FEDERAL COURT OF AUSTRALIA
Sportsbet Pty Ltd v The State of Victoria [2011] FCA 961
| IN THE FEDERAL COURT OF AUSTRALIA | |
| DATE OF ORDER: | |
| WHERE MADE: |
THE COURT ORDERS THAT:
1. The parties are directed to being in orders to give effect to these reasons for decision by 4:00pm on 29 August 2011.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
| VICTORIA DISTRICT REGISTRY | |
| GENERAL DIVISION | VID 808 of 2010 |
| BETWEEN: | SPORTSBET PTY LTD (ABN 87 088 326 612) First Applicant EUREKA HOTEL HOLDINGS PTY LTD (ACN 135 267 597) Second Applicant |
| AND: | THE STATE OF VICTORIA First Respondent THE VICTORIAN COMMISSION FOR GAMBLING REGULATION Second Respondent TABCORP HOLDINGS LIMITED (ABN 66 063 780 709) Third Respondent |
| JUDGE: | GORDON J |
| DATE: | 22 august 2011 |
| PLACE: | MELBOURNE |
INDEX
| Content | Para(s) | |
| A. | Introduction | [1] – [7] |
| B. | Relevant Legislative Provisions | |
| (1) The Impugned Provisions | ||
| (a) s 2.5.2 of the GRA – betting house or place of betting | [8] – [11] | |
| (b) s 2.6.1 of the GRA – instrument of betting | [12] – [14] | |
| (c) s 115 of the LCRA | [15] | |
| (2) The Provisions Relating to Tabcorp | ||
| (a) The Tabcorp Licence | [16] – [20] | |
| (b) Exemption from the GRA – s 2.5.2 | [21] – [22] | |
| (c) Exemption from the GRA – s 2.6.1 | [23] | |
| (d) Exemption from the LCRA – s 115 | [24] – [25] | |
| (e) Tabcorp’s totalisator exclusivity on racing | [26] – [28] | |
| C. | Proper Construction of the Impugned Provisions | |
| (1) Introduction | [29] | |
| (2) s 2.6.1 of the GRA | ||
| (a) Legislation | [30] – [33] | |
| (b) Respective Contentions | [34] – [35] | |
| (c) Analysis | [36] – [55] | |
| (3) s 2.5.2 of the GRA | [56] – [69] | |
| (4) s 115 of the LCRA | [70] – [71] | |
| D. | Constitutional Arguments | |
| (1) Introduction | [72] – [75] | |
| (2) Do the Impugned Provisions Impose a Discriminatory Burden on Interstate Trade? | ||
| (a) Interstate Trade and Commerce? | [76] – [93] | |
| (b) Discriminatory Burden | [94] | |
| (c) s 2.5.2 of the GRA | [95] – [106] | |
| (d) s 2.6.1 of the GRA | [107] – [109] | |
| (e) s 115 of the LCRA | [110] | |
| (3) Discrimination Protectionist? | [111] – [129] | |
| (4) Impugned Provisions Appropriate and Adapted to Achieve Objectives Consonant with s 92? | ||
| (a) Introduction | [130] – [132] | |
| (b) Funding | [133] – [151] | |
| (c) Public Interest in having a single large totalisator as part of Tabcorp’s retail exclusivity | [152] – [154] | |
| (d) Regulation – Integrity and Probity | [155] – [160] | |
| E. | The Fixed Odds Challenge | [161] – [172] |
| F. | Orders | [173] |
REASONS FOR JUDGMENT
A. INTRODUCTION
1 The first applicant, Sportsbet, is Australia’s largest corporate bookmaker with an annual turnover of about $2 billion. Sportsbet holds a licence issued under the Racing and Betting Act 1983 (NT) (the NT Act) to conduct the business of a sports bookmaker in the Northern Territory. In May 2010, Sportsbet installed a device known as a “betbox” at the Eureka Stockade Hotel in East Ballarat, Victoria. The second applicant, Eureka, is the licensee of the Eureka Stockade Hotel under the Liquor Control Reform Act 1998 (Vic) (the LCRA).
2 The “betbox” is a physical computer terminal or device developed by Sportsbet which allows a user, by means of a touch screen, to communicate with Sportsbet’s servers located at its licensed premises in Darwin for the purpose of placing bets. In July 2010, officers of the second respondent, the Victorian Commission for Gambling Regulation (the VCGR), seized the “betbox” at the Eureka Stockade Hotel. The VCGR officers were empowered by s 10.5.9(1)(c) of the Gambling Regulation Act 2003 (Vic) (the GRA) to seize any machinery, equipment or records if they considered it necessary to do so for the purpose of obtaining evidence of the commission of an offence.
3 The first respondent, the State, and the VCGR contend that the installation and operation of the “betbox” at the Eureka Stockade Hotel was a contravention of:
1. s 2.5.2 of the GRA, which prohibits a person from opening, keeping or using a “betting house or place of betting”;
2. s 2.6.1 of the GRA, which prohibits a person from possessing an “instrument of betting” not authorised by the GRA; and
3. s 115 of the LCRA, which generally prohibits the holder of a license under the LCRA from allowing a person to bet on licensed premises,
(collectively, the Impugned Provisions).
4 The applicants contend that the installation and operation of the “betbox” was not a contravention of the Impugned Provisions because:
1. the Impugned Provisions do not apply in circumstances where a bet is regulated or authorised by the law of another State or Territory, or is accepted outside Victoria, so that the Impugned Provisions are not capable of applying to the installation and operation of the “betbox” in Victoria, because bets are accepted by Sportsbet in the Northern Territory in accordance with Northern Territory legislation (Ground 1);
2. s 2.6.1 of the GRA does not apply to a wagering service provider which is entitled to advertise and which has approval to publish and / or use Victorian race fields, such as Sportsbet (Ground 2);
3. the Impugned Provisions are inconsistent with s 49 of the Northern Territory (Self-Government) Act 1978 (Cth) (the Self Government Act) because they discriminate in a protectionist way against trade and commerce between the Northern Territory and the States (Ground 3); and
4. ss 2.5.2 and 2.6.1 of the GRA exceed the extraterritorial power of the State (Ground 4).
5 Fifth and finally, the applicants also contend that the approval given by the relevant Minister to the third respondent, Tabcorp, under s 4.5.3 of the GRA to conduct fixed odds betting on thoroughbred, harness and greyhound races was beyond the power conferred by s 4.5.3 of the GRA (Ground 5).
6 These reasons for decision will consider the Impugned Provisions and their proper construction (Grounds 1, 2 and 4). I will then turn to consider trade, commerce and intercourse between Victoria and the Northern Territory and the constitutional validity of the Impugned Provisions (Ground 3). Finally, I will consider Ground 5.
7 These reasons will demonstrate that the Impugned Provisions on their proper construction applied to the installation and operation of the “betbox” at the Eureka Stockade Hotel. In that operation, the Impugned Provisions are inconsistent with s 49 of the Self Government Act and are accordingly invalid. The Impugned Provisions are inconsistent because they burden trade and commerce between the Territory and a State. The Impugned Provisions are a burden because in their legal and practical operation they establish Tabcorp as a monopoly provider of off-course betting services in Victoria in what is a national market for the supply and acquisition of off-course betting services. It was not demonstrated that the Impugned Provisions were no more than an appropriate and adapted means to a legitimate end. Finally, these reasons demonstrate that Tabcorp’s approval to conduct fixed odds betting is a valid approval under s 4.5.3 of the GRA.
B. RELEVANT LEGISLATIVE PROVISIONS
(1) THE IMPUGNED PROVISIONS
(a) s 2.5.2 of the GRA – betting house or place of betting
8 Section 2.5.2(1) of the GRA relevantly provides:
A person must not –
(a) open, keep or use a betting house or place of betting; or
(b) being the owner or occupier of a house or place, knowingly and wilfully permit it to be opened, kept or used by any other person as a betting house or place of betting; or
(c) have the care or management of, or in any manner assist in conducting the business of, a betting house or place of betting.
…
(Emphasis added.)
9 The terms “betting house” and “place of betting” are defined in s 2.5.1(1) of the GRA as:
A betting house or place of betting is a house or place (as the case requires) that is opened, kept or used –
(a) for the purpose of betting with any persons (whether in person or by messenger, agent, post, telephone or otherwise); or
(b) for the purpose of taking instructions for the placement of bets on behalf of any person; or
(c) for the purpose of any money or valuable thing being received by or on behalf of a person –
(i) as or for the consideration for any undertaking to pay or give thereafter any money or valuable thing on any sporting event; or
(ii) as or for the consideration for securing the paying or giving by some other person of any money or valuable thing on any such event –
except for the purpose of paying or receiving money in settlement of bets lawfully made under the Racing Act 1958 or this Act by or on behalf of a registered bookmaker; or
(d) for the purposes of printing, duplicating or producing lists of persons, animals or things (however identified) for the purpose of such lists being used for or in connection with unlawful betting on a sporting event.
(Emphasis added.)
A betting house or place of betting is declared to be a public nuisance and contrary to law: s 2.5.1(2) of the GRA. “Place” is defined in s 2.1.2 of the GRA to mean any place, whether or not within a building, on land or water, defined as to area, or on private property.
10 A “registered bookmaker” is the holder of a current certificate of registration as a registered bookmaker under Pt 5A of Ch 4 of the GRA: s 1.3 of the GRA. Sportsbet is not a registered bookmaker in Victoria and, so far as the evidence reveals, has never sought registration under Pt 5A of Ch 4 of the GRA.
11 Pursuant to s 4 of the Racing Act 1958 (Vic) (the Racing Act), it is not a contravention of the GRA for a registered bookmaker to take bets on thoroughbred, harness or greyhound races (or certain other events) while present at a racecourse licensed under the Racing Act either:
1. during the holding of a race meeting, from a punter on the racecourse; or
2. at any time, from a punter off the racecourse by means of a method of communication approved by the Minister under s 4A of the Racing Act.
The reference to racecourse in s 4 of the Racing Act is a reference to a racecourse in Victoria: s 48(b) of the Interpretation of Legislation Act 1984 (Vic) (the Interpretation Act).
(b) s 2.6.1 of the GRA – instrument of betting
12 Section 2.6.1(1) of the GRA provides that a “person must not possess an instrument of betting not authorised under this Act” (emphasis added). It is an offence to contravene s 2.6.1(1).
13 Section 2.6.1(2) non-exhaustively defines “possession” as including:
(a) actual physical possession; and
(b) custody or control; and
(c) having and exercising access, either solely or in common with others –
and an instrument of betting is in a person’s possession if it is on land or in premises occupied, used or controlled by the person.
14 Section 2.1.2(1) of the GRA defines “instrument of betting” as including:
(a) a document;
(b) a card, list, money, paper, record, sheet, table, ticket or other written document;
(c) a mechanical, electrical, telephonic, electronic or other equipment or device or any access to such equipment or device;
(d) a board, chart or screen; or
(e) any form or means of recording, storing or transmitting information or data –
used, apparently used or likely to be used in carrying on or in connection with betting on a sporting event (being betting that is not authorised by a gaming Act or any other Act).
(Emphasis added.)
The expression “gaming Act” is defined in s 1.3 of the GRA to mean the GRA or the Casino Control Act 1991 (Vic) (Casino Control Act).
(c) s 115 of the LCRA
15 Section 115 of the LCRA provides:
(1) A licensee or permittee must not bet or allow a person to bet on the licensed premises or any authorised premises.
Penalty: 20 penalty units.
(2) Subsection (1) does not apply to betting on licensed premises or on any authorised premises –
(a) if –
(i) the premises are on a licensed racecourse within the meaning of the Racing Act 1958; and
(ii) the betting is engaged in during the holding of a race meeting within the meaning of that Act on the licensed racecourse; or
(b) if –
(i) a betting facility of the holder of the wagering licence or the wagering operator under Chapter 4 of the Gambling Regulation Act 2003 is established in the premises; and
(ii) the betting takes place through that licence holder or wagering operator; or
…
(Emphasis added.)
(2) THE PROVISIONS RELATING TO TABCORP
(a) The Tabcorp Licence
16 Tabcorp was the holder of the wagering licence granted on 28 June 1994 under s 12(1)(a) of the Gaming and Betting Act 1994 (Vic) (the Gaming and Betting Act). That Act was repealed by s 12.1.1(b) of the GRA with effect from 1 July 2004. From that date, Tabcorp was deemed to be the holder of the wagering licence under Pt 3 of Ch 4 of the GRA: s 12.2.1 and cl 4.2(1) of Sch 7 of the GRA.
17 Under s 4.3.3 of the GRA there can only be one wagering licence at any given time. That wagering licence is referred to in s 4.3.1 of the GRA which provides:
The wagering licence authorises the licensee and the wagering operator to conduct, subject to this Act and the regulations, the Racing Act 1958 and any conditions to which the licence is subject –
(a) wagering; and
(b) approved betting competitions.
(Emphasis added.)
18 The “licensee” means the holder of the wagering licence; that is, Tabcorp: s 4.1.2 of the GRA. Pursuant to s 22(1) of the Gaming and Betting Act, Tabcorp appointed its wholly owned subsidiary, Tabcorp Manager Pty Ltd (Tabcorp Manager) as the operator of the wagering licence. From the commencement of the GRA, that appointment was deemed to be an appointment under the GRA so that Tabcorp Manager was the “wagering operator” under s 4.3.1 of the GRA: see s 4.3.15(1) of the GRA read with cl 4.3(3) of Sch 7 of the GRA.
