Sports Law 03 July 2013

Advertising and promotion of gambling in sport

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Executive Summary

The proliferation of sports betting advertising and sponsorship by local betting operators during sporting events continues to be a source of economic growth, and consumer consternation in Australia.  

Several recent parliamentary inquiries into the advertising and promotion of gambling products and services in and around the sporting industry have produced a series of detailed reports containing recommendations on how to best regulate the industry, minimise the influence of sports gambling promotions on vulnerable people and ensure the integrity of the sports themselves.

In the context of an upcoming Federal election, it is unclear whether the Federal Government will take any further legislative action to implement such recommendations.

The regulatory environment is a combination of state and federal legislation, with Victoria leading the way in terms of a comprehensive regulatory framework.  This article considers the current regulatory environment around sports gambling in Victoria and federally and examines the importance of balancing the interests of the different sporting bodies, stakeholders and groups in the community when considering future regulation in the sports betting industry.

Overview

Sports betting continues to be a rapidly growing and developing market in Australia, marked by strong competition between domestic and international corporate bookmakers and betting agencies. At the same time, technology has largely eroded international borders and created an international marketplace for gambling products. Through the internet, it is now possible to gamble on any number of sports played virtually anywhere in the world.

Growth in sports betting has also resulted in an increase in the advertising of sports betting products and services. It was inevitable that this saturation marketing of gambling would result in burgeoning public concern with regard to the welfare of vulnerable groups, such as children and those with a gambling problem. Of course increased gambling in sport also leads to increased speculation around tampering and the integrity of those affected sports more generally.

Amidst mounting political pressure to impose strict bans on ‘live odds’ advertising during sports broadcasts, former Prime Minister Julia Gillard announced, on 26 May 2013, the Federal Government’s edict that TV and radio networks ban the promotion of live odds and restrict gambling advertisements during sporting matches.

Under the Federal Government’s proposed changes:

  • all promotion of betting odds on broadcast media will be prohibited during live sports matches. This includes statements or announcements by gambling companies and commentators;
  • all generic gambling broadcast advertisements will be banned during play. Advertisements of this sort would only be allowed before or after a game, or during a scheduled break in play, such as quarter-time and half-time;
  • gambling advertisements on banners, sponsorship logos, and other broadcast promotions must not appear during play; and
  • representatives of gambling companies must not appear during a broadcast of a sporting event at or around the venue. They also must not appear with the commentary team at any time and must be clearly identified as a gambling representative.

The Government also asked broadcasters to submit a revised television industry code of practice to the industry regulator, the Australian Communications and Media Authority (ACMA). At this stage, television networks have agreed to co-operate with this request. Free TV Australia, which represents the free to air television networks, reacted by describing the restrictions as unprecedented but nevertheless agreed to implement them and have undertaken to submit a revised television industry code of practice as soon as practicable.

The Government’s announcement acts as a warning to broadcasters that failure to present a suitable code and make appropriate changes with regard to gambling advertising in sport may result in the Government taking further action by fast-tracking legislation.

The Federal Government's demands are largely the result of in-play betting updates during coverage of football codes, especially the National Rugby League. This year, a sponsorship deal allowed bookmaker Tom Waterhouse to regularly appear alongside Channel Nine commentators during their coverage of NRL matches, which prompted a public backlash amid concerns over the growing move to the mainstream of sports gambling.

Existing legislative regime

Sports betting is governed by a combination of state and federal legislation. Notably however, Victoria is the only state with comprehensive sports betting legislation.

In Victoria, sports betting is governed by the Gambling Regulation Act 2003, and the Gambling and Racing Legislation Amendment (Sports Betting) Act 2007. Federally, the Interactive Gambling Act 2001 (Cth) (IGA) also governs sports betting offered in Victoria and elsewhere in Australia. The IGA regulates interactive gambling services offered over the internet by placing restrictions on certain services being provided to customers in Australia irrespective of where those services originate.

