Gambling ads during live sports: Not on

There is a plethora of regulation that governs advertising of gambling services at both a State/Territory and federal level in Australia. The intent of this note is not to consider those existing restrictions but to discuss proposed new restrictions, which were first announced by the Australian Government as part of its May 2017 Broadcast and Content Reform Package.

In the dying days of the 2017 parliamentary sitting year, the Minister for Communications introduced the Communications Legislation Amendment (Online Content Services and Other Measures) Bill 2017 (Bill) in the Australian Senate. The intent of the Bill is to prohibit gambling advertising during the live coverage of sporting events occurring between 5.00am and 8.30pm, whatever platform those events are made available on. 

The Government’s stated intention is that the new restrictions should be in effect from 30 March 2018, though this timing is unlikely to be fully achieved.

How will the new restrictions operate? 

The Bill provides for amendments to be made to the Broadcasting Services Act 1992 (Cth) (BSA). Different regimes will apply to online services and traditional broadcasting services, as follows:

• The proposed Schedule 8 of the BSA sets out a regime for the Australian Communications and Media Authority (ACMA) to make service provider rules prohibiting or restricting gambling advertising, by means of a legislative instrument, that will apply to “online content service providers” (unless a relevant exemption applies). ACMA’s rules may also require the regulated providers to provide an explanation of the rules on their service and to keep records of compliance with the rules.
• It is expected broadcasters will amend existing industry codes of practice to introduce the prohibition. If this does not occur, the Minister for Communications will have power, under the proposed new section 125A of the BSA, to require ACMA to make a program standard prohibiting gambling advertising during live sports coverage. If a program standard was to be made by ACMA, it is contemplated it would be on similar terms to the service provider rules to be made by ACMA under the proposed Schedule 8 of the BSA.

Regulating the internet

The proposed regulation of streaming services is the most interesting aspect of the Bill. The BSA primarily regulates broadcasting services, with online services not being considered to be within that category. In that sense, the Bill will extend the content services that are regulated under the BSA to online services for the first time.

As noted, the new Schedule 8 will allow ACMA to make service provider rules that prohibit (or otherwise restrict) gambling ads being shown during a live sporting event streamed on a relevant service. It is intended that these restrictions will apply between 5.00am and 8.30pm. The “online content service providers” who will be covered by the rules are those who provide online content services to the public where the relevant service has a “geographical link” to Australia. Such a link will exist where an ordinary reasonable person would conclude the service is targeted at individuals who are physically present in Australia or where any of the content provided on the service is likely to appeal to the public (or a section of the public) in Australia. Given Australia is often described as a “sports mad” nation, the second limb of the test will ensure that the service provider rules have a very broad reach, unless ACMA exercises its powers to provide exemptions to the application of the rules.

The Explanatory Statement provides that it is expected enforcement action for breach of the rules will be largely complaints driven. Where ACMA does determine that a breach of the rules has occurred, the relevant provider will be liable for civil penalties (with ACMA having the power to impose fines as an alternative to commencing civil penalty proceedings in certain circumstances). In addition ACMA will be able to require the relevant provider to comply with a remedial direction.

As these new service provider rules will have extraterritorial application, questions have been raised as to how ACMA will be able to enforce the service provider rules against streaming service providers who – while they have an audience in Australia – do not have a physical presence here. Neither the Bill nor the Explanatory Memorandum addresses this issue. Although it would be expected this would be a key concern of the Government, the Department of Communications and the Arts has suggested this is a question that is to be addressed by ACMA[i]. It remains to be seen how effective any enforcement action by ACMA is as against offshore operators.

It is unfortunate that, at the time the Bill was released, the proposed service provider rules were not also released, to allow stakeholders to fully consider the scope of the regulation. It is assumed these will largely replicate the restrictions existing in industry codes but, without a draft of those rules, it is difficult to know the impact that the rules are likely to have.

Industry Codes of Practice

Industry codes are developed by relevant broadcasting industry bodies under section 123 of the BSA. Once developed, if certain criteria are satisfied, ACMA will register these codes of practice. For commercial and subscription broadcasters, the following are the primary codes of practice:

• the Commercial Television Industry Code of Practice 2015 (Commercial TV Code);
• the Commercial Radio Code of Practice 2017 (Radio Code); and
• the Australian Subscription Television and Radio Association (ASTRA) Subscription Television Broadcasting and Narrowcasting Codes of Practice (ASTRA Codes).

Commercial TV Code 

FreeTV Australia, the industry organisation for the commercial free-to-air TV sector, consulted on amendments to the Commercial TV Code in late 2017 (with submissions closing on 15 December). Appendix 3 of the Commercial TV Code already contains restrictions on gambling ads during live sports including, for example, banning gambling ads during live sports other than before and after play and during scheduled and unscheduled breaks. In its consultation paper, FreeTV Australia proposed that Appendix 3 would be modified to include the Government’s required ban on advertising, including betting odds promotion. These restrictions will be added to the existing restrictions contained in the Code.