19 “Wagering” is defined to mean “pari-mutuel betting on a horse race, harness race or greyhound race”: s 1.3 of the GRA. The nature of pari-mutuel betting and its comparison with fixed odds betting was addressed in Betfair Pty Ltd v New South Wales (2010) 189 FCR 356 at [15].
20 “Approved betting competition” on horse, harness and greyhound races are those approved by the Minister under s 4.5.3 of the GRA or by the VCGR under s 4.5.6: see s 1.3 of the GRA. Section 4.5.3 of the GRA provides:
(1) The Minister may approve a betting competition on an event or contingency, or a class of event or contingency, of or relating to a horse race, harness race or greyhound race.
(2) An approval is to be given by instrument.
(3) The Minister must not approve a betting competition that –
(a) is conducted on a totalisator; or
(b) in his or her opinion, is offensive or contrary to the public interest.
(4) The Minister may impose any conditions he or she thinks fit on the approval of a betting competition at the time of giving the approval or at any later time.
(5) An approval –
(a) takes effect on the day notice of it is published under section 4.5.4(a) or on the later day specified in the notice; and
(b) remains in force until revoked by the Minister.
(6) A condition imposed under subsection (4) takes effect on the day notice of it is published under section 4.5.4(b) or on the later day specified in the notice.
(b) Exemption from GRA – s 2.5.2
21 Section 4.2.1 of the GRA provides:
(1) The conduct of wagering and approved betting competitions is lawful when conducted in accordance with a licence or permit granted under this Chapter and is not a public or private nuisance.
(2) Any place in which wagering or an approved betting competition is conducted as referred to in subsection (1) is not a common gaming house or place.
(3) Despite anything to the contrary in Chapter 2, the licensee or the wagering operator, the wagering and betting licensee or the holder of a permit may broadcast, display and publish information related to races and race meetings and betting odds on any race or combination of races.
…
Section 4.2.1(2) of the GRA deems a place in which wagering or an approved betting competition is conducted by Tabcorp or Tabcorp Manager in accordance with the Tabcorp Licence not to be “a common gaming house or place”. As a result, that exemption takes those places outside the scope of various offences concerning common gaming houses or places in Div 6 of Pt 5 of Ch 2 of the GRA.
22 In addition, “common gaming house or place” is defined in s 2.5.20(1) of the GRA to mean:
(a) a house or place opened, kept or used for –
(i) the purpose of a lottery or proposed lottery; or
(ii) the purpose of playing any unlawful game; or
(iii) any of the purposes mentioned in section 2.5.1; or
(iv) for the purpose of using or conducting a totalisator; or
(v) for the purpose of conveying or communicating information relating to betting odds at a race meeting on races or combinations of races to persons not on the racecourse while the race meeting is being held; or
(b) a house or place –
(i) used principally for the purpose of enabling any one or more persons to bet with others or with one another or to pay or receive any money or valuable thing in respect of any bets whether made in or at the house or place or elsewhere; or
(ii) occupied by a company or club having for its principal object or one of its principal objects the enabling of shareholders or members to make wagers or bets or pay or receive money in respect of wagers or bets whether so made either among themselves or with other persons not necessarily being shareholders or members; or
(c) a house or place opened, kept or used in connection with any offence referred to in section 2.5.15; or
(d) a house or place that, at common law, is a common gaming house or place.
(Emphasis added.)
For the purpose of s 2.5.20(1), it is irrelevant whether or not the house or place is open only for the use of subscribers or of members or shareholders of any particular club or company or may not be open to the public: s 2.5.20(2). Therefore, by reason of the definition of “common gaming house” in s 2.5.20(1)(a)(iii) of the GRA, the deeming in s 4.2.1(2) excludes the offences applying to “betting houses” or “places of betting” as defined in s 2.5.1(1) of the GRA: see [8] and [9] above. The consequence is that only Tabcorp may establish a “retail presence” in Victoria for betting, also described as “off-course retail exclusivity”.
(c) Exemption from the GRA – s 2.6.1
23 Tabcorp uses an “EasyBet terminal”. Tabcorp submitted that betting using an “EasyBet terminal” was lawful (if it was conducted in accordance with s 4.3.1 of the GRA see [18] above) because it was betting of a kind authorised by s 4.2.1 of the GRA: see [21] above.
(d) Exemption from the LCRA – s 115
24 Section 115(2) of the LCRA expressly exempts from the prohibition in s 115(1) of the LCRA betting at licensed premises through Tabcorp or Tabcorp Manager if there is a betting facility of Tabcorp or Tabcorp Manager at the premises: see [15] above.
25 The phrase “betting facility” in s 115(2) of the LCRA is not defined.
(e) Tabcorp’s totalisator exclusivity on racing
26 Sections 2.5.14 and 4.7.2 of the GRA both prohibit various conduct in relation to the use of a “totalisator”. A “totalisator” is “a scheme of pari-mutuel betting, whether conducted by means of an instrument or contrivance known as a totalisator or otherwise”: s 1.3 of the GRA.
27 There is one exception. Section 4.2.2 of the GRA provides:
(1) The use of a totalisator as provided by this Chapter is lawful.
(2) A person who uses or conducts a totalisator as provided by this Chapter, the regulations and the betting rules is not guilty of an offence at common law or under any Act by reason of so using or conducting a totalisator.
(3) Subject to this Act, the mere fact of persons wagering or betting by means of a totalisator –
(a) does not constitute the wagering or betting an offence at common law or under an Act;
(b) is not a ground for any house or place being taken to be a common gaming house or place;
(c) is not a public nuisance.
(Emphasis added.)
28 Chapter 4 of the GRA contemplates the use of a totalisator by the licensee or wagering operator (presently, Tabcorp and Tabcorp Manager: see [18] above) or by the holder of a permit to conduct an on-course totalisator under Pt 4 of Ch 4 of the GRA. Within Victoria, only Tabcorp or Tabcorp Manager use a totalisator, also described as “totalisator exclusivity”.
C. PROPER CONSTRUCTION OF THE IMPUGNED PROVISIONS
(1) INTRODUCTION
29 The contentions about whether and how the Impugned Provisions apply to what Sportsbet did in relation to the “betbox” are an exercise in statutory construction. Resolution of that question must begin with the text of the statutes: Spencer v The Commonwealth (2010) 241 CLR 118 at [50] and the authorities there cited.
(2) Section 2.6.1 of the GRA
(a) Legislation
30 Section 2.6.1(1) of the GRA provides that “[a] person must not possess an instrument of betting not authorised under [the GRA]” (emphasis added). “Possession” includes actual physical possession and custody or control and an instrument of betting is in a person’s possession if it is on land or in premises occupied, used or controlled by the person: s 2.6.1(2) of the GRA: see [13] above.
31 Section 2.1.2(1) defines instrument of betting as including:
(a) a document;
(b) a card, list, money, paper, record, sheet, table, ticket or other written document;
(c) a mechanical, electrical, telephonic, electronic or other equipment or device or any access to such equipment or device;
(d) a board, chart or screen; or
(e) any form or means of recording, storing or transmitting information or data –
used, apparently used or likely to be used in carrying on or in connection with betting on a sporting event (being betting that is not authorised by a gaming Act or any other Act).
(Emphasis added.)
32 “Sporting event” is defined to include “a horse race, or other race, fight, game, sport or exercise”: s 2.1.2(1) of the GRA. The phrase “gaming Act” is defined to mean the GRA and the Casino Control Act: s 1.3 of the GRA. The phrase “any other Act” must be read, consistently with s 38 of the Interpretation Act, as referring to any other Act “passed by the Parliament of Victoria”. That construction is reinforced by the fact that when the GRA intends to refer to a law of another State or Territory, it does so expressly: see, by way of example, s 2.6.1 for the definition of “relevant offence”.
33 It is common ground that the “betbox” satisfies one or more of the opening paragraphs of the definition of an instrument of betting: see [14] and [31] above. It is, at the very least, a device used in connection with betting on a sporting event: s 2.1.2(c) of the GRA. It probably also satisfies subs (d) or (e). It is also common ground that Eureka was in possession of the “betbox” within the meaning of s 2.6.1(2) because the “betbox” was in the hotel premises occupied, used or controlled by Eureka. “Betting” and “bet” however, are not defined in the GRA.
(b) Respective Contentions
34 The applicants contended that:
1. s 2.6.1 of the GRA concerns “betting” in and of Victoria and excludes betting regulated or authorised by another law of a State or Territory. In support of this construction the applicants relied upon:
1.1 s 48(b) of the Interpretation Act which provides that any reference in any Act to a locality, jurisdiction or other matter or thing shall be construed as a reference to such locality, jurisdiction or other matter or thing in Victoria, with the result that the instrument of betting is directed at betting in and of Victoria;
1.2 the interpretative presumption that, unless a contrary intention appears, statutory provisions have no application to matters governed by foreign law (with the law of the contract being decisive);
1.3 a constraining interpretation of provisions creating criminal offences, to treat them as applying to acts or omissions taking place in the territory of the legislature;
1.4 the absence of any contrary intention to displace any of paragraphs 1.1 – 1.3 above;
1.5 s 6 of the Interpretation Act which would avoid a construction of the Impugned Provisions otherwise violating s 92 of the Commonwealth of Australia Constitution Act 1900 (Cth) (the Constitution) and s 49 of the Self Government Act;
2. alternatively, s 2.6.1 is directed at the physical location of the bookmaker with the result that it does not apply to betting that takes place outside of Victoria in the sense that the bookmaker is outside of Victoria or the bet is accepted outside of Victoria.
35 On the other hand, the respondents contended s 2.6.1 should be read as confined to betting prohibited by the GRA. For the reasons that follow, I reject the applicants’ construction of s 2.6.1.
(c) Analysis
(i) The statute
36 First, the statutory language. Section 2.6.1 of the GRA is general. It contains an express prohibition, subject to an exception, in relation to betting authorised under the GRA. Indeed, s 2.6.1 is to be found in Pt 6 under the heading “General” in Ch 2 of the GRA entitled “General Prohibition on Gambling”. As s 2.1.1 of Ch 2 provides, the purpose of Ch 2 is to “impose a general prohibition on gambling and create certain offences”. Section 2.6.1 is one of the offences created. The text, purpose and context of the GRA disclose a clear and continuing legislative intention to prohibit gambling except as provided in the GRA. That is the right of the State: Wanganui-Rangitikei Electric Power Board v Australian Mutual Provident Society (1934) 50 CLR 581 at 596.
37 Secondly, s 2.6.1 operates on possession of an instrument of betting in Victoria. “Possession” is broadly defined in s 2.6.1(2) of the GRA to include actual physical possession, custody or control and having and exercising access, either solely or in common with others and an instrument of betting is in a person’s possession if it is on land or in premises occupied, used or controlled by the person: see [13] and [30] above.
38 Thirdly, the prohibition in s 2.6.1 is confined to “an instrument of betting not authorised under the GRA”: see [12] and [30] above. An “instrument of betting” is an instrument used in connection with “betting that is not authorised by a gaming Act or any other Act”. In other words, if the instrument of betting is used in relation to betting that is “not authorised” by the GRA or any other Act, it is “prohibited”. That construction is consistent with authority: Horgan v Seiber; ex parte Horgan [1976] Qd R 25 at 30-31 and 33-34.
39 The applicants also submitted that if this was the preferred construction of s 2.6.1, it would lead to the absurd result that a person would be prohibited from possessing a betting slip obtained from a bookmaker in New South Wales and then brought into Victoria and that possession of any private telephone or computer used to make a bet would contravene s 2.6.1. I reject those submissions. None of the betting slip, private telephone or private computer is an “instrument of betting” the possession of which is prohibited by s 2.6.1 of the GRA. Section 2.6.1 only operates to prohibit an instrument of betting where the betting in question is otherwise prohibited, for example under s 2.5.2 of the GRA. Put another way, s 2.6.1 does not criminalise the possession of any private telephone or computer used to make a bet, where betting over that private medium was not prohibited under the GRA or any other Act.
40 On the other hand, the “betbox” is an “instrument of betting”. The sole, dedicated and public use of the “betbox” is to facilitate betting. The “betbox” is not merely the means by which the bet is communicated. It is the means by which the bet is selected, placed and its acceptance is notified. Put simply, there are distinct and significant functional differences between the “betbox” on the one hand and a private telephone or private computer on the other.
41 As is apparent, s 2.6.1, by its express terms, is directed at physical possession of, custody or control of, or access to, an instrument of betting in Victoria. The provision is not concerned with the wagering contract or its proper law or its governing law – it is concerned with the physical instrument and its possession or deemed possession in Victoria. That prohibition does not extend to, and is not concerned with, Sportsbet’s servers in the Northern Territory. That is, s 2.6.1 is directed at prohibiting the physical presence in Victoria of an instrument that is used in carrying on or in connection with betting on a sporting event and possession by a person of that instrument unless the instrument is authorised by the GRA. In the present case, that is possession of the “betbox”, the means or mechanism by which the bet is selected, placed and its acceptance is notified, at the Eureka Stockade Hotel. Given the express terms of s 2.6.1, possession of an instrument like the “betbox” that enables any one of those objectives to be achieved would be contrary to s 2.6.1.