Important changes to how sports betting is regulated in Victoria came with the introduction of the Gambling and Racing Legislation Amendment (Sports Betting) Act 2007. This Act amended the Gambling Regulation Act 2003. It transferred responsibility for approving betting on sporting and other non-racing events to the Victorian Commission for Gambling and Liquor Regulation (VCGLR). It also gave the VCGLR the power to prohibit particular bet offers it considered inappropriate (such as those that might be offensive, contrary to public interest or that would pose an unmanageable integrity risk).

The aim of the legislation was to improve confidence in the integrity of sports being bet on, and to enable sports controlling bodies to receive a portion of the revenue from the betting on their sports. As a result, sports betting operators need written agreements with sporting organisations on sharing gambling information and on the fees payable to approved sports controlling bodies. Sports betting providers may not offer bets on Victorian sporting events without a written agreement from the relevant sports controlling body or a determination by the VCGLR.  

The effect of the Betfair case

Until 2009, advertising by interstate bookmakers was illegal in Victoria.

In 2008, the laws relating to advertising restrictions in both Victoria and NSW were challenged in the Federal Court by two interstate wagering service providers, Betfair Pty Ltd (licensed in Tasmania), and Sportingbet Australia Pty Ltd (licensed in the Northern Territory).

These laws were challenged in response to an earlier High Court decision in the matter of Betfair Pty Ltd v State of Western Australia in 2008 which examined Western Australian restrictions on interstate trade in the context of telephone and internet gambling. The Court held that these restrictions, to the extent they applied to Betfair Pty Ltd (Betfair), contravened section 92 of the Commonwealth Constitution as they imposed discriminatory and protectionist burdens on interstate trade and operated as an unfair commercial restraint on commerce between and within states. The High Court decision made it clear that legislation must not treat interstate wagering service providers in a discriminatory fashion based on their location.

Following the decision of the High Court in the Betfair v Western Australia and subsequent challenges to Victorian and NSW legislation, the Victorian Government undertook to review provisions relating to the prohibition of advertising by interstate wagering service providers. In 2009, both Victoria and NSW repealed their advertising restrictions, allowing interstate wagering service providers to advertise their services in both states.

That deregulation resulted in an opening of the floodgates in respect of the level of advertising and promotion by corporate bookmakers looking to gain market share and improve brand recognition in the highly competitive markets of NSW and Victoria. At the time, policy concerns about gambling focused primarily on pokies, which allowed sports-betting operators, media networks and sporting bodies to concentrate their efforts on advertising and promotion in and during sport. 

Reviews and inquiries into the regulation of sports gambling

In the last few years, however, there have been several major reviews of how sports betting is currently regulated, and how it should be regulated in the future, at both the state and federal level.

Productivity Commission Inquiry Report on Gambling

In June 2010, the Productivity Commission released its Inquiry Report on Gambling, which looked at the implications of new technologies (such as the internet), including the effect on traditional government controls on the gambling industries, and the effectiveness and success of harm minimisation measures.

Its key findings and recommendations included that:

  • the potential impact of online gaming services by problem gamblers poses a significant social cost. Accordingly, online gaming should be subject to appropriate regulation;
  • the IGA has had limited effectiveness in reducing demand for online gaming services and its effectiveness is likely to decline over time;
  • the IGA discriminates against potential online gaming providers by effectively ensuring that the Australian market (which is growing) for online gaming is catered for by offshore providers who operate under different regulatory regimes; and
  • the most appropriate form of regulation is gradual managed liberalisation of online gaming with strict licensing criteria and harm minimisation requirements.

Victorian Government Review of Sports Betting Regulation

In 2011, the Victorian government released the Review of Sports Betting Regulation. The review made a number of recommendations aimed at improving the regulatory regime including greater enforcement of existing legislation, improving integrity assurance, and the need to pursue a nationally-consistent approach in order to best protect sporting integrity. The Victorian Government agreed to implement all of the recommendations where it had power to do so and work with the gambling regulator, other Australian governments, sporting bodies and betting providers to implement those recommendations that require action by others.

Interactive Gambling Act 2001

At a federal level, the Department of Broadband, Communications and the Digital Economy (DBCDE) also undertook an inquiry into the prevalence of interactive and online gambling in Australia and the adequacy of the IGA and released its final report in March 2013.

The following recommendations of the DBCDE are of particular relevance.

  • A national standard, a framework of harm minimisation and consumer protection measures for all forms of permissible online gambling should be developed. Online gambling providers who do not sign up to this standard should be prohibited. Examples of harm minimisation measures suggested include pre-commitment, credit restrictions, warning messages and links to gambling helpline services.
  • The Australian Communications and Media Authority (ACMA) should be responsible for administering penalties to those who provide prohibited online gambling services. Accordingly, they should be given stronger powers to enforce these penalties. Financial institutions should be able to block transactions with prohibited gambling sites, and internet service providers should be able to block access to prohibited gambling sites or at least display warning messages when they are accessed.
  • Steps should be taken to ensure that the risk of children accessing online gambling sites is minimised.
  • Advertising of prohibited online gambling services, either directly or indirectly, should attract civil as well as criminal penalties which should also be administered by ACMA. This should include “free-play” gambling sites that are associated with “real money” gambling sites.
  • Online “in-play” betting (i.e. bets on the outcome of an event after it has started) on sporting events should be legalised.  At present, “in-play” bets can only be placed in person or via the phone; this recommendation would allow “in-play” bets to be placed online as well, subject to state law and the regulations of the relevant sporting code.
  • To minimise the capacity for rapid and potentially harmful online “in-play” betting, the practice of “micro-betting” in sport should be completely prohibited. This is currently covered by the ban on online “in-play” betting, but should be extended to all forms of “micro-betting” on sporting events. “Micro-betting” refers to bets on “micro” outcomes within an event (e.g. bets on the individual results of balls in a cricket game or a single point in tennis). Micro-bets offer opportunities to bet frequently and repetitively with short intervals between bet and result. There are concerns this type of betting may affect the integrity of sports since they are seen as events easily susceptible to manipulation, as a player could be persuaded to fix a result of a bet, without having a significant impact on the result of the match as a whole.
  • Other platforms with online gambling connections (such as social media services and online games) revise their user policies, and ensure that these games and services are not inappropriately targeting or misleading younger children.

Australian Crime Commission report

DBCDE’s findings came shortly after the release of the Australian Crime Commission's (ACC) report into links between performance-enhancing drug use, organised crime and possible betting corruption in sport in Australia. Although Australia’s major sporting codes were not implicated in the ACC findings (as the report did not provide any evidence that the increased promotion and advertising of gambling in sports has had an impact on the level of corruption or the incidence of match-fixing in Australian sport), the report highlighted the need for vigilance from all sports and the risks associated with the rapid growth of the local sports betting industry and the tight grip it now has on Australia’s premier professional codes, as well as the threats posed by exotic forms of betting and infiltration by organised crime with consequent implications of corruption and match fixing.

Commonwealth Parliament’s Joint Select Committee on Gambling Reform

Most recently, the sports betting industry and its potential effect on the integrity of Australian sport came under review again as part of the inquiries undertaken by the Commonwealth Parliament’s Joint Select Committee on Gambling Reform (Committee) (which was appointed by resolution of Parliament on 30 September 2010 and has already completed several inquiries and delivered several reports on interactive and online gambling, gambling advertising and the prevention and treatment of problem gambling in 2011 and 2012). In June 2013, the Committee released its latest report containing a series of recommendations following its inquiry into the advertising and promotion of gambling in sport, which centred around the following key issues:

(i)      in-ground and broadcast advertising;

(ii)     the role of sponsorship alongside traditional forms of advertising;

(iii)    in-game promotion and the integration of gambling into commentary and coverage;

(iv)    exposure to, and influence on, children;

(v)     contribution to the prevalence of problem gambling, and mechanisms to reduce that prevalence;

(vi)    effect on the integrity of, and public attitudes to, sport;

(vii)   the importance of spot betting and its potential effect on the integrity of sporting codes; and

(viii)  the effect of inducements to gamble as a form of promotion of gambling services, and their 
         impact on problem gambling.

Some of the key recommendations of the Committee included:

  • A governmental review of the self regulatory action being taken by the gambling industry with a view to legislating in the area if industry does not make appropriate changes regarding the promotion of gambling products in an environment which includes children. 
  • A governmental review (including public consultation) of the current exemption of gambling advertising for sporting programs.
  • Further research be undertaken or commissioned by the Australian Gambling Research Centre on the long term effects of gambling advertising on children, and in particular, the normalisation of gambling during televised sport.
  • The Council of Australian Governments (COAG) Select Council on Gambling Reform is to work towards nationally consistent requirements for responsible gambling messages to ensure they work as effectively as possible as harm minimisation measures to counterbalance the promotion of gambling.
  • The COAG Select Council on Gambling Reform is to review of the amount of betting promotion at sporting venues (including the display of sports betting promotion on uniforms) to ensure that it is appropriate for what is marketed as a family friendly environment.
  • The Minister for Sport is to work with the Australian Wagering Council and professional sporting codes to urgently review of the availability of merchandise to children featuring sports betting logos or names.
  • Further research be undertaken or commissioned by the Australian Gambling Research Centre in relation to the effect of mobile phone applications on problem gambling, what harm minimisation features would be effective and how best to incorporate these features into regulatory structures.

However, in light of the work now underway by the Government with broadcasters to amend their existing industry codes of practice, the Committee recommended that the Broadcasting Services Amendment (Advertising for Sports Betting) Bill 2013 that was introduced into the Senate by Senator Richard Di Natale not be passed until a review of the self-regulatory action being taken by the industry is completed. A dissenting report from Committee chairman Andrew Wilkie (as well as Senators Richard Di Natale and John Madigan) claims that the report and recommendations did not go far enough. The dissenting report proposes the total ban of live odds at sporting venues and during the broadcast of games and, rather than conducting a review, calls for the government to proceed immediately with legislation removing the exemption allowing gambling advertisements during sports games watched by children. The dissenting report also urges the government to prohibit the promotion of gambling services during editorial segments of sports and sports-related programs.

Balancing the interests of all parties

It is important that community concerns in relation to the promotion of gambling in sports are addressed to ensure that the integrity of our sporting competitions is protected and sports-betting companies advertise their products and services in a socially responsible manner.

However, from the perspective of local betting operators, any restrictions should not undermine the primary benefit for Australian regulated and licensed operators to be able to advertise their products if they are to remain competitive against unregulated and unlicensed foreign betting operators. Any legislation introduced that creates an overly burdensome regulatory regime may be detrimental to the competitiveness of licensed domestic betting operators and only serve to drive even more Australians to gamble online with illegal, unregulated offshore operators who do not comply with Australian standards and have little or no consumer protection.

Further, for TV networks, any restrictions on the advertising and promotion of sports gambling must strike an appropriate balance between reforming broadcast regulations to protect the community from the influence of gaming while making sure it is possible for the television networks to access an appropriate revenue stream in order to recover the millions of dollars they invest to win the rights to broadcast the matches of our sporting codes. Removing gambling advertising entirely is likely to drive down the value of broadcast rights resulting in lower revenues for sporting associations and ultimately athletes.

Finally, consideration should be given to the relationship between professional sporting codes and the gambling industry, which has become closer and more complex in recent years. The gambling industry is a major financial contributor to various sporting codes throughout Australia, with betting operators now entering into sponsorship agreements with the approved sporting bodies of various codes as well as individual clubs.

Concluding comments

With a Federal election to be held later this year, it remains to be seen whether any further action will be taken by the Federal Government following the multiple reviews and inquiries over the last few years. In the meantime, it would be prudent for all parties concerned to continue to cooperate to address these issues so as to avoid attracting further criticism from the public and increased scrutiny from government that may ultimately lead to stringent legislative reform.  

Author: Jeremy Loeliger and Leigh Krafchek

Contact

Melbourne

Jeremy Loeliger, Partner
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Dean Wattis, Special Counsel – Sports Law
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Ian Robertson, Managing Partner - Sydney
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Scott Lambert, Partner
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