GAMBLING LAW & REGULATION

Transcription

1 GAMBLING LAW & REGULATION Recent developments in Australian gambling law April 2012 Level Carrington Street SYDNEY NSW 2000 DX 262 SYDNEY Tel Fax

2 OVERVIEW This is an expanded edition of Addisons Gambling Law & Regulation Newsletter. It contains articles on current gambling issues, ranging from summaries of the current position relating to the regulation in Australia of precommitment in connection with gaming machines to the aftermath of last week s High Court decisions relating to the constitutional validity of the race fields regime. We also comment on an issue that has been highlighted recently in the British press, namely, whether game shows are in fact gambling or glamorise gambling (and the implicit question as to whether further regulation is appropriate). Our article summarises the differences in approach between the UK and Australia. Finally, we comment on practical issues likely to affect all businesses in the gambling sector, the ability for directors of Australian operators to suppress their residential details, cybersquatting remedies, the new PPS register and the imminent national business names register. And all of this without any comments about the imminent release of the DBCDE report on its review of the IGA this will be covered in our next newsletter. If you have any queries or comments relating to this newsletter, please feel free to contact one of Addisons Media and Gambling Team: Jamie Nettleton, Partner Justine Munsie, Partner Telephone: Telephone: Facsimile: Facsimile: jamie.nettleton@addisonslawyers.com.au justine.munsie@addisonslawyers.com.au Cate Sendall, Senior Assoicate Richard Keegan, Senior Associate Telephone: Telephone: Facsimile: Facsimile: cate.sendall@addisonslawyers.com.au richard.keegan@addisonslawyers.com.au ADDISONS No part of this document may in any form or by any means be reproduced, stored in a retrieval system or transmitted without prior written consent. This document is for general information only and cannot be relied upon as legal advice. 2

3 Index Cybersquatting in Australia A cheaper remedy may be available! Assistance for gaming operators in recovery of domain names 4 Is Your Business Prepared for the New PPS Regime? Application to Gambling Companies 5 Are You Concerned About Your Address Being Disclosed on ASIC s database? Directors of Gambling Companies Take Note! Wagering Advertisements Avoid Misleading and Deceptive Conduct. Lessons from ACCC v TPG for promotional campaigns by wagering operators 6 7 Race Field Cases Implication for Wagering Operators in Australia An Even Playing Field? 8 Gaming Machines and Pre-Commitment Possible Australian Federal Legislation 10 4 Million Viewers But No Gambling Licence!? Why One of the UK s Favourite Game Shows Has Come Under the Glare of Gambling Regulators (and Why its Australian Counterpart Has Not) 13

4 Cybersquatting in Australia A cheaper remedy may be available! Assistance for gaming operators in recovery of domain names Author(s): Martin O Connor, Jamie Nettleton, Ashleigh Fehrenbach Global companies, including gambling operators, often come across cybersquatters who attempt to free ride on their brand and register domain names which suggest wrongly an association with that brand. In many cases, the cybersquatter operates an active website in association with the domain name, thereby deriving business through an implicit association with the relevant brand. We have come across this type of activity in many countries, including Australia. In a recent example, a brand associated with an online gaming client was registered by an Australian company as a domain name in the.com.au sub-domain. This was used to divert customers to a website operated by our clients competitor. In this situation, clients often choose to rely on their intellectual property rights to cause this infringing use to cease. However, a more cost effective and timely remedy may be available. In order to resolve this matter, we made a complaint to the.au Domain Administration (auda) (the government-endorsed manager of the Australian domain names). To have a basis for auda to delete the domain name, it was necessary to establish that the Australian company had not complied with auda's Domain Name Eligibility and Allocation Policy Rules. Under these Rules, domain names in the com.au 2LD must be an exact match, abbreviation or acronym of the registrant s name or trade mark or otherwise be closely and substantially connected to the registrant. After carrying out investigations to confirm that the issue of the domain name to the Australian company did in fact breach these Rules, we wrote to auda who then directed the registrar to delete the offending domain name. The domain name subsequently entered a "pending delete" status for 14 calendar days and was subsequently dropped from the Register, after which it became available for our client to register. It was only a number of days after our complaint was made to auda that the registrar was directed to delete the domain name. Shortly after, the domain name was made available for our client to register. By using this process, the matter was resolved successfully for our client in a very short space of time without resorting to litigation. In order to protect their intellectual property rights, gambling operators should monitor domain names in the.com.au TLD space regularly to ensure that they are not being registered by cybersquatters. Appropriate trade mark protection should also be sought. In any event, effective remedies through the domain name administration process may be available. 4