(ii) s 48(b) of the Interpretation Act
42 Next, s 48(b) of the Interpretation Act provides that a reference in an Act to a matter or thing is a reference to a matter or thing in and of Victoria. The phrase “in and of” is a composite phrase which “imports both situation and a close identification of the matter or thing” with Victoria: Wanganui-Rangitikei Electric Power Board at 612-613.
43 In relation to s 2.6.1 of the GRA, the fact or circumstance which provides the relation or connection with Victoria is possession in Victoria of an unauthorised instrument of betting. The matter may be tested by asking with which jurisdiction is the relevant proscribed activity really connected, or, where does the activity have its natural seat or centre of gravity: Akai Pty Ltd v People’s Insurance Company Ltd (1996) 188 CLR 418 at 437. Of course, not all matters concerned with the activity must relate to Victoria: O’Connor v Healey (1967) 69 SR (NSW) 111 at 114.
44 The applicants submitted that various factors rendered the Northern Territory the seat of the relevant activities including that:
1. Sportsbet is licensed to operate as a bookmaker from premises in Darwin;
2. the computer servers that receive, process and accept or reject a bet are located in Darwin;
3. the website shown on the “betbox” screen identifies Sportsbet as being licensed and regulated by the Northern Territory Government;
4. the terms of Sportsbet’s General Rules; and
5. the parties to the wagering contract resulting from placing a bet using the “betbox” expressly agree that the bet is governed by the law of the Northern Territory.
45 The force of the applicants’ contention depends upon the content that is given to “relevant activities”. Here, the relevant activity is the possession of an instrument of betting and not any of the matters to which the applicants pointed. None of the factors identified by the applicants has anything to do with the prescribed conduct in s 2.6.1 – possession of an unauthorised instrument of betting – the “betbox” (see [2] above) – in Victoria.
46 Indeed, s 2.6.1 is not directed at the wagering contract. Contrary to the applicants’ submission, s 2.6.1 does not seek to regulate a contract. It proscribes possession within Victoria of unauthorised instruments of betting. There are, however, other difficulties with the applicants’ contention that s 2.6.1 is directed at the wagering contract. First, parties to a contract cannot by their contract defeat the operation of a statute on the occurrence of certain prescribed events: cf Kitto J in Kay’s Leasing Corporation Pty Ltd v Fletcher (1964) 116 CLR 124 at 143. Secondly, the foreign law (the Northern Territory legislation) did not and cannot apply to possession (or use) of an instrument of betting in Victoria. Thirdly, even though the parties to the wagering contract resulting from placing a bet using the “betbox” expressly agree that the bet is governed by the law of the Northern Territory, that choice of law provision need not be applied if the Court concludes that the selection was an attempt to avoid the application of local laws: Golden Acres Ltd v Queensland Estates Pty Ltd [1969] Qd R 378 at 385 and Davies M, Bell AS, Brereton PLG, Nygh’s Conflict of Laws in Australia, (8th ed, LexisNexis Butterworths, 2010) at [19.19]-[19.20].
47 Sportsbet, as a registered bookmaker in the Northern Territory, is a “wagering service provider” under the GRA: see s 2.5.15AA(c) of the GRA. The GRA contains provisions which identify what wagering service providers can and cannot do. Section 2.5.16(3) of the GRA provides that a wagering service provider may advertise:
(a) … details that identify the wagering service provider as a wagering service provider;
(b) details about how the wagering service provider can be contacted;
(c) the services offered by the wagering service provider; and
(d) the odds the wagering service provider is offering in respect of a particular betting contingency.
48 However, under s 2.5.19B of the GRA, a wagering service provider must not, in Victoria or elsewhere, publish, use or otherwise make available, a race field in the course of business unless:
(a) … the wagering service provider has obtained the publication and use approval [under s 2.5.19D] of the appropriate controlling body; and
(b) the wagering service provider complies with the conditions (if any) to which the approval is subject.
49 The phrase “appropriate controlling body” is defined in s 2.5.19A of the GRA to mean:
(a) in the case of horse racing, Racing Victoria;
(b) in the case of harness racing, Harness Racing Victoria;
(c) in the case of greyhound racing, Greyhound Racing Victoria.
Sportsbet has obtained the necessary publication and use approval under s 2.5.19D of the GRA from Racing Victoria and Greyhound Racing Victoria (but not Harness Racing Victoria).
50 The applicants contend that those rights – the right to advertise and the approval to use and publish race fields to Sportsbet’s customers – would be rendered nugatory if its customers committed an offence against s 2.6.1 by possessing (through access) an instrument of betting by placing a bet over a “betbox”. I reject those contentions. The rights conferred (to advertise and to use and publish race fields to Sportsbet’s customers) permit Sportsbet to conduct all of the lawful betting activities it currently undertakes. Put another way, the rights conferred are not inconsistent with or rendered nugatory by the construction I have adopted of s 2.6.1 of the GRA. Sportsbet can and does advertise that it is possible to place a bet with Sportsbet by accessing its website and, on accessing the website, a punter would see that Sportsbet uses race field information in the course of its wagering business. The conduct proscribed by s 2.6.1 does not affect, directly or indirectly, those activities of Sportsbet.
51 Alternatively, if the applicants’ argument is that because the GRA authorises a wagering service provider to advertise and publish race fields, it would give a harmonious operation to s 2.6.1 to construe it as not applying to interstate operators, I reject that contention. It finds no support in the language of the GRA and is contrary to common sense and logic. The prohibition against possession of instruments of betting deals with an entirely different subject matter to advertising and publication of race fields. The fact that a prohibited activity (possession of an unauthorised instrument of betting) might include permitted activities (such as advertising and publication of race fields) does not make lawful that which is otherwise unlawful or circumvent the prohibition. In fact, such a contention is contrary to a basic rule of statutory construction that when an Act is amended by a later Act (as occurred here in relation to the later conferral of the rights to advertise and to use and publish race fields), the two are to be regarded as one connected and combined statement of the will of the Parliament unless displaced by very clear evidence to the contrary: Pearce DC, Geddes RS, Statutory Interpretation in Australia, (7th ed, LexisNexis Butterworths, 2011) at [7.23] and the authorities there cited. Here, that presumption was not displaced.
(iii) The common law presumption against foreign effect
52 The applicants also relied upon the presumption that, unless a contrary intention appears, statutory provisions are understood as having no application to matters governed by foreign law: Wanganui-Rangitikei Electric Power Board at 601; Akai Pty Ltd at 443; cf Lipohar v The Queen (1999) 200 CLR 485 at 527 in which the High Court held that the presumption does not apply to criminal provisions. The result, as I understood the applicants’ submissions, was that because the governing law of the wagering contract in the present case was the Northern Territory, the application of the presumption meant that s 2.6.1 did not apply to the “betbox”. That submission is rejected for the reasons stated at [43]-[51] above. The applicants’ submission proceeds from a fundamental misconception – that s 2.6.1 is directed at the wagering contract. It is not. Section 2.6.1 is directed at prohibiting possession (including use) of an unauthorised instrument of betting in Victoria: see [36]-[38] above.
(iv) The proper construction of the penal provisions
53 A contravention of s 2.6.1 gives rise to an offence: see [12] above. The applicants submitted that the imposition of the criminal sanctions principally target bookmakers rather than punters and are therefore more likely to have a strict territorial connection based on the location of the bookmaker. The applicants referred to McDonald v Bojkovic [1987] VR 387 at 390 and Lipohar v The Queen. That submission hides more than it reveals.
54 First, as noted above (see [36]), the purpose of Ch 2 is to “impose a general prohibition on gambling and create certain offences”. Section 2.6.1 creates one of those offences. The text, purpose and context of the GRA disclose a clear and continuing legislative intention to prohibit gambling except as provided in the GRA. But the fact that it creates an offence does not itself support the applicants’ contention that the provision is “more likely” to have a strict territorial connection based on the location of the bookmaker. The role of the Court is to “ascertain and enforce” the intention of the legislature as expressed in the statute and to refuse to extend the punishment to cases which are not clearly embraced by the statute: Scott v Cawsey (1907) 5 CLR 132 at 154-155. In the present case, the intention of the legislature is clear and the “betbox” is an instrument of betting which falls foul of the prohibition in s 2.6.1 of the GRA. Even if s 2.6.1 was regarded as a provision which was both penal and beneficial, the preferred construction must yield to the definitive statement that the legislature intended to prohibit gambling except as provided in the GRA. Section 2.6.1 is one of the provisions that achieves that purpose.
(v) s 6 of the Interpretation Act and the Constitutional Claim
55 The applicants submitted that the construction contended for by the respondents (which I consider to be the preferable construction) would be inconsistent with s 49 of the Self Government Act and, in relation to bets governed by State law, inconsistent with s 92 of the Constitution and should therefore be avoided: s 6 of the Interpretation Act. The submission assumes the correctness of what the applicants submitted was a secondary constitutional argument. I consider this argument in Section D below.
(3) s 2.5.2 of the GRA
56 Section 2.5.2 of the GRA creates an offence in relation to a betting house or place of betting. It is Ch 2 of the GRA which contains the general prohibitions on gambling. It is necessary to restate ss 2.5.2(1) and 2.5.1 of the GRA. Section 2.5.2(1) provides:
A person must not –
(a) open, keep or use a betting house or place of betting; or
(b) being the owner or occupier of a house or place, knowingly and wilfully permit it to be opened, kept or used by any other person as a betting house or place of betting; or
(c) have the care or management of, or in any manner assist in conducting the business of, a betting house or place of betting.
…
(Emphasis added.)
57 Section 2.5.1(1) of the GRA defines a betting house or place of betting as a house or place that is opened, kept or used for one of the four following prohibited purposes:
(a) for the purpose of betting with any persons (whether in person or by messenger, agent, post, telephone or otherwise); or
(b) for the purpose of taking instructions for the placement of bets on behalf of any person; or
(c) for the purpose of any money or valuable thing being received by or on behalf of a person –
(i) as or for the consideration for any undertaking to pay or give thereafter any money or valuable thing on any sporting event; or
(ii) as or for the consideration for securing the paying or giving by some other person of any money or valuable thing on any such event –
except for the purpose of paying or receiving money in settlement of bets lawfully made under the Racing Act 1958 or this Act by or on behalf of a registered bookmaker; or
(d) for the purposes of printing, duplicating or producing lists of persons, animals or things (however identified) for the purpose of such lists being used for or in connection with unlawful betting on a sporting event.
(Emphasis added.)
A betting house or place of betting is declared to be a public nuisance and contrary to law: s 2.5.1(2) of the GRA. “Place” is defined in s 2.1.2(1) to mean any place, whether or not within a building, on land or water, defined as to area, or on private property.
58 The applicants contended that s 2.5.2 does not apply to the “betbox”. I reject that contention. In my view, the “betbox” at the Eureka Stockade Hotel satisfies at least ss 2.5.1(1)(a), (b) and (d) of the GRA.
59 Before turning to consider each of the relevant subsections, it is necessary to identify some preliminary matters that must be kept at the forefront of consideration of this issue. First, the phrase with which we are concerned is “a betting house or place of betting”. The phrase “betting house” derived from s 1 of the Betting Houses Suppression Act 1853 (UK): see Mackenzie v Hawke [1902] 2 KB 216 at 219 (footnote 1). As WJV Windeyer said in The Law of Wagers, Gaming and Lotteries in the Commonwealth of Australia, (Law Book Company of Australasia, 1929) at 153, “what is a betting house” is answered by directing attention to two considerations – the nature of the place or premises necessary and the purposes for which the place or premises must be used in order to be a betting house.
60 Secondly, the concept of “place” as defined in s 2.1.2 of the GRA is identifiable by reference to some defined area: Prior v Sherwood (1906) 3 CLR 1054 at 1070. Thirdly, that defined area must be opened, kept or used. The requirement that the defined area be opened, kept or used necessarily requires that the person committing the offence has some connection with the place.
61 Finally, the place must be used for one of the prohibited purposes in s 2.5.1(1) of the GRA. Two basic purposes are identified – (1) the purpose of the keeper of the place betting with persons who come to the place and (2) the purpose of any money or valuable thing being received as or for consideration for the bet. Of course, it is not essential that money should be received at the place: Mackenzie v Hawke and Lennox v Stoddart [1902] KB 21.
62 Against that background, I turn to consider ss 2.5.1(1)(a), (b) and (d) of the GRA.
(a) s 2.5.1(1)(a) – open, kept or used for the purpose of betting
63 The “betbox” was installed in the Eureka Stockade Hotel and operated from that hotel. The “betbox” was intended to attract customers to Sportsbet and to attract patrons to the hotel. The idea was that by putting the “betbox” in the sports bar of the Eureka Stockade Hotel, punters would have a drink, watch television, eat a meal and bet on the “betbox”. The “betbox” enabled hotel patrons to bet. In fact, the licence for the “betbox” between the applicants included an obligation to locate the “betbox” in a prominent and visible position adjacent to the main bar. Sportsbet paraphernalia was disseminated throughout the bar to attract customers.
