31 January to 5 February 2002 in
Cairns, Townsville, Rockhampton, Ipswich, Mackay, Toowoomba, the
Sunshine Coast, the Gold Coast and Brisbane.
In 2002, an Industry Consultative Committee was formed comprising
representatives from the hotel industry, to discuss in detail the main issues
pertaining to the re-allocation scheme.
During 2003, a Public Benefit Test (PBT) was undertaken in relation to
the restrictions potentially placed on competition as a result of the scheme.
As a result, a Draft PBT Report was released for comment on 5 April 2003
and comments closed on 28 April 2003. Five responses were received and
a summary of the responses were included in the Report which was
finalised on 6 May.
NOTES ON PROVISIONS
PART 1--PRELIMINARY
Clause 1 sets out the short title of the Act.
Clause 2 provides for the commencement of the Act on 1 July 2003.
PART 2--AMENDMENT OF GAMING MACHINE ACT
1991
Clause 3 notes that Part 2 and the schedule amend the Gaming Machine
Act 1991.
Clause 4 amends section 29 to omit paragraphs (i), (j) and (k) of
subsection (9) dealing with appeals to the Minister. This is necessary
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Gaming Machine and Other Legislation Amendment
Bill 2003
because, as a result of clause 13 and clause 5, any application by a licensee,
report from an inspector or request from an approved authority (Liquor
Licensing Division, Queensland Fire and Rescue Service and Local
Government Council) for a decrease in the number of gaming machines for
a licensee's licensed premises, will be decided by the chief executive with a
right of appeal to the Queensland Gaming Commission.
Clause 5 amends section 32 to renumber some of the subsections. In
addition, it inserts new paragraphs (a), (b) and (c) in subsection (1A) to
provide for a right of appeal to the Queensland Gaming Commission from
a decision of the chief executive in relation to an application by the
licensee, or a report from an inspector or request from an approved
authority (Liquor Licensing Division, Queensland Fire and Rescue Service
and Local Government Council), for a decrease in the approved number of
gaming machines for a licensee's licensed premises. This reflects
amendments in clause 15 which change the decision-maker from the
Queensland Gaming Commission to the chief executive for initial
decisions and consequently require a change in the appeal body.
Clause 6 inserts a new section 54A to provide that the chief executive
may issue guidelines. For example, the chief executive will be able to
provide guidelines about the sale of operating authorities. The chief
executive will also be able to issue guidelines about matters that the chief
executive may take into account in deciding applications to decrease
gaming machine numbers under section 86, especially in relation to
category 1 licensees. The new section is similar to the ability for the
Queensland Gaming Commission to issue guidelines under the existing
section 17.
Clause 7 amends section 56(1) to restore the ability for individuals and
corporations to apply for a gaming machine licence for a category 1
licensed premises (primarily hotels). This ability to apply for a gaming
machine licence was omitted through section 6 of the Gaming Machine
Amendment Act 2001 as a means of imposing the state-wide cap on gaming
machines in hotels. In order to fully restore the ability to apply for gaming
machines, the clause also amends section 56(2) and inserts a new
subsection (6) thereby restoring these related provisions to their former
status. The re-allocation scheme is intended to leave the existing licensing
decision-making processes unaffected. Thus, the amendments in this
clause do not change the role of the Queensland Gaming Commission (the
Commission) in considering applications for gaming machine licences. All
applications for gaming machine licences will still have to be approved by
the Commission. The legislation will continue to require that an
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Gaming Machine and Other Legislation Amendment
Bill 2003
application for a new licence must be accompanied by a community impact
statement and a statement of responsible gambling initiatives and the
Commission will still have regard to social impact issues in deciding
applications. Furthermore, decisions by the Commission to grant a gaming
machine licence will not be constrained by the cap on machine numbers for
category 1 licensed premises. That is, the Commission will be able to grant
approvals for more approved machines than there are available operating
authorities. It is the additional requirement to purchase operating
authorities that will give effect and retain the cap on machine numbers in
hotels.