5 Is Your Business Prepared for the New PPS Regime? Application to Gambling Companies Author(s): Jamie Nettleton, Nicole Tyson On 30 January 2012, the Personal Property Securities Act (2009) (PPS Regime) commenced in Australia. The PPS Regime will affect companies in the gambling sector conducting business in Australia: if you and/or your suppliers include retention of title clauses in sale agreements; if you sell on consignment or if your suppliers sell to you on consignment; and if your company enters into hire purchase agreements, equipment leases and similar agreements. Preparing for PPS need not be complex or time consuming. Simple preparation is all that is necessary. How will the PPS Regime impact your business? A national online register has been introduced. You can register your interests on the register (as may your suppliers). Registration is not limited to traditional interests, such as fixed and floating charges, but also includes retention of title arrangements and equipment leases which have not previously been registrable. This may be relevant to gaming machine suppliers who include retention of title clauses in sales arrangements with venues. To obtain the best protection possible, you must register your interests in the prescribed way. Your suppliers and banks may also register against you. Our searches have revealed many errors in registrations. Any errors will be publicly visible and should be corrected. What should you do? Review your documents: Do they comply or are new agreements required? This may be important for your terms and conditions of supply or purchase orders. Register or lose title: Registration will often be more important than title! When similar legislation was introduced in New Zealand, some owners bought their own goods back from liquidators after failing to register their interests. This is particularly important in the case of customers who may face financial difficulties so that you preserve your rights in the products that you supply. Review methods of physical supply and stock identification: Banks already have their documents ready. Failing to prepare means you run the risk of losing priority to banks or a liquidator. Audit the listings against companies in your group to challenge or correct any incorrect registrations. How can we help you? Addisons has been working with clients to understand the PPS. We can help you to: understand exactly what impact the new regime will have on your business; review your agreements to determine whether or not it is necessary to draft new terms of trade; draft any new documents; train and educate your employees, including to conduct searches and to register your interests; and audit the PPS register for the accuracy of interest recorded against your business. Despite what you might have heard or read elsewhere, dealing with PPS need not be complex or time consuming. Simple preparation is all that is necessary. 5

6 Are You Concerned About Your Address Being Disclosed on ASIC s database? Directors of Gambling Companies Take Note! Author(s): Jamie Nettleton, Belle Jing The gambling industry involves a level of risk for all participants. Generally, the focus is on the risk faced by customers. However, risk also exists for management and executives of gambling companies. Gambling businesses deal with customers, some of whom suffer significant losses and feel aggrieved as a result. This occasionally gives rise to threats of violence against the directors, senior officers and employees of the business, and their families. While the Corporations Act 2001 (Cth) (Act) requires each company director to disclose their actual place of residence on the public databases, there is provision under the Act for a company to make an application to keep private the residential address of their directors. Similar procedures exist in other countries, such as the United Kingdom. The Australian Securities & Investments Commission (ASIC), the Australian companies regulator, appreciates the particular safety risks to which directors of a certain businesses (and their families) can be exposed. Addisons has recently made an application successfully to suppress the residential addresses of directors of an overseas gambling operator. This application was made on the basis that making available the directors residential addresses publicly would place the personal safety of those directors (and members of their families) at risk. Where an application for suppression of residential address is granted, ASIC will manually remove all references to the relevant director s residential address on its records (which may involve companies outside the gambling sector) and replace it with an alternative address nominated by that director. If you would like further information about this procedure, including how an application for suppression of residential address can be made to ASIC, please contact us. 6