64 By installing the “betbox” in the Eureka Stockade Hotel, Sportsbet had localised a place as the stand or pitch where the bets were executed: Bond v Foran (1934) 52 CLR 364 at 370. The “betbox”, including the computer terminal located within it, constituted the physical presence of Sportsbet within the venue. Of course, physical presence is not necessary for the offence to be committed (Taylor v Monk [1914] 2 KB 817) and not all aspects of the betting transaction need occur in the place for that place to contravene the GRA: Downing v O’Donnell [1959] VR 696 at 698.
65 Here, the bet was placed on the “betbox” in Victoria. The “betbox” was the indispensable or essential means for placing the bet in Victoria. The fact that the bet was subsequently accepted or rejected in Darwin does not detract from the conclusion that the “betbox” in the Eureka Stockade Hotel satisfied s 2.5.2(1)(a) of the GRA.
66 As Tabcorp submitted, the “betbox” and the venue in which it was located (the Eureka Stockade Hotel) were both places to which punters resorted for the purpose of betting with Sportsbet: Powell v Kempton Racecourse [1899] AC 143 at 159 and 161.
(b) s 2.5.1(1)(b) – open, kept or used for the purpose of taking instructions for the placement of bets on behalf of any person
67 For the same reasons, s 2.5.1(b) of the GRA was satisfied. The purpose of the “betbox” at the Eureka Stockade Hotel was to accept instructions from punters for the placement of bets on behalf of the punters.
(c) s 2.5.1(1)(d) – open, kept or used for the purposes of printing, duplicating or producing lists of persons, animals or things (however identified) for the purpose of such lists being used for or in connection with unlawful betting on a sporting event
68 The “betbox” also satisfied s 2.5.1(1)(d) of the GRA. A punter using the “betbox” at the Eureka Stockade Hotel would see lists of persons (jockeys), lists of animals (horses) and lists of things (races) used in connection with unlawful betting on a sporting event.
(d) Applicants’ focus on the bookmaker misplaced
69 Before leaving this issue, it is necessary to address the applicants’ submission that s 2.5.2 of the GRA does not extend the concept of house or place to the location at which the punter but not the bookmaker is present. I reject that submission. It ignores the express language of the statute. To take just one example – as s 2.5.1(1)(b) makes apparent, opening, keeping or using a house or place for the purpose of taking instructions for the placement of bets on behalf of any person is sufficient to contravene s 2.5.2 of the GRA. The provision focuses on the nature of the place or premises necessary and the purposes for which the place or premises must be used in order to be a betting house. Neither the location of the punter nor the location of the bookmaker is determinative or, at one level, even relevant: Milne v Commissioner of Police for City of London [1940] AC 1 at 18-19, 27-29, 31, 38-41 and 44-49.
(4) Section 115 of the LCRA
70 Section 115 of the LCRA is limited to “licensed premises” or “authorised premises”. Pursuant to s 48(b) of the Interpretation Act, the references in s 115 of the LCRA to “licensed premises” or “authorised premises” is to be read as limited to such premises in Victoria.
71 The applicants submitted that s 115 of the LCRA has the same limited operation as ss 2.6.1 and 2.5.2 of the GRA – that is, it does not apply to bets made outside Victoria or which are covered by the law of the Northern Territory. The argument fails for the reasons discussed above: see in particular [41] and [65].
D. CONSTITUTIONAL ARGUMENTS
(1) INTRODUCTION
72 Section 49 of the Self Government Act provides:
Trade, commerce and intercourse between the Territory and the States, whether by means of internal carriage or ocean navigation, shall be absolutely free.
This section follows s 92 of the Constitution. The interpretation of s 92 of the Constitution applies to s 49 of the Self Government Act: AMS v AIF (1999) 199 CLR 160 at [36] and Racing New South Wales v Sportsbet Pty Ltd (2010) 189 FCR 448 at [101]. If a law of the State of Victoria is inconsistent with s 49 of the Self Government Act, it is invalid to the extent of the inconsistency: s 109 of the Constitution and AMS v AIF at [37] and [96].
73 Both s 92 of the Constitution and s 49 of the Self Government Act apply to trade, commerce and intercourse. Different tests apply to each limb. The trade and commerce limb was most recently considered by the High Court in Betfair Pty Ltd v Western Australia (2008) 234 CLR 418 at 451 [10] which applied the earlier decision of the High Court in Cole v Whitfield (1988) 165 CLR 360 at 408.
74 As most recently explained in Betfair v Western Australia, analysis of whether a provision contravenes s 92 of the Constitution may be considered by reference to a two-step process:
1. first, an invalidating criterion. This requires the Court to determine whether a law or measure imposes a burden on interstate trade and commerce which is discriminatory in a protectionist sense by reference to three matters:
1.1 does the legislation impose a burden; does it prohibit or restrict a trader’s ability to import a product or service or deal with it once it is imported;
1.2 does the burden discriminate against interstate trade and commerce; is the burden not imposed at all, or to the same extent, on intrastate trade and commerce in respect of the same product or service or a substitutable product(s) or service(s);
1.3 if the burden does discriminate against interstate trade and commerce, is the discrimination protectionist in character; that is, does the law give the domestic product a market advantage over the imported product or the interstate trade in that product;
2. secondly, a saving criterion (see Castlemaine Tooheys Ltd v South Australia (1990) 169 CLR 436 at 472 and 479-480). This renders a law valid if it has a purpose that is not protectionist and any burden it imposes on interstate trade and commerce is appropriate and adapted to achieving that purpose. That criterion may be assessed by reference to three matters:
2.1 identifying a non-protectionist purpose(s);
2.2 considering whether the means adopted by the law are capable of being seen as likely to achieve the identified purpose(s); and
2.3 considering whether there are or are not alternative means to achieve the identified purpose(s) which involve no, or a lesser, burden on interstate trade and commerce than the means adopted.
75 The first step concerns the effects of a law. The second step requires a comparison of the effects of a law with its objects to determine whether the effects are proportionate. I will consider each of these in turn.
(2) DO THE IMPUGNED PROVISIONS IMPOSE A DISCRIMINATORY BURDEN ON INTERSTATE TRADE?
(a) Interstate trade and commerce?
76 First, the question whether Sportsbet is engaged in interstate trade and commerce in relation to bets taken using the “betbox”. The respondents submitted that Sportsbet principally conducts its business of bookmaking in and out of Victoria.
77 Before turning to consider the facts, a number of principles must be kept at the forefront of any consideration of what constitutes “interstate trade and commerce”. The object of s 92 of the Constitution is to eliminate the protection of local industry against interstate competition. A reduction in competition, without more, is not contrary to s 92: Betfair v Western Australia at 451 [11] and 460 [36]; Castlemaine Tooheys Ltd at 471 and Barley Marketing Board v Norman (1990) 171 CLR 182 at 202-203. A State law may contravene s 92 if it protects the domestic industry from competition from traders in another State: Betfair v Western Australia at [11]. That is, the State law reduces competition from interstate traders. Section 92 prevents the use of State boundaries as barriers to protect intrastate traders from competition from interstate traders in the same market.
78 Sportsbet is licensed in the Northern Territory: see [1] above. Sportsbet’s licence authorises it to conduct a “bookmaking business” from premises in the Northern Territory: see [1] above. Bookmaking is defined in s 4 of the NT Act as the business of receiving or negotiating bets. A person wishing to place a bet with Sportsbet must first register and acknowledge Sportsbet’s terms and conditions. A bet placed with Sportsbet, the Sportsbet’s computer server and Sportsbet’s bookmaking business, are all regulated by Northern Territory law. Sportsbet accepts bets by telephone and over the internet from registered members situated throughout Australia, including Victoria. The contingencies on which registered players bet include races conducted in each State and Territory and sporting events conducted in each State and internationally.
79 Sportsbet installed and used a “betbox” in the Eureka Stockade Hotel. It accepted wagers over the internet by means of the “betbox” installed at the Eureka Stockade Hotel. It made and negotiated commercial contracts with the licensee of the Eureka Stockade Hotel for the installation of the “betbox” at the Eureka Stockade Hotel.
80 The respondents submitted that as a matter of substance, rather than form, Sportsbet is a Victorian trader which conducts its business of bookmaking in and out of Victoria, that the “betbox” is and was designed to be a dedicated wagering venue located only and wholly in Victoria, and that as a result, bets undertaken using a “betbox” physically located in Victoria do not involve interstate trade or commerce. I reject the respondents’ submissions.
81 First, the market. In Betfair v Western Australia at [114], the High Court described the relevant market as follows:
The evidence shows that there is a developed market throughout Australia for the provision by means of the telephone and the internet of wagering services on racing and sporting events. Indeed, the evidence shows that such a market may be international. Within the Commonwealth the events may take place in one State, the customer be in another and the licensed bookmaker or TAB be in a third. Before the commencement of the legislation of Western Australia which is under challenge, this market included the services supplied by the betting exchange which Betfair had established under licence in Tasmania. In the other States this remains the case. The inhibition to competition presented by geographic separation between rival suppliers and between supplier and customer is reduced by the omnipresence of the internet and the ease of its use.
82 Sportsbet competes with Tabcorp in a national wagering market. Indeed, the respondents admitted that wagering services on racing and sporting events are supplied throughout Australia by means of telephone and the internet to users of those services. That competition has been increasing for at least 10 years and is now “fierce”. Tabcorp accepts bets over the internet and through “EasyBet terminals” which are widely distributed through licensed venues in Victoria. Sportsbet also competes against bookmakers in Victoria who are able to stand at racecourses and accept bets by a person present on the racecourse, over the telephone and over the internet: ss 4 and 4A of the Racing Act. Tabcorp established “Luxbet”, a Northern Territory subsidiary in response to Sportsbet and other corporate bookmakers offering wagering products. This competition has resulted in lower priced wagering products for punters.
83 Secondly, adapting what the High Court said in Betfair v Western Australia at [1], Sportsbet holds a licence under Northern Territory law to operate as a bookmaker. A registered customer of Sportsbet may place bets by use of a computer connected by the internet to a computer server operated by Sportsbet at its Darwin premises. Customers may be located outside the Northern Territory and Sportsbet seeks to attract such customers located in States of the Commonwealth including Victoria. There is an “interstate dimension to the operation” by Sportsbet of its corporate bookmaking business.
84 A significant part of the respondents’ case was directed at establishing that Sportsbet conducts its business in and out of Victoria because the real commercial seat of the significant activities of the betting business of Sportsbet is Victoria. The respondents identified a number of facts and matters including that:
1. while Sportsbet has a registered office in Darwin, it has much larger offices in Melbourne;
2. a substantial part of Sportsbet’s business is conducted in Melbourne including its IT department, marketing, human relations, finance and administration, its bookmakers, the risk management department for real time client bet monitoring and the fraud department including anti-money laundering checking;
3. the management of Sportsbet’s business is conducted in Melbourne and there is a far greater concentration of senior and other staff in Melbourne;
4. Sportsbet’s senior management spend most of their time in Melbourne and are resident in Melbourne;
5. although Sportsbet’s Northern Territory licence explains the physical location of Sportsbet’s servers at the Fannie Bay Racecourse, the licence has no significance for the purposes of the Impugned Provisions because it does not confer any right, and does not purport to confer any right, on Sportsbet to engage in bookmaking in Victoria; and
6. by installing the “betbox” and with logos and advertising, Sportsbet had a physical presence in Victoria and, in substance, the transactions occurred within Victoria.
85 The difficulty with the respondents’ submission is that it ignores some critical facts and matters. First, Sportsbet was registered as a company on 29 June 1999 under the Corporations Law (Cth), as applied to the Northern Territory by the Corporations (Northern Territory) Act. Its registered office was that specified in the registration application: ss 117 and 121. When the Corporations Act 2001 (Cth) (the Corporations Act) commenced, Sportsbet’s registration was taken to have effect under the corresponding provisions of the Corporations Act. Sportsbet’s registered office and principal place of business remained the same: s 1378(3) of the Corporations Act. Moreover, for the purposes of s 119A of the Corporations Act, it was taken to be registered in the Northern Territory: s 1378(4) of the Corporations Act. Those facts might not be determinative but they remain significant.
86 Secondly, Sportsbet has a registered licensed business which operates from specified premises in Darwin (the Fannie Bay Racecourse) under the NT Act (see [78] above) that:
1. permits Sportsbet to offer a much wider range of bets to punters than that permitted under Victorian law;
2. permits Sportsbet to provide credit to punters (contrary to anywhere else in Australia);
3. permits Sportsbet a more flexible approach to marketing (than other places in Australia);
4. until recent changes to the Victorian legislation, provided Sportsbet with better access to capital resources because the NT Act did not insist on directors and shareholders of the registered bookmaker themselves being bookmakers;
5. required, as a condition of the licence, that Sportsbet takes bets from the Fannie Bay Racecourse in Darwin.
87 Thirdly, a significant part of Sportsbet’s computer system is located in Darwin and Sportsbet’s customers (both national and international) interact with the Sportsbet business through the Darwin office. For all those reasons, Sportsbet is engaged in interstate trade and commerce.