Clause 8 omits section 559(2A), (3A) and (5) that were included in the
Gambling Legislation Amendment Act 2002 to give effect to the cap on
machine numbers in category 1 licensed premises. This provision was
originally inserted to provide that, where a gaming machine application is
made as a result of the transfer of a liquor licence, the Queensland Gaming
Commission could not approve more gaming machines than the number for
which the licensed premises was approved at the time of the application.
For example, if the existing premises was approved for 30 gaming
machines, the Commission could not approve 31 or more machines when
granting a gaming machine licence to the new applicant. It is now
necessary to remove those provisions in order to implement the re-
allocation scheme.
Clause 9 renumbers the subsections and inserts a new section 68(2)(d)
which details some additional matters to be included in future, on licences
for category 1 licensed premises. In particular, the licence will be required
to state the authority region in which the licensed premises are located, the
number of operating authorities for the licence, the registration number of
each of those operating authorities and the date of the most recent sale of
authorities at the licensed premises. By definition, the number of operating
authorities shown on a licence will be the endorsed number of operating
authorities for the licensed premises. In indicating the number of
authorities for the licensed premises, the licence will also clearly indicate
any authorities that provisionally form part of the endorsed number of
authorities pending their sale. In such circumstances, if the licensee for the
licensed premises changes, the new licence will only show the lesser
number of authorities that are held unconditionally. All of the new
information to be shown on a licence will be necessary for the sale of
authorities and will be amended under section 109I after the sale or
purchase of authorities.
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Gaming Machine and Other Legislation Amendment
Bill 2003
Clause 10 inserts three new subsections to section 78 to provide that
where a gaming machine licence is issued at the same time as a liquor
licence transfer, the operating authorities under the associated gaming
machine licence that existed just prior to the liquor licence transfer, are
transferred to the new holder of the new gaming machine licence for that
licensed premises less any authorities that are pending sale. This will
ensure that authorities (and hence gaming machines) can stay with the
licensed premises when there is a change in licensee for the licensed
premises, such as when lessees change. This will provide business certainty
and will enable continuity of machine gaming in the absence of a decision
to reduce gaming machine numbers at the licensed premises. Importantly,
this transfer of authorities only applies to a change of licensees at the same
licensed premises. It does not permit the transfer of authorities between
licensed premises held by the same licensee. Moreover, the transfer will
not permit an increase in authorities because the only means by which a
licensee may increase authorities is via purchase at an authorised sale. The
clause also clarifies that authorities which are pending sale, are not
included in the transfer to the new licensee.
Clause 11 inserts new section 80B to create an offence with a maximum
penalty of 200 penalty units if a category 1 licensee installs and operates
more gaming machines than the endorsed number of operating authorities
for the licensed premises. For example, if the endorsed number of
authorities is 20, a licensee must not install and operate 21 or more
machines. This ensures effect is given to the Government's state-wide cap
on the number of gaming machines in hotels. It also combines with new
section 109F so that the number of endorsed authorities for a licensed
premises must be both greater than or equal to the number of operational
machines for the premises as well as being less than or equal to the number
of approved machines for the licensed premises.
Clause 12 amends section 81 by omitting `other than category 1 licence'
to restore the ability for category 1 licensed premises to apply for an
increase in their approved number of gaming machines. This ability to
apply for an increase in the approved number of gaming machines was
omitted through section 8 of the Gaming Machine Amendment Act 2001
and combined with amendments to section 56 to impose the cap on gaming
machines in hotels, whilst the re-allocation scheme was developed.
Reinstating the ability for category 1 licensees to apply for increases
reinstates the requirement for decisions on those applications to be made
by the Queensland Gaming Commission. In assessing applications for
increased numbers of machines at category 1 licensed premises, the
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Gaming Machine and Other Legislation Amendment
Bill 2003
Commission will balance the costs and benefits of an increase in machine
numbers in relation to the community affected by the application.
Clause 13 inserts new subsection (1A) to section 86 to provide that a
category 1 licensee will not be able to apply to decrease the licensee's
approved number of gaming machines at a licensed premises by more than
50% of the total number of approved machines for that licensed premises.