7 Wagering Advertisements Avoid Misleading and Deceptive Conduct. Lessons from ACCC v TPG for promotional campaigns by wagering operators Author(s): Jamie Nettleton The recent decision of the Federal Court in ACCC v TPG Internet Pty Ltd 1 sets out clear guidelines in respect of sales promotions, particularly in respect of the manner in which prices should be displayed and conditions identified. This is relevant to all businesses, including gambling and betting operators. The TPG advertisements considered by the Court related to a new broadband offer where, for $29.99 a month, customers could sign up to their unlimited ADSL2+ network. However, the fine print stated that this offer was available only as part of a package which cost an additional $30, and involved an upfront setup charge and deposit. As a result, the Court determined that the advertisement constituted misleading and deceptive conduct in contravention of sections 52 and 53 of the Trade Practices Act (now sections 18 and s 29 of the Australian Consumer Law). The clear principle from the decision is that any information which corrects or qualifies the primary message of an advertisement must be sufficiently clear and prominent if it is to prevent the primary message from being misleading. With this principle in mind, gambling industry participants must ensure that their promotions as a whole are truthful. If any qualifications exist, they must be clear, precise and prominently stated. One example where these principles should be followed relates to promotions for sportsbetting operators which offer bonus bets. Initially, they may appear to offer very attractive incentives. However, where the website terms and conditions qualify (or if there exists small print at the bottom of the advertisement which qualifies) substantially the unconditional nature of the bonus bet being promoted, considerable care must be taken to ensure that those conditions are prominently stated. For example, if it is a requirement that a customer must deposit $250 to get a $250 bonus (rather than receiving the $250 in any event), this must be obvious on the face of the advertisement (or the relevant page of the website). A failure to do so may give rise to a claim in misleading and deceptive conduct. In considering the Internet advertisements of TPG, the Court found 2 that they did not display corrective information with sufficient prominence or clarity to dispel the false dominant message. Just because information is present somewhere on a website is not enough. Advertisers should ensure prominence and transparency when creating promotional campaigns. This is particularly relevant to betting operators, as well as other participants in the gambling sector. Section 53(g) (now section 29(m) of the ACL) prohibits a corporation from making a false or misleading representation concerning the existence, exclusion or effect of a condition. Some bookmakers may wish to include a promotion where you can refer a friend and get a $50 bonus bet. In many cases of promotions of this type, there is often a statement in the terms which states that a condition applies, namely that the friend must not only sign up but must also deposit money and make a bet above $50. This may not be clear on the face of the advertisement and the conditions may not be sufficiently prominent or clear. As a result of the TPG decision, there is a risk of a contravention of section 23(m). In TPG, the Court stated it is an unfair trade practice to require consumers to find their way through to the truth, past advertising stratagems which have the effect of misleading or being likely to mislead them. This comment applies to all advertisements, such as gambling sector advertising just as much as to promotions by mobile phone providers or supermarkets. Consumers should not be forced to find out for themselves details of the conditions. All gambling companies must be aware of the risk that arise in respect of promotional materials and take care in structuring their advertisements so as to not mislead or deceive. This is not a gamble that should be taken. 1 [2011] FCA At para 92 7