88 The State and the VCGR submitted that even if Sportsbet was located in the Northern Territory, bets undertaken via a “betbox” did not involve interstate trade or commerce. In support of that contention, the State and the VCGR referred to Hospital Provident Fund Pty Ltd v Victoria (1953) 87 CLR 1 at 14-15 (per Dixon CJ) cited in HC Sleigh Ltd v South Australia (1977) 136 CLR 475 at 506-507 (by Mason J with whom Barwick CJ and Stephen J agreed) and Street v Queensland Bar Association (1989) 168 CLR 461 at 439 (by Dawson J):
The essence of the business from the point of view of the persons engaged in it is the making of contracts involving on the one hand the receipt of money and on the other hand the payment of money on the occurrence of certain contingencies. From the point of view of the statute no doubt it is the character of the contingencies that forms the distinguishing and important feature of the business. But neither the character of the contingencies nor the character of the monetary side of the contract could bring the transaction within the conception of inter-State trade commerce or intercourse. For a company to contract with a man that, in consideration of the latter making payments to it at any given place, the company will in a specified contingency make a payment to him at some other place is not to engage in inter-State commerce. Neither the making of the contract nor the performance of the contract by either side involves any step or dealing which of itself forms part of inter-State commerce even if a State line runs between the two places. If it is found necessary or convenient by either party to communicate with the other across a boundary between two States in the course of making the contract, that is an accidental feature which cannot make it an inter-State contract, although the sending of the communication itself will, of course, form an act of inter-State commerce or intercourse.
(Emphasis by the respondents.)
89 Dixon CJ continued (Hospital Provident Fund at 15):
In the same way, if either party finds it necessary to transmit money across such a boundary, so that he may make a payment in pursuance of the obligation of the contract, the transmission of the money will be an act of inter-State commerce, but that will not make the performance of the contract an inter-State transaction.
Neither the contract nor its performance contemplates or of its nature involves the movement from one place to another of things tangible or intangible, and certainly not from a place in one State to a place in another.
Again the contingencies against which the contract provides have nothing of the character of inter-State commerce or intercourse. To fall sick, to be treated in a hospital, to receive medical attendance or medicines, or to be buried, are not acts or things done or suffered as a part of inter-State commerce or intercourse. This is true even if the sickness develops on an inter-State journey, or the medical attendant comes across the border, or the burial is in another State from that in which death took place. For these are accidental features of the particular case and give the contingency no different character.
90 What brings a business within the protection of s 92 of the Constitution depends in part on the repeated occurrence of these accidental features in the course of its business and in part on the manner in which it conducts its internal affairs. That is to say, the communications between its offices in different States, the transmission of funds and the movements of its directors, servants and agents.
91 The respondents submitted that these comments in Hospital Provident Fund have “never been disapproved by the High Court” and are binding on this Court. It is inappropriate and dangerous to cherry pick one or two passages from a judgment and submit that the “comments” are binding on this Court. What in fact is the principle that is identified? The analysis in both Hospital Provident Fund at 14-15 and HC Sleigh at 506-507 was fact specific. A critical fact was that “the transmission of funds and the exchange of communications were no more than the incidents of the business”: HC Sleigh at 507. In Hospital Provident Fund the business was the business of insurance. In HC Sleigh the business was a system of refinery exchange. In Street, the business was a barrister’s practice. Those businesses stand in stark contrast to the business of banking: HC Sleigh at 506. Here, the business of wagering conducted by Sportsbet was more akin to the business of banking. It was far removed from the business of insurance, refining petroleum products or conducting a barrister’s practice. Sportsbet’s internal affairs, namely, “communications between its offices in different States, the transmission of funds and the movements of its directors, servants and agents” do not reflect the fundamental nature and aspects of the interstate trade and commerce undertaken by Sportsbet’s wagering business: see [82]-[83] above.
92 Here, a punter in Victoria approached a “betbox” situated in Victoria which was installed in Victoria and owned by Sportsbet. On approaching the “betbox”, the punter accessed information on a website maintained by Sportsbet and selected a race on which to place a bet. The punter then selected the size of the bet and sent that “request”. The request was received by Sportsbet on its server located in Darwin. That server then communicated Sportsbet’s acceptance of that bet with notification of acceptance of the bet being capable of being received on the “betbox” in Victoria. Put another way, both the contract here and its performance contemplates, and by its nature involves, the movement from one place in one State to a place in the Territory of things tangible or intangible.
93 Contrary to the submissions of the State and the VCGR, the conclusion that Sportsbet was engaged in interstate trade and commerce in relation to bets taken using the “betbox” does not result in a broadening of the concept of “interstate” trade. Further, even if the conclusion did broaden the concept (a view I reject), it cannot be said that the conclusion results in the elimination of the distinction between interstate and intrastate trade drawn by s 51(i) of the Constitution: cf R v Burgess; Ex parte Henry (1936) 55 CLR 608 at 672; Wragg v New South Wales (1953) 88 CLR 353 at 385-386; Airlines of New South Wales Pty Ltd v New South Wales (No 2) (1965) 113 CLR 54 at 78, 113-115, 144, 149; Zines, The High Court and the Constitution (5th ed, The Federation Press, 2008) at 98.
(b) Discriminatory burden?
94 The next question is whether the Impugned Provisions impose a “discriminatory burden”. There is no “formula” capable of automatic application to a law to determine this question. The task is complicated by the lack of direction provided by s 92 of the Constitution. In acknowledging this problem in Cole v Whitfield, the High Court stated that whether or not a law is discriminatory in effect is a matter of fact and degree that may ultimately depend on “judicial impression”: at 407-408. Of course, it is not necessary to show that the Impugned Provisions discriminate in favour of all intrastate traders as against all interstate traders. Even a law that targets a single interstate trader may offend s 92 of the Constitution: Castlemaine Tooheys Ltd at 475.
(c) s 2.5.2 of the GRA
95 What then does s 2.5.2 of the GRA do? It prohibits the operation (keeping, opening or using) of a betting house or place of betting: see [56]-[61] above. Neither interstate nor intrastate traders may operate betting houses or places of betting in Victoria under s 2.5.2. That is a burden on interstate trade and commerce. That burden is not de minimis.
96 There is an exception in s 2.5.1 of the GRA for “registered bookmakers”: see [9] above. Sportsbet is not a registered bookmaker and has not applied for registration: see [10] above. That does not alter the fact that s 2.5.2 of the GRA is a burden on interstate trade and commerce. Section 2.5.2 still prohibits Sportsbet from using its “betbox” in Victoria.
97 The fact that the GRA does not authorise the operation at the same time of more than one wagering licence or more than one gaming licence (s 4.3.3 of the GRA) provides further and independent support for the contention that s 2.5.2 of the GRA is a burden on interstate trade or commerce.
98 The next question is whether the burden imposed by s 2.5.2 of the GRA is “discriminatory”.
99 The concept of discrimination necessarily embraces factual discrimination as well as discrimination in the “legal operation” of a law. In Cole v Whitfield, the High Court said at 399 that “[a] law will discriminate against interstate trade or commerce if the law on its face subjects that trade or commerce to a disability or disadvantage or if the factual operation of the law produces such a result”. Section 2.5.2 does not appear to discriminate on its face. It prevents both interstate and intrastate gambling and wagering providers from operating betting houses or places of betting in Victoria (unless they are registered bookmakers, and in discrete circumstances). However, does the practical operation of the law result in discrimination?
100 Sportsbet sought to conduct betting in Victoria through its “betbox” – a machine prohibited by s 2.5.2 of the GRA. In theory, Sportsbet could seek registration as a “registered bookmaker”. Part 5A of Ch 4 of the GRA sets out the way in which individuals and corporations may do so. Applications are to be made to the VCGR, which is charged with either granting or refusing the applications: see ss 4.5A.2 and 4.5A.4 of the GRA. If granted, Sportsbet could rely on the exception for “registered bookmakers” in s 2.5.1 of the GRA (see [96] above), which provides that a betting house or place of betting may operate for the purpose of paying or receiving money in settlement of bets lawfully made under the Racing Act or the GRA by or on behalf of a registered bookmaker: see [9] and [96] above. Such lawfully made bets are bets made with a registered bookmaker who is present at a racecourse at the time the bet is made: s 4 of the Racing Act. However, that exception favours Victorian bookmakers, by requiring registered bookmakers to be present at a racecourse in Victoria: see [11] above. That is not the end of the analysis. Discrimination results from the operation of s 2.5.2 in the context of the other provisions of the GRA because the way in which Sportsbet (as an interstate trader) seeks to conduct its business in Victoria (through a “betbox”) is prohibited. While unlike in Betfair v Western Australia (at [119]) the prospect of Sportsbet obtaining registration is not “illusory”, registration would, if granted, be futile. Futile, because Sportsbet would not be permitted to conduct its business using the “betbox”. For example, Sportsbet would not be present at a racecourse in Victoria.
101 Broadly it can be said that the GRA favours Tabcorp and registered bookmakers over other traders such as Sportsbet because it excludes Tabcorp from the operation of s 2.5.2: see further at [21]-[22] above. In practice, the prohibition on running a betting house or place of betting does burden interstate trade to a significantly greater extent than it burdens intrastate trade. The trading activity prohibited (operating betting houses and places of betting) and the trading activity protected (Tabcorp’s monopoly, and the activities of registered bookmakers in certain circumstances) are not identical, but as Heydon J stated in Betfair v Western Australia, “they are each part of the same overall trading activity – offering facilities to gamblers to bet” in what was described as a “national market”: at [133]. For these reasons, I consider that the effect of s 2.5.2 is discriminatory because it entrenches Tabcorp’s monopoly and that of registered bookmakers at racecourses by precluding all interstate (and other) competition. This conclusion is reinforced when the provision is assessed in the context of other provisions of the GRA.
102 The fact that the issue of validity of s 2.5.2 of the GRA is informed by the operation of the relevant provisions of the GRA is not unusual. It was the approach adopted by the High Court in Betfair v Western Australia. Indeed, s 2.5.2 in this case is not dissimilar to s 27B of the Betting Control Act 1954 (WA), one of the provisions considered in Betfair v Western Australia. That section provided that a person who established or operated a “betting exchange” committed an offence. The definition of “betting exchange” in the Western Australian legislation distinguished between betting exchanges and other modes of gambling, such as that conducted through bookmakers or totalisators. Section 27B of the Betting Control Act 1954 (WA) was not the subject of direct challenge by the plaintiffs in Betfair v Western Australia. However, the majority noted that before the relevant Western Australian legislation was introduced, Betfair was competing with Racing and Wagering Western Australia (RWWA) for wagers placed by internet and telephone and but for the introduction of the relevant legislation, they would have continued to do so. Put another way, RWWA and licensed bookmakers were afforded a ‘carve-out’ from a number of provisions in this legislation. RWWA did not at that time operate betting exchanges. The majority accepted that s 27B Betting Control Act 1954 (WA) would apply equally to Betfair and RWWA in the event that RWWA started to provide betting exchange services. However, their Honours considered that this did not change the underlying fact that “RWWA and Betfair competed before 29 January 2007 for wagers placed by internet and telephone and but for the changes then instituted by statute would have continued to do so”: Betfair v Western Australia at [77]. The effect of the legislation as a whole was said to be (Betfair v Western Australia at [116]):
… to restrict what otherwise is the operation of competition in the stated national market by means dependent upon the geographical reach of its legislative power within and beyond the State borders.
That fact was held to engage s 92 of the Constitution. Although Betfair in that case expressly challenged the validity of two separate provisions of the legislation in question, the majority in Betfair v Western Australia considered the combined effect of the relevant provisions of the legislation when considering s 92 of the Constitution.
103 In the present case, it is appropriate to assess the factual operation of s 2.5.2 of the GRA by reference to the carve-outs from the prohibition created for Tabcorp (a statutory monopoly) and registered bookmakers (under certain circumstances) by other provisions of the GRA that are not the subject of specific constitutional challenge. When that is done, it is apparent that s 2.5.2 imposes a discriminatory burden.
104 The respondents submitted that the Impugned Provisions apply to Sportsbet in the same way as they apply to all wagering operators other than Tabcorp, including other Victorian wagering operators. They submitted that their different application to Tabcorp arises out of their position as the holder of the single Victorian wagering licence, making it the only body permitted to operate a totalisator within Victoria. The respondents submitted that the different application does not constitute discrimination against interstate trade and commerce vis-À-vis intrastate trade and commerce. That is not to the point. The fact that a law burdens intrastate operators as well as interstate operators does not preclude it from being discriminatory against interstate trade and commerce. In Betfair v Western Australia at [121] the High Court stated that:
It is true that this particular form of fixed odds betting also is denied to in-State wagering operators and their customers. But that does not deny to s 24(1aa) its character of a discriminatory burden on interstate trade of a protectionist kind. The subsection operates to protect the established wagering operators in Western Australia, including RWWA, from the competition Betfair otherwise would present.
The position of Sportsbet is no different.
105 Sportsbet’s position stands in stark contrast to that considered by the High Court in Barley Marketing Board. In that case, the State compulsory marketing scheme limited competition to the extent that all barley grown in New South Wales vested in the marketing body. However, the scheme was not contrary to s 92 because it did not discriminate against interstate trade and commerce. It did not result in the exclusion of one group but not the other or lead to any difference in terms of price to traders in the two States. Here, the Impugned Provisions do result, in the very least, in the exclusion of one group (of which Sportsbet is a member) but not the other (Tabcorp) from the market: see [101] above.
106 Tabcorp further submitted that economic theory and practice accord with the legal proposition that a statutory monopoly which closes markets to new entrants is not, for that reason, discriminatory or protectionist. I reject that submission. In my view, that submission is best considered in the context of the next question.