The ban would be subject to a number of exclusions, for example:

• for “long form live sporting events”, one gambling ad may be shown every 2 hours, during scheduled or unscheduled breaks. A long form live sporting event is defined to include sporting events of a long duration such as golf, tournaments with concurrent games and multi-sport events such as the Olympic Games;
• for long form live sporting events, odds promotion would be permitted during play on a limited basis, for example, one on each day of a golf competition;
• the restriction would not apply where the live sporting event originated outside Australia, the gambling ad was not added by the broadcaster, it is not reasonably practicable to remove the ad and there is no benefit received from the ad; and
• exemptions which apply to other platforms will also apply to broadcasters. Of particular concern, it would seem, is that the rules put in place by ACMA for online services – which of course are not yet publicly available – may contain more generous exemptions than those otherwise contemplated by the Commercial TV Code and, if so, those will also apply to the broadcasters bound by the Commercial TV Code.

The definition of gambling ad does not include ads for fantasy sports and sports tipping competitions or ads for betting on the outcome of lotteries. It also does not include, in most cases, references to the official sponsors of the relevant event or a participating team, the name of a sporting venue or other incidental broadcasting.

Radio Code

Commercial Radio Australia (CRA), the industry body for commercial radio, consulted on changes to implement the advertising ban in the Radio Code late in 2017 (submissions for this consultation, as applied for the Commercial TV Code consultation, closed on 15 December). The changes proposed closely reflect the changes to the Commercial TV Code. But there are some differences, for example, the Radio Code will also have an exemption for radio ads where the commercial is required to be aired pursuant to a contractual arrangement entered into before the end of March 2018. 

ASTRA Codes 

ASTRA commenced a review process for changes to the ASTRA Codes in late November 2017. Again, the amendments proposed were similar to those proposed to the Commercial TV Code (though noting, given that subscription television broadcasts to all time zones using a single signal, unlike free to air broadcasters, ASTRA proposes to use Australian Eastern Standard Time/Australian Eastern Daylight Time to determine the time during which the ban will apply). 

Controversially, ASTRA proposes that there will be an exemption for gambling ads broadcast on “low audience share channels” during live sporting events. These low audience share channels are ones with an average audience share of 0.5% or less. The examples provided of these channels in ASTRA’s consultation paper were beIN SPORTS 1 – 3 (European football tournaments, European tennis and European rugby), ESPN and ESPN 2 (broadcasting US sports such as the NFL), Eurosport (European focussed, including cycling and basketball) and English Premier League (EPL) club team channels. ASTRA’s data suggests that most viewers of these channels are over 18, for example, that data indicates approximately 89% of beIN Sports 1 – 3 viewers are over 18. The reason given for the exemption was therefore not only the small audience shares but the fact that only a small percentage of those audiences are children.

Finalisation of Industry Code amendments

Generally, the submissions made to the various industry bodies in relation to the proposed amendments to the codes of practice, outlined above, called for further restrictions on gambling ads. The industry bodies are considering those submissions. The amendment process will not be complete until ACMA registers the amended codes. This will require, amongst other matters, that ACMA is satisfied the new restrictions provide appropriate community safeguards. Accordingly, it is likely that some further tightening of the restrictions will be required before any of the code amendments are registered.

Public consultation on the Bill

As soon as the Bill was introduced in the Senate in December 2017, it was referred for consideration to the Senate Standing Committees on Environment and Communications (Committee) for public consultation. The inquiry process attracted many submissions and a public hearing was held in February 2018.

Most submissions focussed on the proposed online regime. There was not universal support for that regime, with a variety of concerns being raised. Many stakeholders expressed the view that there is a need to ensure that all platforms are treated equally (whatever the audience share) but were worried that it was not clear this would be achieved. To take another example, although Responsible Wagering Australia, the peak body for the Australian online wagering industry, supported the restrictions generally, it argued that there should be an exemption from the new Schedule 8 rules for online services with age-gating mechanisms in place (that is, where steps are taken to verify that the person accessing the service is over the age of 18). The rationale for this exclusion is that, as the restriction is aimed at protecting children from exposure to gambling ads, there would be no reason to extend the prohibition to services that children would not access.

The Committee finalised its review of the Bill on 12 February 2018. It recommended that the Bill is passed, although it did note the concerns that had been raised by stakeholders. The Committee suggested some drafting changes to the Government, but the need for those drafting changes did not change the Committee’s overall support of the passage of the Bill.

Implementation of the new rules

Given the recommendations of the Committee and the likely bipartisan support for the Bill when it is considered in Parliament in the near future, it is expected that the legislation will pass, but perhaps not in time to allow commencement of the new restrictions by 30 March 2018. As ACMA has not released a draft of the service provider rules for consultation the new regime may take effect in relation to traditional broadcasters before it commences in relation to online services.

Author: Angela Flannery

[i] See Proof Committee Hansard, Senate, Environment and Communications Legislation Committee, Communications Legislation Amendment (Online Content Services and Other Measures) Bill 2017 (link), at page 41.


Contacts:

Sydney

Angela Flannery, Partner
T: +61 2 8083 0448
E: angela.flannery@holdingredlich.com


Ian Robertson, Partner
T: +61 2 8083 0401
E: ian.robertson@holdingredlich.com

Greg Wrobel, Partner
T: +61 2 8083 411
E: greg.wrobel@holdingredlich.com

Melbourne

Dan Pearce, Partner
T: +61 3 9321 9840
E: dan.pearce@holdingredlich.com

Brisbane 

Paul Venus, Partner
T: +61 7 3135 0613
E: paul.venus@holdingredlich.com

Trent Taylor, Partner
T: +61 7 3135 0668
E: trent.taylor@holdingredlich.com


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