8 Race Field Cases Implication for Wagering Operators in Australia An Even Playing Field? Author(s): Jamie Nettleton Last week s High Court decisions in the Betfair and Sportsbet appeals (see our FocusPaper entitled Round 3: High Court Dismisses Challenges to NSW Race Fields Legislation by Betfair and Sportsbet ) have received widespread publicity. They appear, on initial reading, to slam the door shut on the ability of wagering operators licensed in one Australian state or territory from challenging, on constitutional grounds, legislative provisions imposed by another Australian state or territory which place restrictions on their business activities. Certainly, commentary from various parties have suggested that these decisions are a watershed and justify legally, and without exception, the imposition of race fields fees (and sports fixture fees) on a turnover basis without any restriction. But it is important to consider whether it is appropriate to give a broad interpretation of this nature to the decisions. In light of various comments, it is necessary to distil the decisions and set out a number of the principles that emerge: The 2008 decision of the High Court in Betfair & Anor v Western Australia 1 (see our FocusPaper entitled Internet Regulation - End of Cross-Border Restrictions on Gambling Activities? ) remains in place. This is clearly supported by last week s decisions of the High Court. In essence, this means that any State/Territory legislative restriction which is discriminatory in its application in respect of a class of businesses conducting business interstate where that restriction is protectionist and not reasonably appropriate to the issue being addressed, is still at risk of being declared unconstitutional. The clearest example of a restriction which remains at risk is any law which prohibits a specific service being supplied (where that service is supplied by interstate operators) where that restriction warehouses the services of an intrastate business. Many constitutional cases brought by wagering operators remain on foot. These fall into three categories, namely: o o o challenges to race fields legislation; challenges to promotional restrictions; (the VCGR Prosecutions) and challenges to the provision of services in venues (the Betbox decision). Each of these give rise to different issues. The principles set out in last week s decisions will be taken into account by the parties bringing these challenges and it will be interesting to see the extent to which these claims are pursued. However, what is certain is that a number of these challenges will remain on foot and they will continue to be ongoing challenges brought by wagering operators to the effect that certain restrictions contained in State and Territory gambling laws are unconstitutional. There will continue to be challenges brought on other legal grounds by and against wagering operators. This will be the same as any other industry sector. Of specific interest will be the possible involvement of the ACCC, as well as prospective claims being brought by one wagering operator against another in respect of misleading and deceptive conduct. Racing and sports bodies have viewed the High Court s decisions as providing complete justification for the calculation of product fees by reference to a turnover benchmark. There has already been considerable discussion that all product fees should be calculated on this basis and pressure will be applied to increase the fees that should be chargeable for the use of race fields and sports fixture information. It is important to note that the High Court s decisions are dependent very much on the way in which the cases were argued and there remains the possibility that, in addition 1 Betfair Pty Limited v Racing New South Wales [2012] HCA 12 8

9 to the race field cases already on foot, other challenges may be brought in the future. Dangers also exist if the rates imposed are uncommercial. This will give rise to the risk that different business strategies will be pursued by wagering operators which may include making a decision to cease to provide wagering in respect of certain races and sporting events. Consideration may be given to separating the product fee and integrity elements of the current race fields and sporting fixtures arrangements. The decisions of the High Court and responses illustrate the inherent difficulties posed by the current legislative regime. The rules relating to race fields and sports fixtures are administered on a completely dysfunctional basis, with different rules applying in respect of each state or territory and most racing and sports bodies. As initially signalled by the Productivity Commission in its June 2010 report, it is in all parties interests that consistency be achieved in respect of the regulatory regime that applies to race fields and sporting fixtures with common standards and a coordinated approach adopted (possibly with a single body responsible) for the supervision of integrity and collection of product fees. Last week s High Court decisions present a unique opportunity for all interested parties to adopt a coordinated approach. Indeed, with the imminent release of the report from the Department of Broadband, Communications and the Digital Economy (DBCDE) into online gambling, it is also appropriate for the Government to take an active role in this regard. 9

10 Gaming Machines and Pre-Commitment Possible Australian Federal Legislation Author(s): Jamie Nettleton There are two sets of bills currently being reviewed that seek to introduce various legislative requirements at the Australian Federal level which have the objective of maximising harm minimisation through the operation and use of gaming machines. These are: the National Gambling Reform Bill 2012 and two National Gambling Reform (Related Matters) Bills 2012 (the Government Bills). These bills, which are in draft form only, set up a national regulator with the responsibility of implementing precommitment and other harm minimisation strategies in relation to gaming machines and gaming machines venues and the imposition of additional taxes relating to the supply and operation of gaming machines; and the Poker Machine Harm Reduction ($1 Bets and Other Measures) Bill 2012 (the Senate Bill). This seeks to implement the recommendations of the Productivity Committee on a national level by introducing a $1 bet limit, a $20 deposit limit and a limit to jackpots to $500. In order to understand these bills, it is necessary to review the debate that has occurred concerning the manner in which gaming machines should be regulated at the Federal level, as that policy has developed over the last couple of years. Productivity Commission In June 2010, the final report of the Inquiry of the Productivity Commission into Australia s gambling industries was released. For a summary, see our FocusPaper entitled Gambling - Australian Productivity Commission Final Report on Gambling (June 2010) - What does this mean for the gaming machine sector? 1. This report contained a number of wide ranging recommendations relating to gaming machines including the introduction of a full precommitment system, the display of dynamic warnings and $1 bet limits. These recommendations were to be implemented in accordance with a strict timeline. Wilkie/Gillard Agreement 1 _Australian_Productivity_Commission_Final_Report_on_Gambli ng June_ _What_does_this_mean_for_the_gaming_machine_sector259.asp x Almost immediately after the release of the report of the Productivity Commission, there was a change in the Prime Minister, with Ms Julia Gillard being elected to that position by the Labour Caucus. In August 2010, the Federal election was held and, after extensive negotiations with independent members of parliament, the Labour government was re-elected. It was able to govern with the support of some of these independent members of parliament. One of these independent members, Mr Andrew Wilkie MP, entered into an agreement with the Prime Minister (the Wilkie/Gillard Agreement) which contained a number of commitments relating to the approach to be taken by the Government in connection with the recommendations of the Productivity Commission relating to gaming machines. These included the following commitments: 7.5 (a) Implementing a best practice full precommitment scheme that is uniform across all States and Territories and machines consistent with recommendations and findings of the Productivity Commission Implementation of pre-commitment arrangements will commence in 2012, with the full pre commitment scheme commencing in 2014 (b) (c) Supporting the Productivity Commission recommendations in relation to poker machines dynamic warning displays and cost of play displays. Implementing a $250 daily withdrawal limit for ATMs in venues with poker machines (excluding casinos). 7.7 In the absence of agreement with the States by 31 May 2011 on any of the reforms detailed in Clause 7.5, the Government will unilaterally seek to legislate in order to achieve these reforms If required, the Government will support Commonwealth legislation through the Parliament by Budget The Government agrees that as soon as it is practicable, it will seek to establish a Select Committee of the Parliament. to progress a 10