(d) s 2.6.1 of the GRA
107 For reasons that are similar to those already given in connection with s 2.5.2 of the GRA, s 2.6.1 of the GRA imposes a burden on interstate trade or commerce. It provides that a person must not “possess” an instrument of betting not authorised under the GRA: see [12] above. An “instrument of betting” is broadly defined: see s 2.1.2(1) at [14] above. “Possession” is broadly defined in s 2.6.1(2): see [13] above.
108 As noted earlier, s 2.6.1, by its express terms, is directed at actual physical possession of, custody or control of, or having and exercising access to, an instrument of betting in Victoria. It is directed at prohibiting the physical presence in Victoria of an instrument that is used in carrying on or in connection with betting on a sporting event and possession by a person of that instrument unless the instrument is authorised by the GRA. In the present case, that is possession of the “betbox” at the Eureka Stockade Hotel, the means or mechanism by which the bet is selected, placed and its acceptance is notified. Given the express terms of s 2.6.1, possession of an instrument like the “betbox” that enables any one of those objectives to be achieved would be contrary to s 2.6.1. That is a burden that applies to Sportsbet throughout Victoria. That burden is not de minimis. As the applicants submitted, the prohibition on the installation and use of the “betbox” is a significant burden on Sportsbet and its customers.
109 The next question is whether the burden imposed by s 2.6.1 of the GRA is “discriminatory”. It is apparent that it is. The burden does not apply to Tabcorp. Tabcorp is free to install and operate “EasyBet terminals”.
(e) s 115 of the LCRA
110 For the same reasons as in respect of ss 2.5.2 and 2.6.1 of the GRA, s 115 of the LCRA imposes a burden on interstate trade or commerce. Relevantly, it prevents betting on licensed premises unless the betting is via a betting facility of Tabcorp or Tabcorp Manager at the premises, such as an “EasyBet terminal”: see [24] above. The burden is, therefore, also discriminatory.
(3) DISCRIMINATION PROTECTIONIST?
111 The next question is whether the discrimination is “protectionist” in character. As the High Court said in Betfair v Western Australia at [15]:
The term ‘protection’ is concerned with the preclusion of competition, an activity which occurs in a market for goods or services. To focus upon the geographic dimension given by state boundaries, when considering competition in a market in internet commerce, presents practical and conceptual difficulties.
See also Betfair v Western Australia at [116]; Racing New South Wales v Sportsbet Pty Ltd (2010) 189 FCR 448 at [101] and Cole v Whitfield at 392-393.
112 It is common ground that the party who seeks the immunity which s 92 of the Constitution confers must demonstrate the protectionist character of the relevant legislation – here, the Impugned Provisions: SOS Mowbray Pty Ltd v Mead (1972) 124 CLR 529 at 574-575 and Betfair Pty Ltd v New South Wales (2010) 189 FCR 356 at [93].
113 A burden has a protectionist character if, in its differential effect, it is likely to remove or diminish significantly any competitive advantage which the interstate trader enjoyed over the intrastate trader before the imposition of the burden, or, is likely to impose a competitive disadvantage on the interstate trader alone: Betfair Pty Ltd v New South Wales (2010) 189 FCR 356 at [37].
114 In the present case, Sportsbet submitted that the Impugned Provisions are protectionist in character because when they are applied to the identified trade and commerce, the Impugned Provisions permit Tabcorp to communicate with its customers in a way that is commercially advantageous in the market but, at the same time, prohibits Sportsbet from operating the same or comparable facility.
115 On the other hand, the respondents submitted that the Impugned Provisions, when introduced, did not reflect a policy measure that sought to give a competitive or market advantage to an intrastate trader over interstate traders and that the mere existence of a statutory monopoly or exclusive rights did not give rise to a conclusion that there was protection at work. Alternatively, the respondents submitted that, viewed today, the Impugned Provisions in their proper and full context could not be characterised as providing a competitive or market advantage. That is, the respondents submitted that the Impugned Provisions do not protect an inefficient local trader from a more efficient trader from another State or Territory but result from other externalities, such as necessary regulation.
116 In support of their contention, the respondents submitted that the starting point should be acceptance of what they described as two fundamental propositions, namely:
1. s 92 is not concerned with individual rights: Betfair v Western Australia at [26];
2. “s 92 was not designed to create a “laissez-faire economy in Australia”; rather, it had a more limited operation, to prevent the use of State boundaries as trade borders or barriers for the protection of intrastate players in a market from competition from interstate players in that market”: Betfair v Western Australia at [36].
117 As a result, the respondents submitted that if a law imposes a burden on an interstate trader or even has an impact on competition in a national market for goods or services, that is not itself sufficient to contravene s 92. Rather, a further element is necessary – namely that the burden or impact is discriminatory against interstate trade or commerce because:
1. “the law on its face subjects … [interstate] trade or commerce to a disability of disadvantage”; or
2. “the factual operation of the law produces such a result”,
Cole v Whitfield at 399.
118 At one level, argument of this aspect of the dispute proceeded by reference to the conflicting views of economists called to give evidence. Sportsbet called Dr Philip Williams. Tabcorp called Mr Derek Ridyard. These reasons for decision will consider the differing views of each economist and then analyse whether or not the discrimination is protectionist in character.
119 First, their respective qualifications. Dr Williams obtained his doctorate from the London School of Economics in 1977 having completed his masters in economics at Monash University in 1973. Until 2002, he was a Professor of Law and Economics in the Melbourne Business School at the University of Melbourne. He remains an honorary Professorial Fellow of the University and continues to teach there on a part time basis. He is now the Chairman of Frontier Economics (Australia), an advisory company. He has advised the Australian National Competition and Consumer Commission, the National Competition Council and the New Zealand Commerce Commission and been retained by law firms to provide advice on a range of matters. Mr Ridyard obtained a Bachelor of Science in Economics from the University of Southampton in the United Kingdom in 1982 and a Masters of Science in Economics from the London School of Economics in 1986. He is currently a partner and co-founder of RBB Economics, a firm that specialises in the economics of competition and regulation. Prior to RBB Economics, he worked for the United Kingdom Government Economic Service and in the private sector.
120 Secondly, the different views expressed by the economists. Dr Williams concluded that the Victorian arrangements are protectionist because they grant statutory monopoly rights to Tabcorp. The respondents rejected that contention. As noted above (at [106]), they submitted that it cannot be right that the mere grant of statutory monopoly rights gives rise to protectionism. In support of that contention, they called Mr Ridyard who concluded that the economic indicia of protectionist measures are the reduction of economic efficiency and overall welfare, and that the relevant market in the present case does not display such features.
121 The evidence given by the economists was received without objection. I express no view about its admissibility. However, the utility of the evidence of each depended wholly upon what each economist meant by the expression “protectionist” and how each understood the relevant provisions bear upon the question to which his opinion was directed. Both the meaning to be given to the term “protectionist” and the legal and practical operation of the Impugned Provisions are ultimately questions for the Court. Neither is a question for expert economic opinion. That conclusion is reinforced by consideration of the opinions which each expressed.
122 It will be observed that each expressed a view about whether the arrangements in question were or were not protectionist. The considerations which each identified as bearing upon that question were considerations based only in the relevant laws. And the conclusions expressed depended wholly upon the content which each gave to the term “protectionist”.
123 Shorn of the complications presented by the views being expressed by witnesses having particular expertise in economic matters, the critical observations to make about both the evidence given and the facts that were proved in evidence are that the Impugned Provisions entrench Tabcorp’s position as the sole supplier in Victoria of betting facilities of a kind which Sportsbet seeks to supply in Victoria and the market in which both Tabcorp and Sportsbet operate is a national market.
124 The High Court said in Betfair v Western Australia (at [118]) in relation to s 27D of the Betting Control Act 1954 (WA) that:
This provision applies to the conduct of Betfair in publishing or otherwise making available a WA race field. This burdens interstate trade and commerce, both directly and indirectly. It does so directly because it denies to Betfair use of an element in Betfair’s trading operations. It does so indirectly by denying to Betfair’s registered players receipt and consideration of the information respecting the latest WA race fields by access to Betfair’s website or by communication with its telephone operators. These effects of s 27D(1) operate to the competitive disadvantage of Betfair and to the advantage of RWWA and the other in-State wagering operators. The law in its application to Betfair answers the description of a discriminatory burden on interstate trade of a protectionist kind.
125 Applying that to the Impugned Provisions, it is apparent that the Impugned Provisions impose a competitive disadvantage on Sportsbet, as an interstate trader, as they would another interstate trader wishing to supply betting facilities in Victoria. The disadvantage does not hinge upon Sportsbet’s particular circumstances or business model: cf Betfair Pty Ltd v Racing New South Wales (2010) 189 FCR 356. The Impugned Provisions are therefore protectionist in the requisite sense.
Date for construing the Impugned Provisions
126 Another aspect of this question is the relevant date for construing the Impugned Provisions? The respondents placed considerable reliance upon the historical context stretching back as far as the Betting Act 1853 (16 & 17 Vict c 199) from which s 2.5.2 of the GRA was said to be “directly derived”. Unsurprisingly, the statutory regime has been the subject of substantial and insubstantial amendment on numerous occasions.
127 In considering the “burden” that may arise from the legal or practical effect of any of the Impugned Provisions, difficult questions of fact are often involved: Cole v Whitfield at 408-409 and Betfair v Western Australia at [17]. Those questions are not static. That is reinforced by the essential requirement that there be a justiciable controversy on the facts: see, by way of example, Sportsodds Systems Pty Ltd v New South Wales (2003) 133 FCR 63 at [38], [41]-[43] and [47]. Questions of fact are capable of changing over time. For example, changes in a market (whether, for example, by technology, participants or the like) have the potential to, and often do, change the legal or practical effect of a particular provision: by way of example, see Armstrong v Victoria (No 2) (1957) 99 CLR 28 at 73-74; Commonwealth Freighters v Sneddon (1959) 102 CLR 280 at 302 and Zines, The High Court and the Constitution (5th ed, The Federation Press, 2008) at 560-561. As a result, the purpose and effect of a provision may be ascertained at the date of its enactment but the operation of the provision may change as a result of amendment and its practical operation may change as technology changes. Given the speed of change in so many areas relevant to the enquiry, the point of enquiry cannot cease at the date of enactment or amendment: see Thomas v Mowbray (2007) 233 CLR 307 at [7], [132], [146] and [425].
128 It must be recalled that three significant changes since Cole v Whitfield were identified by the High Court in Betfair v Western Australia at [12]-[16] – the change in 1997 to the Court’s interpretation of Ch IV of the Constitution, the appearance of the “new economy” and the emergence since 1995 of a National Competition Policy. That list was not intended to be exhaustive. The issue may be further tested by recognising that if the High Court was now to adopt a different approach to the operation of s 92, that new approach could not be prospective. It would apply to laws already enacted.
129 The issue before the Court is the validity of the Impugned Provisions. The time at which that question is to be determined in this case when the “betbox” was removed by the VCGR. Not at any earlier or later time. The removal of the “betbox” was the event which underpinned the constitutional challenge: cf Sue v Hill (1999) 199 CLR 462 at [49] in relation to the phrase “a foreign power” in s 44(i) of the Constitution and Kruger v The Commonwealth (1997) 190 CLR 1 at 36-37, 62 and 84-85.
(4) IMPUGNED PROVISIONS APPROPRIATE AND ADAPTED TO ACHIEVE OBJECTIVES CONSONANT WITH S 92?
(a) Introduction
130 This argument was extensively addressed by the parties. The respondents submitted that any discriminatory burden is appropriate and adapted to legitimate ends. The ends identified by the respondents were different. The State and the VCGR identified two overlapping legitimate objects:
1. funding the operation of the racing industry in Victoria by means of taxes and charges imposed in respect of the sole off-course wagering and betting business authorised to be conducted in Victoria; and
2. the regulation, control and restriction of off-course betting (including totalisator wagering and other betting) in Victoria.
The State and the VCGR did not identify retail exclusivity separately.
131 Tabcorp, on the other hand, submitted that the Victorian racing industry relies almost entirely for its vibrancy and success on funding generated by Tabcorp. In addition, Tabcorp submitted that the concept of retail exclusivity informs each of the following propositions:
1. Tabcorp’s retail exclusivity is extremely important to the total operations of the “joint venture” (see [5] below) and accounts for more than 60% of total wagering turnover in Victoria;
2. the long term impact of loss of exclusivity would have devastating effects on the Australian and Victorian racing industries;
3. there is a public interest in having a single large totalisator pool as part of Tabcorp’s retail exclusivity; and
4. the single licence retail wagering system provided through the totalisator is appropriate and adapted and reasonably necessary to minimise the risk of corrupt or criminal practices associated with gambling and there are legitimate concerns relating to the integrity and security of the “betbox”.
132 Before turning to consider each of these in turn, a number of matters should be noted. First, the respondents bear the onus of establishing that the discriminatory burden is appropriate and adapted to a legitimate end: Betfair v Western Australia at [102]-[103]. Secondly, in considering whether a particular provision is appropriate and adapted to a legitimate end, the restrictions imposed must be no more than are “reasonably necessary” in all the circumstances: Permewan Wright Consolidated Pty Ltd v Trewhitt (1979) 145 CLR 1 at 31 and Betfair v Western Australia at [102] citing North Eastern Dairy Co Ltd v Dairy Industry Authority of NSW (1975) 134 CLR 559 at 608. Thirdly, the criterion of “reasonable necessity” involves consideration of whether the burden is greater than that which the reasonable attainment of the purpose requires. That is, there must be an acceptable explanation or justification for the identified discriminatory treatment of interstate trade or commerce. Fourthly, it is not necessary to show that the burden is absolutely necessary to achieve the non-protectionist object: Betfair v Western Australia at [102] citing Thomas v Mowbray at [20]-[26].