This will limit a licensee to either selling all of the authorities for a licensed
premises by surrendering the licence for the licensed premises or only
selling up to 50% of the authorities for the licensed premises. This section
combines with the limit on the number of decrease applications per year
under section 86A, plus the requirement to pay a commission on the sale of
authorities to the Community Investment Fund under section 109D. The
combined limitations through the three sections will provide a disincentive
for market speculation in authorities. They also limit the ability for large
windfall gains to be obtained and limit the incentives for rapid, large scale
reductions in authorities and hence gaming machine numbers. This will
assist industry stability and will help retain a suitable level of the social
interaction that is associated with the whole entertainment package
provided by gaming machines, especially in rural and regional Queensland.
The clause also provides that a licensee must include their gaming machine
licence as part of the application for a decrease in the approved number of
gaming machines for their licensed premises.
Clause 14 inserts a new section 86A to provide that an application for a
decrease in the approved number of gaming machines for a category 1
licensed premises may only be made 12 months after the last sale (if any)
of authorities for that licensed premises. This combines with clause 13 to
provide a disincentive for speculative behaviour. It also requires licensees
to make decisions in relation to decreases solely on the basis of the number
of machines which are suitable for the licensed premises rather than with
regard to how much money may be obtained through sales of authorities.
The new section 86A(2) does, however, provide the chief executive with
the power to waive that restriction, if the chief executive is satisfied that the
restriction would impose an unreasonable financial burden on the licensee.
For example, a licensee may experience such financial difficulties that an
administrator may be appointed to the licensed premises, who then requires
that the number of machines be reduced immediately in order to continue
to be able to trade.
Clause 15 replaces sections 87 and 88 with new sections 87, 88, 88A and
88B.
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Gaming Machine and Other Legislation Amendment
Bill 2003
The new section 87 provides for decisions on the different types of
decrease proposals available under section 86 and reflects that it is the chief
executive and not the Queensland Gaming Commission who will be
deciding applications for decreases in future. Section 87(2) provides that,
for a category 1 licensed premises, the chief executive will not be able to
approve a decrease for more than half the approved number of gaming
machines that relates to the licensed premises immediately before the
application for the decrease is made. This reflects the restriction on
applications provided in clause 13. For example, if the approved number
of gaming machines is 20 and the decrease sought is 10 machines, then the
chief executive may approve a decrease of up to 10 machines, however, the
chief executive must not approve a decrease of 11 or more machines. In
addition, section 87(5) requires the sale of any operating authorities that
become in excess of the approved number of gaming machines, as a result
of approving a decrease application by a licensee. Such excess authorities
must be included for sale at the next authorised sale and, once a decrease
application is approved, a licensee has no discretion about the sale and
therefore can not decide not to sell the authorities. That is, the selling of
authorities will occur automatically, once an application for a decrease is
approved. Conversely, sections 109F and 109G provide that authorities
associated with decreases which arise from a report or request will be
forfeited to the State without compensation. Provision is also made under
section 87(6) for a category 1 licensee to request, at the time of making an
application, that a decrease is made conditional on the sale of the operating
authorities associated with the gaming machines. If approved under
section 87(7), a licensee would then be able to continue to operate the
additional gaming machines until the authorities were sold, which could
occur a number of months after the decrease is approved. The authorities
that are being used pending sale, will be recorded on the licence under
section 68. While section 87(4) states that the chief executive must not
refuse a decrease application if it would impose an unreasonable financial
burden on a licensee, subsection 87(8) states that the chief executive may
not approve a decrease arising from a request or report which would
similarly cause financial hardship, but only constrains the chief executive
in this regard in relation to category 2 licensed premises.
The new section 88 replicates the effect created by the existing section
88(5) & (6) in relation to dealing with the disposal of gaming machines
where a decision is made approving a decreased number of gaming
machines for a licensed premises.
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Gaming Machine and Other Legislation Amendment
Bill 2003
The new section 88A replicates the effect created by the existing section
88(7), (8) & (9) regarding notices that must be provided in relation to
decisions about decreasing the number of gaming machines for a licensed
premises.
A new section 88B provides that, following receipt of a notice under
section 88A about a decision approving a decrease proposal, a licensee
must return the licence to the chief executive for the chief executive to
record the decrease in approved numbers of machines (and associated
decrease in operating authorities for category 1 licensed premises) for the
licensed premises. An offence with a maximum penalty of 40 penalty units
is created, if the licensee does not return the licence to the chief executive
for replacement within 7 days after receiving the notice.
Clause 16 amends section 89 to remove references to the Queensland
Gaming Commission given that the role of determining decrease proposals
will now be undertaken by the chief executive rather than the Commission.
Clause 17 amends section 90 to remove references to the Commission
given that the role of determining decrease proposals will be made by the
chief executive. Furthermore, a new subsection (4) is inserted which
provides that, if the decrease is approved subject to the sale of the operating
authorities associated with the gaming machines, the licensee has one
month after the sale of each operating authority to dispose of the associated
gaming machine.
Clause 18 amends section 95 to provide in subsection (2A) that, where a
category 1 licensee surrenders a gaming machine licence, all of the
operating authorities for that gaming licence must be made available for
sale at the next authorised sale of authorities. This is similar to the
requirement that authorities associated with voluntary decreases must be
sold. New subsection (2B) enables the surrender of the gaming machine
licence for a category 1 licensee, to be conditional on the sale of the
licensee's operating authorities, but only if notified by the licensee at the
time of notifying the surrender. This will enable a licensee to continue to
operate the gaming machines until the authorities for the machines are sold.
Where the surrender is conditional, new subsection (2C) states when the
licensee's gaming machine licence must be returned to the chief executive
and an offence with a maximum penalty of 40 penalty units is created, if
the licensee does not return the licence within the required time. A new
subsection (8A) is also inserted which provides that, if the surrender of the
licence is conditional on the sale of the operating authorities associated
with the gaming machines, the licensee has one month after the sale of the
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Gaming Machine and Other Legislation Amendment
Bill 2003
operating authorities to dispose of the gaming machines. An offence with a
maximum penalty of 200 penalty units is created, if the licensee does not
dispose of the gaming machines within the required time.
Clause 19 amends section 96 by inserting a new subsection (1A) to
provide that, where a special facility liquor licence is surrendered to the
Liquor Licensing Division and is immediately replaced with a general
liquor licence, the associated gaming licence is not cancelled, as would be
the case under the existing provisions of section 96.
Clause 20 amends section 97(1) to include that additional grounds for
show cause action will arise if the chief executive considers a licensee has
contravened three new sections inserted via this Bill. The sections are:--
· 80B - installing and operating more machines than the endorsed
number of authorities for the licensed premises;
· 109C - purchasing operating authorities other than as permitted
and;
· 411(1) - failing to register for an allocation of authorities within
28 days.
PART 3A--OPERATING AUTHORITIES FOR
CATEGORY 1 LICENSED PREMISES
Clause 21 inserts a new Part 3A to deal with operating authorities. It
inserts a number of new sections within three Divisions.
The new Division 1Preliminary inserts section 109A to provide that
the maximum number of operating authorities for category 1 licensed
premises for Queensland is the number prescribed under a regulation. The
figure that will be prescribed will be set at the current amount of 18,843.
This figure is the maximum amount of authorities that will be able to be
used by hotels across Queensland. As the number of gaming machines able
to be installed and operated may not exceed the number of authorities, this
section gives effect to the state-wide cap and ensures that the number of
gaming machines in category 1 licensed premises in Queensland can not be
more than 18,843. The new Part relates only to category 1 licensed
premises. Consequently, the limitation on the number of authorities and
hence the number of machines does not apply to clubs (category 2 licensed
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Gaming Machine and Other Legislation Amendment
Bill 2003
premises). The section also gives substance to the creation of operating
authorities by declaring that they exist. This section acknowledges that
Queensland's population is growing over time by providing that the
Minister may recommend an increase in the maximum number of
authorities, having regard to any population growth within the State. If the
legislation prevented such an increase, the potential for extra demand for
authorities could lead to artificially inflated prices for authorities. As any
increase will have regard to population growth, it is not expected that the
cap number will increase any more frequently than annually or biennially.
This clause also inserts new sections 109B, 109C, 109D and 109E within
a new divisional heading "Division 2Sale of Operating Authorities". First,
section 109B provides that an operating authority may be sold only by an
entity and in the way prescribed under a regulation. It is anticipated that
the regulation will state that a Government agency will oversee the sale
process and that the sale will take place via a tender process. This aims to
prevent unlicensed third parties entering the gaming machine industry and
brokering deals between purchasers and sellers of authorities and will
therefore assist to maintain the integrity and probity of machine gaming in
Queensland. It is further expected that the documentation associated with
the tender will establish the detail of how bids are to be made and decided.
In this regard, it is expected that licensees will only be able to make one
price bid for the total number of authorities sought. The documentation will
also state that the successful tender will be decided solely on the basis of
the highest bid. Second, section 109C provides a cumulative limitation on
who may purchase operating authorities. Importantly, only a category 1
licensee may purchase authorities as the only person who can hold an
authority is a category 1 licensee. This will prevent trading in authorities
by brokers, etc. Also, a category 1 licensee will only be able to purchase
authorities if the approved number of gaming machines for the relevant
licensed premises is more than the number of authorities they currently
hold for that licensed premises. Further, unless the authorised sale of
authorities is conducted for the whole of the State, only category 1
licensees with a licensed premises in the region for which authorities are
for sale will be able to purchase those authorities. The regions will be
prescribed under a regulation. There will be three regions based on the 11
Statistical Divisions defined by the Australian Bureau of Statistics for
Queensland. The regions will be South-East, Coastal and Western. Thus,
the regional restriction will mean that someone in the Western Region will
not be able to purchase authorities from the Coastal Region. This shows
the Government's commitment to maintaining Queensland's regions by
preventing a large movement of authorities and hence machines from
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Gaming Machine and Other Legislation Amendment
Bill 2003
regional Queensland to the south-east corner of the State. This section also
creates an offence with a maximum penalty of 200 penalty units (currently
$15,000) if a person not mentioned in subsection (1) was to purchase an
operating authority. It also creates an offence with a maximum penalty of
200 penalty units, if a category 1 licensee purchases operating authorities
which would result in the licensee having more authorities than the
approved number of gaming machines for that licensed premises. For
example, if the approved number of gaming machines for a licensed
premises is 20 and the number of authorities for the licensed premises is
17, the licensee must not purchase more than 3 operating authorities. The
section also clarifies that any authorities transferred under section 78 as a
result of the transfer of a liquor licence for the licensed premises, are not
taken to have been purchased in terms of section 109C. Third, new section
109D provides that when any operating authorities of the State are sold at
an authorised sale, the proceeds from the sale must be paid into the
Community Investment Fund. Sales of authorities held by the State will be
rare, as the State will only obtain authorities under the new section 109F
when licensees have failed to correct actions leading to forfeiture of
authorities. Since 8 May 2001, when the state-wide cap was announced,
the approved number of gaming machines has fallen below the total
number that existed at the time of the announcement. Consequently, it is
probable that the Government will conduct one sale in order to re-allocate
the authorities that the State holds. In order not to unfairly restrict access to
such "borderless" authorities, the State-held authorities will be available
for purchase across Queensland in a fair and equitable manner for all
licensees. Fourth, new section 109E provides that a commission must be
paid on the sale of authorities and the commission must be paid into the
Community Investment Fund with the balance of the sale price paid to the
licensee. The commission percentages will be prescribed in the associated
amendment regulation and will be 33% for a partial sale of authorities
associated with a voluntary decrease of approved gaming machines for the
licensed premises and 50% commission for a full sale of all authorities held
by a licensee when the licensee surrenders the licence for the licensed
premises. The section also provides that regulations will detail how the
commission and the balance of sale amounts are to be distributed when
there are 2 or more licensees selling authorities at the sale. In this regard, it
is intended that the sale prices received for all authorities at an approved
sale will be combined and averaged across the number sold, irrespective of
whether the authorities sold are the result of a decrease approval or a
surrender of the gaming machine licence. Licensees will then receive the
average price multiplied by the number of authorities that they sold (less
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Gaming Machine and Other Legislation Amendment
Bill 2003
the commission). The section also clarifies that a licensee includes a
person who was the licensee who initiated the sale of authorities. This
enables sale proceeds to be provided to a person who was a licensee even
though they subsequently ceased to be a licensee because they have
surrendered the gaming machine licence.
Clause 21 also inserts new sections 109F, 109G, 109H, 109I and 109J
within a new divisional heading "Division 3-Other matters about operating
authorities". The new section 109F provides for the various situations
when operating authorities become operating authorities of the State and
stop being authorities of a licensee. Section 109G then provides that
compensation is not payable where such authorities become authorities of
the State. Importantly, section 109F also states that any authorities which
exceed the number of approved machines for a licensed premises will be
forfeited to the State. This ensures that authorities can not be bought,
warehoused and then sold and thus prevents authorities being bought
simply to trade, rather than for the purposes of installing and operating
machines. Section 109H provides that an encumbrance over an operating
authority is of no effect. This ensures that only category 1 licensees can
hold authorities and in holding them have an unfettered ability to deal with
them. The new section 109I provides for the issuing of a replacement
gaming machine licence for a fee upon the purchase or sale of an operating
authority. An offence with a maximum penalty of 40 penalty units is
created, if the licensee does not return the licence to the chief executive for
replacement within 7 days of the purchase or sale. The section also
provides for inclusion of the matters mentioned in the new section 68(2)(d)
(inserted by clause 9) on the replacement licence. Finally, section 109J
provides for the review of the operation of the provisions of the Act relating
to operating authorities by the chief executive within 2 years of the
commencement. This gives effect to the Government's commitment to trial
the scheme and subsequently review it after 2 years of its operation.
Clause 22 amends section 164 by inserting a new subsection (4A) to
provide that the chief executive may exclude the particular information
mentioned in subsection (4) from a supplier's control system submission, if
satisfied that the information is not necessary for the proper consideration
of the submission. For example, if the control system submission were to
require ten particular items of information and the chief executive was
satisfied that items one to three were not necessary, only items four to ten
would be required as part of the submission.
Clause 23 amends section 322 dealing with disposition of fees to
provide that a prescribed amount per operating authority will be deducted
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Bill 2003
from the monthly gaming machine taxes paid by category 1 licensees and
retained as controlled receipts of the Department. These funds will be used
for the purpose of offsetting the extra costs which will be incurred by the
Queensland Office of Gaming Regulation in the ongoing administration of
and compliance with the scheme.
Clause 24 enables a regulation to be made in relation to defining the
authority regions for the Act.
Clause 25 omits section 367, now a redundant provision which, through
an oversight, was not removed through the Gambling Legislation
Amendment Act 2002.
Clause 26 inserts a new Division 8 within Part 12 to provide for the
initial allocation of operating authorities and the transitional dispute
resolution mechanism for disputes arising from that initial allocation.
Subdivision 1 deals with preliminary matters and inserts section 408 to
provide the definitions relevant to the division. The section defines
"allocation dispute" as a dispute which arises from the initial allocation of
authorities and affects existing agreements or arrangements between
parties. This definition confines the mechanism for hearing disputes to
only the initial allocation of authorities, not the ongoing dealings with
authorities. The section also defines a category 1 licensee to be the
category 1 licensee who is the licensee for the licensed premises as at 1
July 2003. Consequently, the dispute resolution process exists for persons
who hold category 1 licences on 1 July, not those who may have held them
on or before 30 June 2003 or who may hold them on or after 2 July 2003.
The section also defines who may be a party to a dispute. The definition
intends to confine the resolution of disputes to matters arising between a
category 1 licensee, the landlord (if any) for the category 1 licensed
premises and any person prescribed who has a financial interest in the
conduct of machine gaming at the licensed premises which could be
adversely affected by the initial allocation of authorities. For example, a
person to be prescribed could include a lessee where the category 1
licensee is a sub-lessee. However, it is unlikely that a lending institution
would be prescribed as a party to the dispute. Finally, the section specifies
that the Tribunal which will hear disputes is the Commercial and Consumer
Tribunal.
Clause 26 also inserts new sections 409, 410, 411, 412 and 413 within
subdivision 2 to provide for the initial allocation of operating authorities to
existing category 1 licensees. Section 409 states that on 1 July 2003, each
category 1 licensee will be allocated the number of operating authorities
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Gaming Machine and Other Legislation Amendment
Bill 2003
for the licensed premises equal to the approved number of machines for the
licensed premises. Authorities will be allocated to licensees because, in
accordance with the rest of the principal Act, gaming machine licensees are
the persons responsible for the conduct of gaming on licensed premises.
Section 410 provides that the chief executive will, as soon as practicable
after commencement of the Act, give each category 1 licensee a written
notice stating that the licensee must register for the allocation of operating
authorities. Section 411 then requires licensees to return the completed
registration within 28 days after receiving the written notice from the chief
executive. An offence with a maximum penalty of 200 penalty units is
created in section 411(1) if a category 1 licensee fails to register in relation
to the allocation of authorities within the 28 day period. Among other
matters, the approved form for registration will require licensees to advise
if they own or lease the licensed premises. If a licensee leases the licensed
premises, the licensee will then be asked if the licensee has reached
agreement in relation to the initial allocation of authorities and nominate
who is the other party to the agreement. In this regard, the existing section
350(f) allows for a maximum penalty of 400 penalty units or 2 years
imprisonment for the provision of false or misleading information. The
registration must also be properly completed and an offence is created with
a maximum penalty of 40 penalty units, if a licensee does not return the
licensee's gaming machine licence to the chief executive with the form.
The new sections 412 and 413 provide for the chief executive to issue a
replacement gaming machine licence detailing the number of authorities
for the licensed premises, their registration numbers and the authority
region for the licensed premises. It is anticipated that the reissuing of
licences will be complete within one month of commencement of this Act.
Clause 26 also inserts new sections 414, 415, 416, 417, 418, 419 and 420
within subdivision 3 which provides for dealing with allocation disputes
under the Commercial and Consumer Tribunal Act 2003 (Tribunal Act).
First, the new section 414 confines the jurisdiction of the Commercial and
Consumer Tribunal (the Tribunal) to only hearing and deciding disputes
between parties arising from the initial allocation of authorities and matters
necessary to so decide the dispute. Second, section 415 provides that the
Tribunal Act applies to allocation disputes, albeit the subdivision places
some limits on the Tribunal Act. The new section 416 provides that a party
to the dispute may apply, within the prescribed period, for the Tribunal to
hear and decide the dispute. Such an application must be accompanied by
a mediation fee. The mediation fee is charged instead of the application fee
imposed under the Tribunal Act. When any responding parties are served
with the application, they must also pay the mediation fee. The amount of
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Bill 2003
the mediation fee will be prescribed and will be equal to the cost of 3 hours
of mediation. Consequently, as both parties pay the fee, they will be
paying, up front, for a combined 6 hours of mediation. As the chief
executive will receive a copy of the application, the chief executive will be
able to check that those parties who, stated in their registration form for
authorities, that they had not reached agreement with their landlord, have
subsequently made an application to the Tribunal. The new section 417
overrides the Tribunal Act to require that mediation is compulsory prior to
the Tribunal hearing the dispute. This compulsory meditation aims to get
the parties to the dispute to resolve the matter themselves without requiring
the need to retain legal representatives. The dispute resolution process in
total is designed to be a speedy, non-confrontational and relatively low cost
means of resolving disagreements. Consequently, there is emphasis on the
low cost mediation, rather than the higher cost Tribunal. Section 418
provides that parties who do not resolve disputes via mediation will be
required to pay a prescribed proceeding fee to the Tribunal within 7 days
after the end of the mediation. Both parties will be required to pay the
prescribed fee and it will be considerably larger than the mediation fee in
order to recover the costs of having the matter heard by the Tribunal.
Section 419 then requires the Tribunal to hear the allocation dispute. It
operates with section 31 of the Tribunal Act and will ensure that anyone
seeking to have an allocation dispute heard by another jurisdiction, will be
referred back to the Tribunal to first have the dispute decided by the
Tribunal. While section 419 states that payment of a mediation or
proceeding fee is not a pre-requisite for resolution of the matter, it does
specify that the State may recover such fees as a debt due to the State.
Consequently, if only one party pays the required fees, the Tribunal may
exercise its discretion to hear and decide the matter in the absence of the
other party. As with all decisions of the Tribunal, such decisions will be
enforceable through the relevant Court and will only be able to be appealed
on points of law.
Finally, section 420 provides some examples of orders which the
Tribunal may make in relation to an allocation dispute, but are not intended
to limit the Tribunal Act. It also gives non-limiting examples of matters the
Tribunal may consider in deciding a dispute and enables further matters to
be prescribed or provided in a guideline issued by the chief executive.
Lastly, clause 26 inserts new sections 421, 422, 423, 424, 425, 426 and
427 within subdivision 4 which provides for a number of transitional
matters. First, section 421 provides for the way in which appeals to the
Minister in relation to the proposals to decrease the approved number of
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Bill 2003
gaming machines for a licensed premises, which have not been decided
before the commencement of the provision, may be continued and decided.
Second, section 422 provides that an application for a decrease in the
approved number of machines for a licensed premises which has not been
decided before the commencement of this Act, must be decided under the
amended Act. Third, new section 423 provides that a licensee does not
contravene section 80B in having machines installed and operational
without authorities until the licensee receives a replacement licence under
section 412 showing the initial allocation of operating authorities. Fourth,
new section 424 provides that if a licensee or another person has applied to
the Tribunal to hear an allocation dispute, the category 1 licensee who is a
party to the dispute must not, without the chief executive's written
approval, surrender the involved gaming machine licence until either the
period for lodging an application with the Tribunal is ended or the dispute
is resolved. Fifth, new section 425 provides that if, before the
commencement of this Act, the Queensland Gaming Commission had
approved a decrease in the approved number of gaming machines for a
licensed premises and the required time for disposing of the machines has
not ended, then the licensee must dispose of the gaming machines in the
required time under the existing section 90(2). Sixth, new section 426
provides that, where a category 1 licensee has not paid a meditation fee or a
proceeding fee to the Tribunal, the chief executive may direct the licensee
in writing to pay the fee. Additionally, if the chief executive considers an
allocation dispute exists from the information available, the chief executive
may direct the licensee to apply to the Tribunal to have the dispute decided.
For example, the chief executive may be aware that the registration form
stated that a category 1 licensee had not reached an agreement with a
landlord, but the licensee had not subsequently made an application to the
Tribunal. Consequently, the chief executive may direct the licensee to
make an application under section 416. Finally, section 427 provides that
an authorised disclosure of information under section 54(5) includes the
disclosure of information to assist a party to settle an allocation dispute.
Clause 27 amends the schedule (Dictionary) by inserting definitions
relating to dealings associated with operating authorities. This clause also
amends the definition of "approved number" due to amendments to
sections 87 and 88. It also amends the definition of "category 1 licensed
premises" to reflect the change in name of the Surfers Paradise Bowls Club
Incorporated to its new name of Surfers Paradise Sports Club Inc.
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Bill 2003
PART 3--AMENDMENT OF COMMERCIAL AND
CONSUMER TRIBUNAL ACT 2003
Clause 28 provides that Part 3 amends the Commercial and Consumer
Tribunal Act 2003.
Clause 29 amends schedule 2 to include in the definition of
"empowering Act" the `Gaming Machine Act 1991'.
SCHEDULE
MINOR AMENDMENTS OF GAMING MACHINE ACT
1991
The schedule provides for five minor technical amendments to the
Gaming Machine Act 1991.
© State of Queensland 2003