11 national response to the full set of recommendations in the Productivity Commission report. First Inquiry of the Joint Select Committee In accordance with the Wilkie/Gillard Agreement, a special Joint Select Committee on Gambling Reform was formed as a joint committee of the Federal Parliament (the Joint Select Committee). This was chaired by Mr Wilkie with Senator Xenophon as the deputy chair. The first Inquiry, which was referred to the Joint Select Committee on 30 September 2010 by the Senate, focused on the design and implementation of a best practice full pre-commitment scheme. Among the recommendations of the Joint Select Committee set out in its report that was released on 6 May 2011, were the following: the introduction of a mandatory precommitment scheme applying to all players of high intensity gaming machines by 2014; the introduction of dynamic warnings as part of the pre-commitment system; the use of a pre-commitment card which incorporates a self-exclusion option for use by players of gaming machines; the establishment of a national independent regulatory body to oversee mandatory precommitment; and the exclusion from the mandatory precommitment scheme of low intensity machines (where those machines featured a $1 bet limit, a $500 maximum prize and a $20 deposit limit). The recommendations of the Joint Select Committee report met very strong objections from the clubs and pubs sector. This gave rise to a vociferous campaign against the proposals, which was targeted particularly at marginal electorates. Termination of the Wilkie/Gillard Agreement At the beginning of this year, the Government announced an approach that did not follow either the Wilkie/Gillard Agreement or the recommendations of the Joint Select Committee in its first inquiry. Instead, the Government announced that it intended to act in accordance with the recommendations of the Productivity Commission by introducing a bill that would implement voluntary pre-commitment measures. At the same time, it announced that there would be a trial conducted by clubs in the Australian Capital Territory, subject to the agreement of these clubs, which involves mandatory pre-commitment measures being applied to players of gaming machines. The results of the trial would then be assessed to ascertain whether mandatory precommitment is effective. This approach was different to that contemplated by the Wilkie/Gillard Agreement and the recommendations of the Joint Select Committee in its First Inquiry insofar as it suggested that evidence from the trial is required before mandatory pre-commitment should be mandated. As a result, Mr Wilkie withdraw his support from the Government and the Wilkie/Gillard Agreement was terminated in effect. The Government Bills In accordance with this announcement, the Government Bills were published on the website of the Department of Families, Housing, Community Services and Indigenous Affairs, in mid-february These proposals have not yet been introduced to the Federal Parliament but contain a number of measures which have the objective of achieving harm minimisation through the supply, operation and use of gaming machines. There are a number of core elements to the Government Bills, namely: for all gaming machines to have precommitment capability on the basis that all gaming machine premises, except those premises which are considered to be small gaming machine premises, to have machines with pre-commitment systems in place by 31 December 2016; for all gaming machines to have dynamic warnings in place by 31 December 2016; for certain measures to be put in place concerning the operation of ATMs at gaming venues by 1 February 2013 including the requirement to take steps to limit the amount that can be withdrawn from an ATM located at a gaming premises within 24 hours; and the introduction of two levies relating to the operation of gaming machines, namely, a gaming machine regulation levy and supervisory levy. These proposals were to be overseen by a new national gambling regulator. The Government Bills set out a framework for the implementation of these changes but do not set out in detail a number of the requirements which needed to be met in connection with the operation of the pre-commitment systems. (For example, it does not set out the nature of any precommitment system, just the purposes which it 11

12 must achieve.) It is envisaged that these will be set out in regulations to be enacted in due course. The trial to be introduced in the Australian Capital Territory in respect of mandatory pre-commitment measures was not contemplated in the Government Bills. Although announced by the Government at the time of release of the Government Bills, few details of the proposed trial have been publicised generally. Response to Government Bills and Senate Bill The Government Bills met various responses, ranging from a request being made by representatives of gambling organisations and clubs for more information relating to the government s proposals (which has now caused them to drop their lobbying campaign against the Government s proposals) to concern from Mr Wilkie, Senator Xenophon and other problem gambling advocates that the Government s proposals did not go far enough in achieving effective harm minimisation through the use and operation of gaming machines. As a result, Senator Xenophon and two other Senators have introduced the Senate Bill as a private members bill into the Senate. This includes specific measures mentioned in the recommendations of the Productivity Commission, including: a $1 bet limit; a $20 deposit limit; and a limit to jackpots to $500. The Senate Bill has been referred to the Joint Select Committee for consideration as a separate Inquiry. The Joint Select Committee has also announced that it will review in due course the Government Bills in the form in which they are introduced into Parliament. Where from here? There are two certainties in connection with the Australia debate relating to the introduction of pre-commitment mechanisms relating to gaming machines, namely that it will continue to generate considerable comment at the political level, and any legislative measures will be subject to lengthy debate, thereby delaying the enactment of any legislation at the Federal level. Also, the consideration of the Bills by the Joint Select Committee is likely to delay further any Parliamentary review of pre-commitment legislation. However, it is without doubt that the May session of Parliament will result in greater publicity being given to the issue. 12

13 4 Million Viewers But No Gambling Licence!? Why One of the UK s Favourite Game Shows Has Come Under the Glare of Gambling Regulators (and Why its Australian Counterpart Has Not) Author(s): Jamie Nettleton, Jessica Azzi Introduction Recent media reports indicate that the UK Gambling Commission (UK Commission) is investigating the British version of Deal or No Deal (the British Version) as well as Simon Cowell s Red or Black, to determine if these shows require a gambling licence. These investigations are perhaps a curtain raiser for a written guidance on television game shows which the UK Commission is reportedly due to publish later this month. 1 Key Issues Little background to these investigations has been released. However, two issues appear to be at their centre, namely: to what extent do TV game shows constitute games of chance and fall under the definition of gambling, therefore requiring a gambling licence; and do these shows glamourise gambling and, if so, what controls should be placed on them? Deal or No Deal Prior to considering these issues, as well as any possible differences between Australian and UK gambling law, it is useful to set out the basic structure of Deal or No Deal. The Australian version of Deal or No Deal (the Australian Version) follows the following basic format 2 : There are 26 participants, including the Finalist who stands with the host. Each participant is allocated a briefcase. Each briefcase represents a cash value between $5 to $200,000, with the exception of one briefcase which represents a car. None of the participants are aware of the contents of any of the briefcases. The Finalist is eligible to win either: 1 Brendan Carlin and Chris Hastings, Hit Game Shows Hit game shows like Deal or No Deal and Play Your Cards Right could be forced off air after gambling watchdog claims that they break the law, The Daily Mail, 10 March See: Deal-faces-Gambling-Commission-probe-TV-gameshows-facecrackdown.html 2 See: o the value represented in his/her briefcase (and not the value represented in the briefcase of any other participant); or o an offer made to the Finalist by the Bank. The Finalist decides which briefcase he/she would like opened. Each time a briefcase is opened, one more possibility of the cash value represented in his/her briefcase is eliminated. At various points throughout the game, the Finalist will be presented with offers from the Bank to purchase the Finalist s briefcase. If the Finalist accepts the deal, the Finalist ceases playing and takes the money offered by the Bank. If the Finalist does not accept the deal, the Finalist continues to choose briefcases which are opened (and then decides whether or not to accept subsequent offers from the Bank). It is our understanding that the British Version follows a similar format, with slight differences 3. We do not consider that these differences are material to this discussion. Game shows in Australia Whilst both the Key Issues are relevant to any game show broadcast on Australian television channels, Australian game shows are generally classified as trade promotions. Trade promotions involving games of chance (including the disposal of property by lot) are exempt from the gambling licensing framework. For gambling to occur in Australian law, three requirements generally have to be fulfilled: the game has to involve chance; the player has to provide consideration; and the game has to be played for something of value. Many trade promotions fulfil these criteria. However, the law makes provision for trade promotions to be regulated as a separate category of gambling activity. In many cases, the trade promotions regime also covers disposals by lot. 3 See: For example, the finalist must answer correctly a skilled based question before being entitled to participate. 13

14 Certainly, on the basis that many trade promotions do not involve entrants paying an entry fee or purchasing a good or service, they would not normally constitute gambling in any event. To the extent that a trade promotion including a game show involves an element of chance, it will fall under the ambit of trade promotion regulations. In some state and territories, a permit must be obtained. Trade promotions involving games of skill fall outside the ambit of laws regulating trade promotions involving games of chance, such as the Lotteries and Art Unions Act 1901 (NSW). In that situation, no permit is required. It is worth noting that the Australian Version, which is filmed in Victoria and is televised every weekday afternoon, is considered to be a game of skill by the Victorian regulator. Accordingly, no permit is required. Game shows in the UK On the other hand, gambling is construed differently in the UK. The Gambling Act 2005 (UK) (the UK Act) regulates lotteries, gaming and betting. This means that, to the extent that a game show fits within any of these categories, the game show would require a licence. Gaming is of most relevance. It is defined in section 6 of the UK Act, as playing a game of chance for a prize. Also, it is provided that a person plays a game of chance for a prize where s/he plays a game of chance and acquires a chance of winning a prize whether or not anything is risked being lost in the game. In other words, there is no requirement for a player to provide consideration. Therefore to the extent that the British version is a game of chance and constitutes gaming, it is not likely to be sufficient for the producers of the British Version to point to the fact that contestants do not provide consideration. Chance or skill? Whilst the view of the UK Commission is unknown, it is worth noting that there is no shortage of game theory related commentary available (including by academics and viewers), that the Deal or No Deal format, which was created by Dutch production house Endemol and is broadcast in over 30 countries, to support the view that it constitutes a game of skill. These views exist despite contrary views that an element of chance is involved, thereby making it a game of mixed skill and chance. Gambling at 5pm There are consequences which apply if the British Version or any other game show is found to constitute a game of mixed skill and chance. Certainly, if a gambling licence were required or conditions needed to be met (on the basis that it constitutes gambling), the profitability of the show may be at risk. In addition to the cost of the annual licence fee itself, the producers are likely to have to move the show into a much later timeslot (in the UK after 9pm). Any move is likely to have implications on the composition of the audience and its size (and in turn advertising and sponsorship revenue). Also, the changed timeslot may involve increased spending on advertising. Considering that the British Version regularly attracts an audience of over 4 million viewers in its 5pm timeslot, any requirement to broadcast the show after 9pm may have far reaching commercial ramifications. Further, any form of gambling licence would involve ongoing compliance requirements, which would impose costs on the broadcaster of the game show. These requirements include, for example, probity and fitness of character requirements to be met by the key personnel involved in the production of the game show, as well as ongoing reporting and audit requirements. Stop fussing and change it to a game of skill! It is possible that the format of any game show likely to be deemed a game of chance, including the British Version, can be altered so that it becomes a game of skill. However, these changes are likely to be made to the inherent features of the game. How much change a game show can sustain before it becomes a different show altogether? In any case, such changes may be costly and are likely to raise a myriad of other issues. For example: If the licence to the game show requires a specific format to be used, can the necessary changes be made? As discussed above, gambling legislation commonly categorise games of mixed skill and chance as gambling. To what extent can outcomes in the game show be dependent on chance before the regulators become concerned? This question is of particular relevance to producers who are considering amending a pre-existing game show format likely to be deemed a game of chance to a game show which is likely to be deemed a game of skill. 14

15 Will the audience like the new changes? It is difficult to imagine some of the most popular game shows without their elements of chance (for example, the spin of a wheel). Normalising and glamorising gambling The concern that game shows glamourise gambling is one which can be raised independently of whether or not these shows fall within the ambit of gambling legislation, but rather on the basis that game shows involve elements of chance in the determination of the winner. As discussed above, most mainstream game shows involve chance and the game is played for something of value arguably meeting two of the three requirements of the definition of gambling generally used in Australian law. But the third element, that is, the staking of consideration by a participant, is rarely found to occur. 4 As a result, the issue is not so much whether gambling is occurring. As community concerns about the promotion of gambling in the mainstream media increase, it is quite possible that critics of gambling may argue that game shows involving these two requirements normalise and glamorise gambling to mainstream audiences (which are likely to include children). We note that similar concerns have recently been made in the context of commentators mentioning sports odds during live sports broadcasts and virtual gaming applications being readily available through social media, for example, Double Down Casino, which is available through Facebook. But these concerns are more focused on whether the activity is promoting or normalising gambling itself. The concern here is more that risk (that is, the chance element/s) and the prospect of winning monies glamourises activities which involve characteristics also inherent in gambling. But will this lead to criticism? In our view, there are numerous other activities with similar characteristics. These include skins, golf and other similar sports events. Where would the line be drawn? Obviously, if any concerns raised were taken into account, there is likely to be a considerable impact on the ability of television broadcasters to broadcast game shows. Currently, many are broadcast in the afternoon timeslot and this is likely to be affected if the view is taken that they glamorise gambling. Accordingly, there remains a risk, albeit remote, that Australian regulators may take issue with game shows, despite their popularity and accepted status as mainstream television shows, if there is sufficient community concern that these shows promote gambling. Whether this approach is taken in the UK is not yet known and we look forward to their views. However, it will necessarily be of relevance in Australia. 4 A technical argument may arise in the course of a game that the player has a stake, for example, when s/he knows that their suitcase has a value. 15