(b) Funding
133 The facts are largely not in dispute.
134 The Victorian racing industry is a successful and prestigious industry. It contributes to the economy of Victoria, the culture and employment of the State and to Australian racing as a whole.
135 The bulk of the funding to the Victorian racing industry comes from contributions that Tabcorp are required to make under a joint venture with the racing industry. (It will be necessary to return to consider some details of that joint venture in greater detail later in these reasons.) So, for example, in the 2009-2010 financial year, the financial contributions to the racing industry in Victoria were as follows:
1. of Racing Victoria Limited’s total annual revenue of $286,220,975, Tabcorp contributed $206,498,000;
2. of Harness Racing Victoria’s total annual revenue of $71,916,000, Tabcorp contributed $49,988,000; and
3. of Greyhound Racing Victoria’s total annual revenue of $46,697,000, Tabcorp contributed $37,444,000.
Tabcorp’s contributions are used, among other things, to provide prize money for events which is necessary to attract participants.
136 The funding model has been and remains highly successful and, in part for that reason, the Court was told is to be continued after Tabcorp’s licence expires in 2012. It is also a funding model adopted in other Australian jurisdictions and internationally.
137 The possibility of funding the Victorian racing industry through contributions from wagering was one of the reasons for establishing a government owned off-course totalisator agency board (the TAB) in the 1950s, a position not unique to Victoria. From that time, totalisator exclusivity and retail exclusivity were features of the TAB’s operation and formed part of the recommendations of the Martin Royal Commission that led to the establishment of the TAB.
138 From the establishment of the TAB until the 1990s, all of the net profits of the TAB were distributed back to race clubs. In 1994, the TAB was privatised. Tabcorp was incorporated and issued with the licence to conduct off-course pari-mutuel wagering: see [16] above. The evidence of Mr Ross Kennedy, Executive Director Gaming and Racing in the Department of Justice, which was not challenged, was that:
In 1994, as part of its program to retire State debt, the Government decided to float the TAB as a public company. This prompted debate between the Government and the racing industry as to who owned the businesses conducted by the TAB. The controlling bodies claimed ownership of those businesses on behalf of the racing industry on the basis that the industry had underwritten the TAB and had permitted the TAB to use wagering revenue, that would otherwise have been payable to race clubs, to fund further investment in the businesses of the TAB, including its growing gaming operations.
Ultimately, the Government, through the Office of State-Owned Enterprises, within the Department of Treasury, and the controlling bodies negotiated an agreement that would make the floating of the TAB possible. … [A] Memorandum of Understanding between the Government and racing industry, dated 15 March 1994, … sets out the terms of the agreement reached. The beginning of the Memorandum sets out the purposes of the new arrangements, including as follows:
1. The Racing Industry, the Totalizator Agency Board of Victoria (‘TAB’) and the government Desire to secure the financial strength and future of the Racing Industry, and to ensure that Wagering, Gaming Sportsbook and keno, being businesses conducted by the TAB, achieve their full potential.
…
3. The Government desires to realise the value of the Wagering and Gaming businesses by receiving at least $600 million through the public float of the businesses conducted by the TAB.
…
6. The Government recognises the importance of the Racing Industry to the Victorian economy and in recognition thereof will deal with the Racing Industry in good faith in respect of the corporatisation and privatisation of the business activities undertaken by the TAB.
Having reached agreement with the racing industry, the Government incorporated Tabcorp as the entity to purchase the businesses conducted by the TAB, and to acquire the wagering and gaming licences needed to conduct those businesses. …
The Government also introduced new legislation to give effect to its decision to float the TAB. … As indicated in [the Second Reading speech on that legislation given by the Treasurer dated 28 April 1994], the Government was seeking, through the float, to generate revenue to retire State debt, yet, in doing so, it was also concerned to ensure an ongoing source of revenue to the racing industry and to maintain standards of integrity and probity (see pages 1313 to 1314). In relation to the [Memorandum of Understanding], that underpinned the floating of the TAB, the Treasurer said:
New arrangements have been entered into with the racing Industry designed to secure the financial health of the industry and to provide for a large degree of self-determination in relation to racing and wagering. No longer will the racing industry be subjected to excessive and prescriptive regulation which even dictates the time on which individual races must start. The government will maintain regulation in respect of matters of public interest and probity. The industry will have a participating interest in the Victorian wagering and gaming operations of the privatised TAB through a proposed joint venture, providing a more secure level of income into the future than would be available under a continuation of the current arrangements.
The government would like to place on record its appreciation of the racing industry’s professional approach to negotiations that resulted in this mutually beneficial outcome which secures the future of the racing industry and unleashes a new, dynamic and rapidly growing private sector company.
(Emphasis added.)
The “joint venture” provided for the provision by the racing industry of a racing program and information, the payment by Tabcorp of various fees to the industry and the joint management of the joint venture by Tabcorp and the racing industry.
139 Taken at its highest, the State submitted that the contributions by Tabcorp to the racing industry were largely derived from its pari-mutuel wagering business. Mr Kennedy and Mr Douglas Freeman, General Manager, Finance, of the Wagering Division of Tabcorp, both gave evidence that pari-mutuel wagering was able to provide greater revenue certainty to the racing industry compared to other forms of wagering because the “take out” from the pool of bets on a particular bet can be fixed in advance regardless of the outcome of the event. Further, the evidence established that retail wagering accounts for the majority of Tabcorp’s wagering business and that Tabcorp has an established network of off-course retail outlets, some staffed and some self-service.
140 The State submitted the present arrangements for funding the racing industry were a continuation of this historical funding model. As will become apparent, that submission fails at a number of levels.
141 First, although there were, and still are, benefits obtained from the funding model, the evidence did not disclose whether the funding of the racing industry was presently adequate, inadequate or in excess of what was “adequate”. Put another way, the evidence did not establish what was the necessary level of funding, and whether that level of funding could only be secured by maintenance of the Impugned Provisions.
142 Indeed, Mr Kennedy was called to give evidence by the State and the VCGR. He told the Court that he was not an expert on the commercial arrangements in place between the controlling bodies and was not privy to them. In cross examination, he accepted that the State had nothing to say about the adequacy or sufficiency of the contribution made to funding the Victorian racing industry by registered Victorian bookmakers.
143 Moreover, the State submitted that the conferral of exclusivity on the TAB (and then Tabcorp) was a means to ensure the ongoing funding of the racing industry in Victoria. It did not submit, and the evidence did not establish, it was the only means or a necessary means. In fact, the State submitted that “it [was] difficult to quantify what would be the consequence to the funding of the racing industry if Tabcorp’s retail exclusivity were removed”. The highest the State could and did put it was that the existing levels of funding and the viability of the industry would be put at risk. That is insufficient justification for the maintenance of the Impugned Provisions: cf Clark King & Co Pty Ltd v Australian Wheat Board (1978) 140 CLR 120 at 191 and Uebergang v Australian Wheat Board (1980) 145 CLR 266 at 306-307. On any view, Tabcorp’s position is fundamentally different to that of the Wheat Board.
144 Secondly, much of the evidence adduced by the respondents was historical. For the reasons stated earlier, the relevant date for construing the Impugned Provisions is the date when the “betbox” was removed by the VCGR, being the event which underpinned the constitutional challenge. The need to consider the Impugned Provisions at a particular time is reinforced by the State’s submission that “to the extent that the [I]mpugned [P]rovisions result in retail exclusivity, for most of their history they have operated primarily to restrict the activities of intrastate operators who may have wished to compete with the TAB” (emphasis added). In that context, it must be noted that the betting industry now is very different from the days described by Frank Hardy in Power Without Glory. No longer is the concern about competition from SP (‘starting price’) bookmakers operating in local laneways.
145 Thirdly, and in any event, even if the evidence supported the factual contention that the funding model was necessary to support and fund the Victorian racing industry (which for the reasons stated earlier it did not), that approach was rejected by the High Court in Betfair v Western Australia at [108] when it stated:
In its submissions Western Australia also contended that any practical effect of the impugned legislation in protecting the turnover of in-State operators from diminution as a result of competition from Betfair, with consequent prejudice to the returns to the racing industry and in-State revenue provided by it, could not be protectionist in nature. But a proposition which asserts that an object of revenue protection of this kind may justify a law which discriminates against interstate trade is contrary to authority [Bath v Alston Holdings Pty ltd (1988) 165 CLR 411 at 426-427; Sportodds Systems Pty Ltd v New South Wales (2003) 133 FCR 63 at 80]. And it is contrary to principle, for such a justification, if allowable, would support the re-introduction of customs duties at State borders.
146 The respondents submitted that that passage in Betfair v Western Australia was limited to protection of State revenue. I reject that submission. What the High Court says in this passage from the reasons in Betfair v Western Australia is not limited to protection of State revenue. That is made clear by the reference to the following passage in Sportodds at [79]-[80] (cited by the High Court in Betfair v Western Australia at [108]):
… In any event, the objective referred to in the Second Reading Speech would seem to be the protection of the ‘racing industry’ in New South Wales. This may be a legitimate objective, notwithstanding that it may have different consequences and effects from the objective of regulating a social evil as discussed above. In Cole v Witfield (sic) (1988) 165 CLR 360 the High Court accepted that the protection of Tasmanian crayfish stocks was a legitimate objective in circumstances where the exploitation of those stocks was non-discriminatory. Further material in this case might establish that the relevant ‘racing’ industry (whether in relation to horse racing, trotting or greyhound racing) is open to persons from all States and Territories whether as competitors, bookmakers or punters. If this is the case then the ‘protection’ of the ‘racing’ industry might be understood as referring to the appropriate funding of racing venues and events so as to attract appropriate interest, both intra-state and interstate. One means of such funding might well be imposing charges and taxes upon bookmakers, totalizators and others who profit from betting on those events. This may be an appropriate objective. There is no obvious reason why bookmakers in other jurisdictions should not pay their fair share of those charges and taxes if they profit from gambling on those events. Obviously this needs to be explored in considerable detail. The nature of the industry, how it is regulated in different jurisdictions, and what arrangements for funding racing events would all need to be explored. The question of whether these arrangements should also be applied to other sporting events not directly connected to horse and greyhound racing would also need to be considered. There may be other essential considerations of which we are totally uninformed. We certainly do not say that further investigation would necessarily establish that this relevant objective, if it exists, is a ‘legitimate’ one. It is simply that it may be.
147 Tabcorp addressed the question of funding under a broader umbrella. It submitted that the Impugned Provisions, read in the context of the legislative structure of which they form part, seek to achieve an object of “promoting a vibrant and successful racing industry, including by materially funding that industry through the totalisator, which generates a stable, commission-based and adequately high source of revenue that is not contingent on outcomes” (emphasis added).
148 The evidence relied upon by Tabcorp established that:
1. it is necessary for the gambling industry (including Sportsbet) to make contributions to the racing industry in order for that industry to be vibrant and successful;
2. payments towards the racing industry by Tabcorp are an essential part of keeping the racing industry vibrant and successful; and
3. the position of the Victorian racing industry (as the foremost in Australia and amongst the best in the world) could not be maintained without substantial funding of the kind that it presently receives.
149 As will be apparent, the fact that there was a need for contributions and that funding by Tabcorp was an essential part of keeping the racing industry vibrant and successful were not in dispute. However, what the evidence did not address was whether the level of funding presently contributed by Tabcorp was the necessary level of funding, and whether the necessary level of funding could only be secured by maintenance of the Impugned Provisions. Instead, Tabcorp adduced evidence to establish that:
1. competition by Victorian corporate bookmakers may have an impact on the level of funding for the Victorian racing fraternity;
2. significant competition between the totalisator and the corporate bookmakers in the 2000s resulted in opportunity cost and although Tabcorp’s revenues have not declined, they have not increased at the rates that existed prior to the increased competitive activities of corporate bookmakers;
3. corporate bookmakers’ turnover has increased significantly following the development of different bet types;
4. as the price of betting lowers due to competition, this has an effect upon funding of the racing industry;
5. until recently, there was no established mechanism for ensuring that corporate bookmakers contributed any funding to interstate racing industries; and
6. while through the introduction of race fields fees, the Australian racing industry has taken some measures to address the issue of corporate bookmakers in the market, the fees paid by the corporate bookmakers constitute only a small proportion of the industry’s current funding.
150 As said earlier, that evidence fails to establish the necessary level of funding and whether that level of funding can only be secured by maintenance of the Impugned Provisions. In fact, in some critical respects, the evidence establishes the reverse – that some aspects of the funding model have been changed without the demise of the racing industry.
151 The respondents have failed to establish that the burden that the Impugned Provisions impose on interstate trade and commerce is appropriate and adapted to achieving the funding objective or even the broader objective of promoting a vibrant and successful racing industry, including by materially funding that industry through the totalisator, which generates a stable, commission-based and adequately high source of revenue that is not contingent on outcomes. The respondents did not establish that the Impugned Provisions are capable of being seen as likely to achieve those identified purpose(s) and, further, did not establish that there were no alternative means to achieve those identified purpose(s) which involve no, or a lesser, burden on interstate trade and commerce than the means adopted. Put another way, there was no evidentiary basis to make the necessary findings that the funding of the racing industry was imperilled by the striking down of the Impugned Provisions. That conclusion is not surprising. A person can use a mobile phone in a public bar to place a bet with Sportsbet but cannot use a “betbox”.
(c) Public interest in having a single large totalisator as part of Tabcorp’s retail exclusivity
152 Tabcorp submitted that is in the public interest to have a single, large totalisator pool, because a larger pool:
1. increases the prospect of a good return because there is more money to divide between successful participants;
2. is more stable, with the result that its indicative odds are more accurate (which is attractive to seasoned punters);
3. is more attractive to experienced and honest punters because they can place large bets without disturbing the pool; and
4. is less susceptible to manipulation.
Put another way, Tabcorp submitted that the public does not benefit from multiple, smaller pools.
153 The difficulties with these submissions were readily apparent from Tabcorp’s own written submissions. It submitted that:
In order to ensure a high level of confidence in the racing industry, it is important that any totalisator system is subject to rigorous scrutiny and control. For this reason, the totalisator system is regulated. Adherence to these regulations imposes onerous administrative burden on Tabcorp. Tabcorp’s costs are predominantly fixed. Accordingly, if Tabcorp operated its totalisator system in a market in which fixed odds operators could directly compete with it in a retail environment, and the level of bets made into its pool is thus eroded, its costs would be approximately the same. Consequently, Tabcorp would not be able to operate as cost-effectively or to offer punters as much value for money. This would reduce the incentive for Tabcorp to continue to run or invest in its totalisator to the same standards and to the same degree.
154 In the end, these considerations encounter the same difficulties that lie in the way of accepting that any of the other forms of justification of the prohibitions demonstrate that the prohibitions are no more than an appropriate and adapted method of achieving ends compatible with the freedom of trade and commerce between the Territory and a State. It is not shown that the objectives sought to be achieved could not be achieved without the Impugned Provisions.
(d) Regulation – Integrity and Probity
155 Tabcorp submitted that concerns regarding integrity and probity underpin both the GRA and its antecedent Acts: cf Second Reading Speech to the Racing (Amendment) Bill 1985 (Vic) (2 May 1985) in the Legislative Assembly and the Second Reading Speech to the Gaming and Betting Bill 1994 (Vic) (28 April 1994) in the Legislative Assembly.
156 As a result, Tabcorp submitted that the single licensed retail wagering totalisator system was appropriate and adapted and reasonably necessary to minimise the risk of corrupt or otherwise criminal practices associated with gambling because:
1. the current system can be carefully scrutinised whereas a fixed odds system is more difficult to scrutinise carefully;
2. the operator of a totalisator does not stand to benefit from any particular outcome whereas a fixed odds operator may do; and
3. there is vertical interdependence between the wagering and racing industries within Victoria reflected in the fact that the racing industry representative body has comprehensive access to Tabcorp’s books and records and influences key decisions and the VCGR has a statutory right to scrutinise and contribute to many of Tabcorp’s processes and activities including through the legislative requirements in ss 4.2.3, 4.2.6, 4.3.10A and 4.8.2 to 4.8.6 of the GRA.
157 The submissions of the State and the VGCR were to a similar effect. They submitted that a balance had been struck between prohibition on competition with the totalisator and the regulation of that competition and that balance reflected the historic importance placed on close regulation of places where gambling takes place.
158 I reject the respondents’ contentions that the identified security and integrity concerns (whether taken singularly or collectively) justify the blanket prohibition contained in the Impugned Provisions. First, the State and the VCGR did not adduce any evidence about integrity concerns which the Impugned Provisions were said to be directed. Secondly, Mr Kennedy gave evidence that although he considered that an integrity risk exposure existed, in his 30 years experience he could not recall any integrity failure with any corporate bookmaker in the Northern Territory or any other corporate bookmaker.
159 Thirdly, even if integrity was an issue (either of the bookmaker or the instruments of betting), those concerns could be appropriately regulated without resorting to the blanket prohibition contained in the Impugned Provisions. That conclusion is reinforced by the fact that many of the items identified by Tabcorp as raising integrity issues concerned training of the venue operator in relation to the operation of the betbox, training of the venue operator in respect of responsible or underage gambling and the design of the betbox both visually and as a device. If those concerns should be addressed (about which I express no concluded view), then again they are concerns that could be appropriately regulated without blanket prohibition. Moreover, the respondents’ submissions were based on the false premise that the effect of Sportsbet’s arguments was that the balance between prohibition on competition with the totalisator and the regulation of that competition “would be utterly destroyed if competition were permitted on an unrestricted basis by persons wholly unregulated by State laws” (emphasis added). It is a false premise because it identifies the wrong question and mischaracterises the effect of Sportsbet’s arguments. Sportsbet does not advocate, and the effect of its submissions is not, that there be competition on an unrestricted basis by persons wholly unregulated by State laws. On the contrary. Sportsbet seeks to attack the Impugned Provisions on the basis that even if that balance is a legitimate one, then the Impugned Provisions impose a discriminatory burden that is not appropriate and adapted to legitimate ends. Of course, it is for the respondents to establish that the discriminatory burden imposed by the Impugned Provisions is appropriate and adapted to legitimate ends. In my view, the respondents have failed to establish that blanket prohibition is no more burdensome than reasonably necessary.
160 Fourthly, the security concerns raised by Tabcorp concerned the “physical aspects of the betbox” (its weight, its access to the internet with the possibility of hacking and appropriate levels of security) and the differences in responsible gambling regimes as between Victoria and the Northern Territory. Again, if those concerns need to be addressed (about which I express no concluded view), then again they are concerns that could be appropriately regulated without blanket prohibition. It is not difficult to conceive of conditions being attached to a licence to operate a “betbox” in a public bar which would address each of the matters identified by Tabcorp. As the High Court said in Betfair v Western Australia at [110] and [112]:
But, allowing for the presence to some degree of a threat of this nature, a method of countering it, which is an alternative to that offered by prohibition of betting exchanges, must be effective but non-discriminatory regulation. That was the legislative choice taken by Tasmania and it cannot be said that that taken by Western Australia is necessary for the protection of the integrity of the racing industry of that State. In other words, the prohibitory State law is not proportionate; it is not appropriate and adapted to the propounded legislative object.
…
… it cannot be found in this case that prohibition was necessary in the stated sense for the protection or preservation of the integrity of the racing industry.
E. THE FIXED ODDS CHALLENGE
161 Section 4.5.3 of the GRA provides that:
(1) The Minister may approve a betting competition on an event or contingency, or a class of event or contingency, of or relating to a horse race, harness race or greyhound race.
(2) An approval is to be given by instrument.
(3) The Minister must not approve a betting competition that –
(a) is conducted on a totalisator; or
(b) in his or her opinion, is offensive or contrary to the public interest.
(4) The Minister may impose any conditions he or she thinks fit on the approval of a betting competition at the time of giving the approval or at any later time.
(5) An approval –
(a) takes effect on the day notice of it is published under section 4.5.4(a) or on the later day specified in the notice; and
(b) remains in force until revoked by the Minister.
(6) A condition imposed under subsection (4) takes effect on the day notice of it is published under section 4.5.4(b) or on the later day specified in the notice.
(Emphasis added.)
162 By a notice under s 4.5.3 of the GRA, published in the Victorian Government Gazette dated 13 November 2008, the then Minister for Racing and the Minister for Gaming stated:
The following classes of events and contingencies are approved with fixed odds under section 4.5.3 of the [GRA] –
Thoroughbred racing, harness racing and greyhound racing – subject to the following conditions:
(i) races held in Victoria must be controlled and regulated by Racing Victoria Limited, Harness Racing Victoria or Greyhound Racing Victoria;
(ii) races held outside Victoria must be controlled and regulated by an authority or body duly recognised by the laws operating within the relevant jurisdictions;
(iii) betting may only be held:
(a) on any race, whether a Group or listed race or otherwise; or
(b) on any contingency relating to any combination of any races;
(iv) betting may only be held with prior written approval of VicRacing Pty Limited, ACN 064 067 849, and Racing Products Victoria Pty Limited, ACN 064 067 867; and
(v) that approval may be revoked at any time in accordance with section 4.5.5(1)(b) of the [GRA] on the understanding that in all reasonable circumstances such withdrawal will not be initiated without providing 6 months notice.
This approval comes into operation on the date of the commencement of provisions of section 4 of the Racing Act 1958 as amended by the Racing and Gambling Regulation Act 2008.
(the Fixed Odds Approval).
The date identified in the last paragraph was 1 January 2009.
163 The applicants contended that:
1. the Fixed Odds Approval is not an approval within the operation of, or for the purpose of, s 4.5.3 of the GRA; and
2. Tabcorp’s authority or permission to conduct “approved betting competitions” under its wagering licence does not include the taking of bets at fixed odds on a horse race, harness race or greyhound race. In particular, the applicants contend that:
(a) fixed odds betting on a horse race, harness race or greyhound race is not a betting competition;
(b) the approval is inconsistent with the grant to Tabcorp (as the licensee) of an exclusive licence to conduct a totalisator; and
(c) the terms of the approval are not authorised by s 4.5.3(1) of the GRA.
I reject the applicants’ contentions.
164 Section 4.5.2 is in Pt 5 of Ch 4 of the GRA. Part 5 is entitled “Approved Betting Competitions and Sports Betting”. The phrase “betting competition” or “betting competitions” is not defined. There is nothing to suggest that the phrase cannot involve fixed odds betting. There are only two relevant limitations in relation to the phrase “betting competition”. First, s 4.5.2 of the GRA provides that an approval under Pt 5 of Ch 4 cannot be given for an event or betting competition that is played on a gaming machine, that is a club keno game or that is an interactive game.
165 Secondly, “betting competitions” can only be approved in two ways – by the Minister under Div 2 (s 4.5.3) in relation to an event or class of event relating to a horse race, harness race or greyhound race, or by the Commission under Div 3 (s 4.5.6(1)(b)) in relation to any event other than one related to a horse race, harness race or greyhound race (s 4.5.7(2)) or any of the activities identified in s 4.5.2. As is apparent, the class of betting events that can be approved is divided by subject matter between the Minister and the Commission. No other distinction is drawn.
166 Indeed, “fixed odds betting” is referred to in a number of places in Ch 4 of the GRA. In s 4.5.6(2) of the GRA (when dealing with approval of betting competitions by the Commission) it provides that:
The approval of a betting competition under this section must specify whether it is a competition with fixed odds or a competition conducted on a totalisator.
There is nothing in the text of the statute or otherwise to suggest that the Minister cannot approve fixed odds betting on the subject matter under his or her control – an event or class of events relating to a horse race, harness race or greyhound race.
167 There are other provisions in Ch 4 of the GRA which expressly support that conclusion. First, s 4.6.6 sets out the amount of tax Tabcorp must pay to the Treasurer on approved betting competitions. Sub-section (1) deals with approved betting competitions on fixed odds and sub-section (2) deals with approved betting competitions conducted by use of a totalisator.
168 Secondly, s 4.2.5(1) requires Tabcorp to make betting rules in relation to, inter alia:
…
(b) totalisators for approved betting competitions;
(c) betting in approved betting competitions at fixed odds;
…
169 Thirdly, ss 4.2.1 and 4.3.1 of the GRA provide that Tabcorp may conduct wagering and approved betting competitions. In other words, the GRA expressly recognises that Tabcorp’s licence is not limited to wagering (or pari-mutuel betting through a totalisator).
170 For those reasons, the Minister’s approval for Tabcorp to conduct fixed odds betting is approval of a “betting competition” under s 4.5.3 of the GRA, being an approval in relation to fixed odds betting on an event or class of event relating to a horse race, harness race or greyhound race subject to the conditions specified in sub-paragraphs (i) and (ii) of the approval: see [162] above. The applicants’ contention that the approval is inconsistent with the grant to Tabcorp (as the licensee) of an exclusive licence to conduct a totalisator is rejected.
171 Finally, it should be noted that at all times since 1994 (when Tabcorp was awarded the wagering licence) (see [16] above), the possibility of approving fixed odds betting on a horse race, harness race or greyhound race as a betting competition has been a feature of the Victorian gaming legislation: see ss 64(2), 64(3)(a) and 65(a) of the Gaming and Betting Act. In fact, Tabcorp has been approved to conduct some fixed odds race betting as a betting competition since 1994.
172 The applicants also submitted that Tabcorp’s authority to conduct approved betting competitions, including under the fixed odds approval, on a horse race, harness race or greyhound race is not exclusive to Tabcorp. At one level that contention is correct. Registered bookmakers are permitted by s 4 of the Racing Act to take bets on races while they are at a licensed race course including from punters not at the racecourse, by a method of communication approved by the Minister under s 4A of the Racing Act. That state of facts, however, does not detract from the fact that Tabcorp has and retains the sole wagering licence: see section [B(2)] above.
F. ORDERS
173 The parties will be directed to being in orders to give effect to these reasons for decision by 4:00pm on 29 August 2011.
| I certify that the preceding one hundred and seventy-three (173) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Gordon. |
Associate:
