Review of Sports Betting Regulation 31 March 2011

Review of Sports Betting Regulation 31 March 2011

CONTENTS 2 EXECUTIVE SUMMARY 3 REPORT BACKGROUND 5 THE EXISTING REGULATORY REGIME 6 Approval of sporting events 7 Contingencies 7 Approval of sports controlling bodies 7 Offering bets without a betting agreement 8 THE GROWTH OF SPORTS BETTING 9 SUMMARY OF RECOMMENDATIONS 12 MATTERS FOR CONSIDERATION 14 Approval of events for betting purposes 14 Approval of sports controlling bodies 16 Requirements on sports betting providers 18 Information sharing agreements 20 The prohibition or otherwise of betting on certain contingencies 22 The adequacy of sports controlling bodies integrity mechanisms 24 The role and powers of the VCGR in relation to sports betting 25 Other relevant matters 26 CONCLUSION 28 GLOSSARY OF ABBREVIATIONS 29 APPENDIX 1 TERMS OF REFERENCE 30 APPENDIX 2 CONSULTATION 31 APPENDIX 3 LIST OF APPROVED SPORTS CONTROLLING BODIES 32 APPENDIX 4 LIST OF APPROVED SPORTS BETTING EVENTS 33 Front Cover: Melbourne Cricket Ground Exterior (3) by Steel Wool http://www.flickr.com/photos/wynnie/912323737/ 2

EXECUTIVE SUMMARY The aim of this review, as expressed in the terms of reference, was to examine the regulation of sports betting to assess its effectiveness in: strengthening public confidence in the integrity of sports; protecting the integrity of betting that takes place on sports; protecting betting consumers; providing sporting bodies with a fair share of the revenues from betting that takes place on their sports. The review is required to provide advice to the Minister for Gaming on the effectiveness of existing requirements and processes, and suggest how these can be enhanced. The terms of reference included a number of matters to be considered by the review. The review met with a number of stakeholders, including the currently approved sports controlling bodies, some sporting bodies who do not have controlling body status, and a number of sports betting providers. The review also conducted research into the regulatory regimes for sports betting both interstate and overseas. The review found overwhelming support for the Victorian sports betting legislation. The sports controlling bodies emphasised the benefits that had accrued to them as a result of the introduction of the legislation and were complimentary in their comments about Victoria s progressive stance in this area of regulation. However, it was also clear to the review that mirror legislation in other states is needed for the regulatory regime to be fully effective. The Victorian legislation only covers events that occur within Victoria. The sports controlling bodies are currently leveraging off the agreements they have made under the Victorian legislation to receive payment from sports betting providers for events occurring in other states and territories, and in one case, overseas. The result of this situation is that sports controlling bodies have differing ability to negotiate with sports betting providers. For example, the AFL, with the majority of games held in Victoria, has considerable power; withdrawal of their agreement to allow betting on AFL games in Victoria would have a significant effect on a sports betting provider. At the other end of the scale, the NRL, with most games held in NSW, has minimal power. Withdrawal of their agreement to allow betting on NRL games in Victoria would be largely a token gesture. The review has been unable to form a view as to whether the legislation has strengthened public confidence in the integrity of sports. Whilst the growing expenditure on sports betting may indicate confidence in the product by betting consumers, there is no definitive evidence to support such an assumption. In the absence of any evidence about public confidence, the integrity of that betting is highly important. The review notes that public confidence in the integrity of any sporting competition is critical to continued public support of that competition both at the ticket box and through commercial broadcasting. Loss of public confidence through an integrity lapse can carry with it potentially damaging consequences for the continued sustainability of a sporting competition. In terms of protecting the integrity of betting that takes place on sports and hence, protecting both the sustainability of the sports and the interests of betting consumers, the review has concluded that the legislation has one major deficiency, namely the lack of provision for 3

ongoing monitoring by the regulator. Information provided to the review suggests that the level of integrity assurance being undertaken by the sports controlling bodies varies. While some sports controlling bodies were able to demonstrate proactive and robust integrity procedures aimed at ensuring no breaches of codes of conduct, including education programs for participants, others appeared less diligent, with integrity processes only coming in to play after a breach had occurred. Whilst the VCGR considers whether a sporting body has adequate policies, rules, codes of conduct and other mechanisms designed to ensure integrity at the time of determining whether to approve an application for sports controlling body status, there is currently no provision for monitoring of adherence to such policies and this is the subject of one of the review s recommendations. The review is satisfied that the existing sports betting legislation has benefited those sports that have gained sports controlling body status in terms of ensuring that they receive a fair share of the revenues from betting that takes place on their sports. The legislation gives the sports controlling bodies the power to negotiate the fee to be paid by a sports betting provider. While some sports controlling bodies indicated that they may seek to renegotiate the fee in the future, there was no evidence given to the review that suggested that any sports controlling body believes the share of revenues they currently receive is unfair. 4

INTRODUCTION Report Background In May 2007, the Parliament amended the Gambling Regulation Act 2003 via passage of the Gambling and Racing Legislation Amendment (Sports Betting) Act (the amending Act). The amending Act made substantial changes to the way sports betting is regulated in Victoria. The new regulatory scheme introduced by the amending Act was intended to strengthen public confidence in the integrity of sporting events and the betting that takes place on those events and to ensure that sporting bodies receive their fair share of the revenues from betting that takes place on their sports. 1 Since passage of the legislation, there have been considerable changes in the sports betting industry and substantial market growth. While these changes have brought benefits to both industry and consumers, there are growing concerns that increased gambling on sport has created greater integrity risks and that these risks have the potential to undermine public confidence in sporting events. There are also concerns about the impact that these risks may have on the consumers of gambling products. As a result of these concerns, Mr Des Gleeson, former chairman of stewards for Racing Victoria, was appointed to undertake this review with the aim of providing the Minister for Gaming with advice on whether further measures can be adopted to enhance the existing regulatory regime. 1 Minister for Gaming, Legislative Assembly, 15 March 2007 5

THE EXISTING REGULATORY REGIME Approval of sporting events Prior to the passage of the amending Act, the Ministers for Gaming and Racing were responsible for approving sporting and other non-racing events for the purposes of betting. The amending Act transferred responsibility for approving these events to the VCGR. The GRA specifies criteria that the VCGR must consider when deciding whether to approve an event for betting purposes. These criteria are designed to ensure that betting is only conducted on events that can be adequately managed from an integrity perspective. In making its decision, the VCGR considers: whether the event is exposed to unmanageable integrity risks whether the event is administered by a body that is capable of ensuring integrity of the event whether betting on the event is offensive or contrary to the public interest except in the case of a sporting event, whether the approval would represent an unreasonable extension of the scope of gambling in Victoria. The VCGR may impose any conditions it thinks fit on an approval at the time of giving the approval or at any later time. Once an event is approved, betting on the event can be conducted by a sports betting provider 2, provided they have an agreement with the relevant approved sports controlling body (if there is one). To date, twenty-one types of event have been approved for fixed odds betting and two for tote odds betting, as detailed in Appendix 4. Contingencies Approval of an event allows for betting to occur on any type of contingency. For example, in AFL, bets may be taken on the winning margin, half time result, player who kicks the most goals and so on. The VCGR approval does not specify what contingencies can or cannot be bet on. Certain types of contingencies are more vulnerable to manipulation and fixing than others. For example, betting on how many wides are bowled in the first over of a cricket match may raise greater integrity concerns than betting on the winning team. The GRA empowers the VCGR to prohibit a contingency that it considers inappropriate for betting purposes. The GRA makes it an offence for a sports betting provider to offer or place bets on a contingency that has been prohibited by the VCGR. The GRA allows for the VCGR to prohibit betting on a contingency if it: would expose the relevant event to unmanageable integrity risks; or 2 A sports betting provider is defined at s.4.5.1 of the GRA as a person who, in Victoria or elsewhere, provides a service that allows a person to place a bet on a sports betting event 6

is offensive; or is contrary to the public interest; or should be prohibited for any other reason. No contingency has been prohibited by the VCGR to date. Approval of sports controlling bodies Under the GRA, a sporting body can apply to the VCGR to be approved as the sports controlling body for an approved sporting event. In making its decision, the VCGR must consider whether the sporting body has the capacity to adequately manage the integrity of the sporting event. Controlling body status provides a sporting body with the legal right to negotiate fees and information sharing arrangements with sports betting providers. This provides a strong incentive for sporting bodies to invest time and resources into developing appropriate integrity systems. In determining an application for approval as a sports controlling body, the GRA provides that the VCGR must have regard to: whether the applicant has control of the event or organises or administers the event whether the applicant has adequate policies, rules, codes of conduct or other mechanisms designed to ensure the integrity of the event whether the applicant supports compliance with relevant international codes and conventions applicable to the event that relate to integrity in sport whether the applicant has the expertise, resources and authority necessary to administer, monitor and enforce the integrity systems whether the applicant has clear policies on the provision of information that may be relevant to the betting market whether the applicant has clear processes for reporting the results of the event and hearing appeals and protests regarding those results whether the applicant has clear policies on the sharing of information with sports betting providers for the purpose of investigating suspicious betting activity whether the applicant is the most appropriate body to be approved as the sports controlling body for the event whether the approval is in the public interest. The VCGR must also consider any objections to the application and may have regard to any other matter in determining whether to approve the application. The VCGR may also impose any condition it thinks fit on an approval at the time of giving the approval or at any later time. To date, six sports controlling bodies for sports betting events have been approved, as detailed at Appendix 3. 7

Offering bets without a betting agreement For sports for which a sports controlling body has been approved, the GRA makes it an offence for a sports betting provider to offer bets on those sports without either the written agreement of the sports controlling body or a binding determination of the VCGR. This offence applies to sporting events held in Victoria. The written agreement between a sports controlling body and a sports betting provider must cover information sharing, and the payment of a fee, if any, to the sports controlling body. Details of the agreement, including the type and level of fee, are determined by the parties to the agreement. If a sports betting provider and a sports controlling body are unable to reach agreement, the sports betting provider may apply to the VCGR to have the dispute resolved The VCGR may make a binding determination on the outstanding issues, having regard to criteria in the GRA that guide the VCGR as to the appropriate terms and conditions for such agreements. 8

THE GROWTH OF SPORTS BETTING The level of betting that takes place on sports, both in Victoria and Australia as a whole, has increased considerably in the last decade and a half. The 26 th edition of Australian Gambling Statistics indicates that expenditure on sports betting in Victoria in 1994-95 was $2.257 million (Figure 1) from turnover of $22.967 million (Figure 2) or, in real terms $3.198 million from $32.54 million (Figures 3 and 4). By 2008-09 that figure had risen to $48.048 million from turnover of $446.389 million, or $39.77 million from $335.717 million in real terms. Figure 1 - Total sports betting expenditure ($m) 80 70 60 50 40 30 20 ACT NSW NT QLD SA TAS VIC WA 10 0 1994-95 1995-96 1996-97 1997-98 1998-99 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 Source: Australian Gambling Statistics, 1982-83 to 2007-08, 26 th edition Figure 2 - Total sports betting turnover ($m) 1200 1000 800 600 400 200 ACT NSW NT QLD SA TAS VIC WA 0 1994-95 1995-96 1996-97 1997-98 1998-99 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 Source: Australian Gambling Statistics, 1982-83 to 2007-08, 26 th edition In Victoria over the period 1994-95 to 2007-08, the annual average increase in expenditure has been 29.03 per cent, or 23.37 per cent in real terms. Over the same period, the annual average increase in turnover has been 28.05 per cent, or 21.47 per cent in real terms. 9

Assuming that this rate of growth continues, product fees paid by sports betting providers will constitute an increasing proportion of the revenues available to sports in future. In 1994-95, expenditure on sports betting in Australia totalled $11.495 million from turnover of $108.413 million, rising to expenditure of $205.412 million from turnover of $2,508.594 million in 2007-08. In real terms, expenditure in 1994-95 was $16.286 million from turnover of $153.601 million, growing to expenditure of $205.412 million from turnover of $2,508.594 in 2007-08. It should be noted that the Northern Territory figures reflect its status as the home of the majority of Australia s corporate bookmakers. Figure 3 - Real total sports betting expenditure ($m) 80 70 60 50 40 30 20 ACT NSW NT QLD SA TAS VIC WA 10 0 1994-95 1995-96 1996-97 1997-98 1998-99 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 Source: Australian Gambling Statistics, 1982-83 to 2007-08, 26 th edition Figure 4 - Real total sports betting turnover ($m) 1200 1000 800 600 400 200 ACT NSW NT QLD SA TAS VIC WA 0 1994-95 1995-96 1996-97 1997-98 1998-99 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 Source: Australian Gambling Statistics, 1982-83 to 2007-08, 26 th edition 10

The latest edition of Australian Gambling Statistics only provides data up until the 2007-08 financial year but it is possible that the repeal of the advertising restrictions in Victoria and NSW will contribute to additional growth in sports betting. 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 v Western Australia which ruled that certain laws in Western Australia were invalid as they were contrary to section 92 of the Commonwealth Constitution. 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 case and 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. Apart from direct advertising, the other possible contributor to growth is the media. Sports commentary often includes quoting of odds supplied by sports betting providers. This type of surreptitious advertising is widespread on television and radio as well as appearing on electronic scoreboards at events. It is noted that this issue is currently under consideration by the COAG Select Council on Gambling Reform. 11

SUMMARY OF RECOMMENDATIONS The review makes a number of recommendations aimed at improving the regulatory regime. These recommendations fall into the following categories: enforcement of existing legislation improving integrity assurance suggested legislative amendments matters requiring national action. Enforcement of existing legislation Recommendation 1 That the sports controlling bodies be required to provide the VCGR with a list of sports betting providers with whom they have agreements. Recommendation 2 That the VCGR prosecute sports betting providers who are offering markets on events for which they have no agreement with the relevant sports controlling body. Improving integrity assurance Recommendation 3 That smaller sports be encouraged to consider setting up an integrity body to service their collective integrity needs and enable them to obtain sports controlling body status. Recommendation 4 That the sports controlling bodies be encouraged to share information with each other about their integrity policies and processes in the interests of ensuring best practice. Recommendation 5 That the sports controlling bodies, either through COMPPS or some other mechanism, consider developing a model code of conduct and guidelines for the conduct of education programs that would act as a minimum standard for all sports. Recommendation 6 That the sports controlling bodies be encouraged to negotiate agreements that include the power to ban betting on contingencies that raise reasonable integrity concerns. Suggested legislative amendments Recommendation 7 That, in the event other Australian jurisdictions move to introduce sports betting legislation, Victoria grants reciprocal rights to out-of-state approved sports controlling bodies and encourages other jurisdictions to do likewise. Recommendation 8 That the penalty for offering a betting service on a sports betting event without the agreement of the relevant sports controlling body be increased. 12

Recommendation 9 That the GRA be amended to provide for the VCGR to have an ongoing monitoring role to ensure that sports controlling bodies are applying their integrity policies and processes Recommendation 10 That consideration be given to amending the GRA to allow the VCGR to adjudicate if a sports controlling body and a sports betting provider cannot reach agreement on the banning of a particular contingency. Recommendation 11 That the Department of Justice (DOJ) liaise with Sport and Recreation Victoria in relation to the development of criminal provisions to deter and deal with match-fixing. Matters requiring national action Recommendation 12 That the Minister for Gaming place the issue of mirror sports betting legislation on the agenda of the COAG Select Council on Gambling Reform or other appropriate national forum. Recommendation 13 That the Minister place the issue of retention and supply of betting information by sport betting providers on the agenda of the COAG Select Council on Gambling Reform or other appropriate national forum. Recommendation 14 That the Minister place the issue of amending the Interactive Gambling Act 2001 to remove the ban on internet betting in the run on the agenda of the COAG Select Council on Gambling Reform or other appropriate national forum. 13

MATTERS FOR CONSIDERATION The approval of events for betting purposes and the matters the VCGR must have regard to when determining whether to approve an event. The VCGR is responsible for approving sporting and other non-racing events for the purposes of betting. The GRA specifies criteria that the VCGR must consider when deciding whether to approve an event for betting purposes. These criteria are designed to ensure that betting is only conducted on events that can be adequately managed from an integrity perspective. In making its decision, the VCGR considers: whether the event is exposed to unmanageable integrity risks whether the event is administered by a body that is capable of ensuring integrity of the event whether betting on the event is offensive or contrary to the public interest except in the case of a sporting event, whether the approval would represent an unreasonable extension of the scope of gambling in Victoria. Once an event is approved, betting on the event can be conducted by a sports betting provider, provided they have an agreement with the relevant approved sports controlling body (if there is one). Sporting events that bets can be taken on but that are not under the control of an approved sports controlling body present some issues in terms of ensuring integrity. Although the VCGR is required to consider whether such events are exposed to unmanageable integrity risks and whether the event is administered by a body that can ensure integrity, this falls short of the more detailed integrity requirements that apply to sports controlling bodies. It is arguable that, ideally, betting on sports that do not have an approved sports controlling body should not be permitted. However, the reality is that such a ban in Victoria would be largely ineffective. Betting consumers would still be able to bet on these events with sports betting providers located outside Victoria. The net effect would be to disadvantage Victorian based sport betting providers without providing any increase in sports integrity. Through consultation, the review has become aware that the major concern for bookmakers is to ensure that they can compete. Interstate sports betting providers, particularly those located in the Northern Territory, are able to offer an enormous range of betting options. Although they may not hold many bets on the more exotic markets, the ability to offer these markets provides them with free publicity, with media often featuring small articles on the more outlandish bets available. This free marketing may lead punters to open an account with an interstate sports betting provider who then becomes their main betting provider, to the detriment of Victorian sports betting providers who are unable to offer a similar range of products. Despite this inequity, it is important to consider the integrity around events. For example, 14

reality television show results have no integrity assurance in place and have not been approved for betting purposes in Victoria but are offered for betting purposes by interstate bookmakers. While the review has some sympathy for Victorian sports betting providers in terms of their inability to compete, it is also of the view that integrity must remain at the forefront of the consideration of whether to approve an event for betting purposes. 15

The approval of sports controlling bodies and the matters the VCGR must have regard to when determining whether to approve a sports controlling body. Under the GRA, a sporting body can apply to the VCGR to be approved as the sports controlling body for an approved sporting event. In making its decision, the VCGR must consider whether the sporting body has the capacity to adequately manage the integrity of the sporting event. Controlling body status provides a sporting body with the legal right to negotiate fees and information sharing arrangements with sports betting providers. This provides a strong incentive for sporting bodies to invest time and resources into developing appropriate integrity systems. In determining an application for approval as a sports controlling body, the GRA provides that the VCGR must have regard to: whether the applicant has control of the event or organises or administers the event whether the applicant has adequate policies, rules, codes of conduct or other mechanisms designed to ensure the integrity of the event whether the applicant supports compliance with relevant international codes and conventions applicable to the event that relate to integrity in sport whether the applicant has the expertise, resources and authority necessary to administer, monitor and enforce the integrity systems whether the applicant has clear policies on the provision of information that may be relevant to the betting market whether the applicant has clear processes for reporting the results of the event and hearing appeals and protests regarding those results whether the applicant has clear policies on the sharing of information with sports betting providers for the purpose of investigating suspicious betting activity whether the applicant is the most appropriate body to be approved as the sports controlling body for the event whether the approval is in the public interest. To date, only six sporting bodies have received sports controlling body approval from the VCGR. Two other sporting bodies have lodged applications which are currently under consideration. The review is concerned that there is betting taking place on a number of other sports that have not applied for sports controlling body status and as a result these sports are not benefiting from that wagering. Equally, there is some risk to punters in betting on sports that may not have robust integrity procedures in place. For example, the review notes that the Ballarat Football League has come to an arrangement with a sports betting provider to allow that provider to take bets on Ballarat League games in return for a set amount of money per year. While the legislation does not compel the Ballarat Football League to seek sports controlling body status, betting on these games is a risk for punters as there is no guarantee that the League has any integrity procedures in place. Equally, while the deal may turn out to be financially advantageous for 16

the League, if there is a large amount of betting on games, they may not benefit as much as they may have if they had negotiated an agreement under the auspices of the legislation. The review has been made aware that the costs involved in seeking sports controlling body status, in particular the costs involved in setting up appropriate integrity systems, is a contributor to this reluctance to seek sports controlling body status. It may be more cost effective for the smaller sporting bodies to set up an integrity body that could service their collective integrity needs. This could potentially be funded from the product fee paid by sports betting providers. Stakeholders with whom the review raised this option were generally supportive though there were some concerns expressed about who would run the body and how it would be funded. If other Australian jurisdictions move to introduce sports betting legislation, it would be helpful if reciprocal rights applied i.e. if a sporting body is approved as a sports controlling body in one Australian jurisdiction, this status should be recognised in the other Australian jurisdictions. This would ensure that sports controlling bodies are saved the expense of applying for status in each jurisdiction. Recommendations That smaller sports be encouraged to consider setting up an integrity body to service their collective integrity needs and enable them to obtain sports controlling body status. That, in the event other Australian jurisdictions move to introduce sports betting legislation, Victoria grants reciprocal rights to out-of-state approved sports controlling bodies and encourages other jurisdictions to do likewise. 17

The requirements on sports betting providers, including the requirement to make an agreement with the relevant sports controlling bodies and the required content of those agreements For sports for which a sports controlling body has been approved the GRA makes it an offence for a sports betting provider to offer bets on those sports without either the written agreement of the sports controlling body or a binding determination of the VCGR. This offence applies to sporting events held in Victoria. The written agreement between a sports controlling body and a sports betting provider must cover information sharing, and the payment of a fee, if any, to the sports controlling body. Details of the agreement, including the type and level of fee, are determined by the parties to the agreement. If a sports betting provider and a sports controlling body are unable to reach agreement, the sports betting provider may apply to the VCGR to have the dispute resolved The VCGR may make a binding determination on the outstanding issues, having regard to criteria in the GRA that guide the VCGR as to the appropriate terms and conditions for such agreements. The sports controlling bodies have been unanimous in their agreement that sports betting providers have been very co-operative in making agreements. The general opinion of those parties the review met with is that the sports betting providers recognise that integrity assurance benefits them as much as the sports controlling bodies and punters by limiting the ability for events to be fixed. Under the standard agreement negotiated between the sports controlling bodies and sports betting providers, each sports controlling body receives five per cent of the sports betting providers gross profit from betting that takes place on events controlled by the sports controlling body. The regulatory regime enables the sports controlling body to negotiate the type and level of fee payable. The current fee payable by the sports betting providers was agreed upon by the members of COMPPS and several of the sports controlling bodies suggested that they may seek to renegotiate the fee in the future. The review was also made aware that, in addition to the fee payable under the standard agreement, a number of sports controlling bodies have negotiated sponsorship arrangements with sports betting providers. The review understands that these arrangements are of considerable benefit to some sports. It is also noted that a number of individual clubs in a variety of sports have negotiated their own separate sponsorship agreements with sports betting providers. There is some concern about the ability of the sports controlling bodies to negotiate higher fees, owing to the limited coverage of the Victorian regulatory regime. Whilst the sports controlling bodies have been able to leverage the current situation to ensure they receive payment from sports betting providers for events occurring outside Victoria, sports betting providers may not be so willing to continue this arrangement if the sports controlling bodies attempt to push for higher fees, or fees based on turnover rather than profit. The consequence of this may be that sports betting providers may only be prepared to negotiate arrangements that cover events occurring within Victoria. This concern was raised with the review by more than one sports controlling body. 18

There is some evidence of sports betting providers betting on events for which they do not have an agreement in place. The sports controlling bodies, while aware that this occurs, have limited resources to police this. It has been suggested that the VCGR could take a more active role in enforcing the requirement for sports betting providers to make an agreement with the relevant sports controlling body on whose events they are taking wagers. The review notes that there is no requirement for sports controlling bodies to notify the VCGR with whom they have agreements. If the sports controlling bodies were required to provide the VCGR with a list of sports betting providers with whom they have agreements, this would make the VCGR s enforcement role easier. The current penalty of 60 penalty units (currently $7,167.00) may also need to be increased in order to act as a deterrent. Of course, the lack of sports betting legislation outside Victoria means that this penalty only applies if a sports betting provider is taking bets on an event held within Victoria. As noted previously, the sports controlling bodies have been able to leverage the current situation to ensure they receive payment from sports betting providers for events occurring outside Victoria, but this is a precarious situation. The legislation needs to be replicated in other Australian jurisdictions to ensure integrity is enforced and sports are fairly remunerated. Recommendations That the sports controlling bodies be required to provide the VCGR with a list of sports betting providers with whom they have agreements. That the VCGR prosecute sports betting providers who are offering markets on events for which they have no agreement with the relevant sports controlling body. That the penalty for offering a betting service on a sports betting event without the agreement of the relevant sports controlling body be increased. That the Minister for Gaming place the issue of mirror sports betting legislation on the agenda of the COAG Select Council on Gambling Reform or other appropriate national forum. 19

Information sharing agreements between sports betting providers and sports controlling bodies. The written agreement between a sports controlling body and a sports betting provider must cover information sharing arrangements. Details of the agreement are determined by the parties to the agreement. Consultation undertaken as part of this review has revealed that the form of the agreement between the sports controlling bodies and the sports betting providers is based on a standard agreement devised by COMPPS. All sports controlling bodies are members of COMPPS, which was active in lobbying for the introduction of the amending Act. Information provided to the review by stakeholders suggests that the amount of information sharing taking place between the sports controlling bodies and sports betting providers varies. The relationship between sports and wagering is a relatively new one and is still only a minor source of revenue for sport. However, it was clear to the review that the level of integrity assurance being undertaken by the sports controlling bodies varies enormously. It would be useful if the sports controlling bodies, whether through COMPPS or some other mechanism, shared information on the integrity policies and processes they have put in place. The United Kingdom s Department for Culture, Media and Sport established a Sports Betting Integrity Panel in 2009 to make recommendations as to the design and implementation of an integrated strategy to uphold integrity in sport and associated betting. The Panel s report 3, delivered in February 2010, made a number of recommendations relating to integrity. In particular, the Panel recommended that a Code of Conduct on integrity in sports in relation to sports betting should be developed and that it should include minimum standards which all sports should observe and cover in their rules on betting. Additionally, the Panel recommended that sports provide regular education and communication programs on sports betting integrity to all competitors and participants. The review believes that these recommendations may be useful in the Victorian context. The sports controlling bodies, either through COMPPS or some other mechanism, may wish to consider developing a model code of conduct and guidelines for the conduct of education programs that would act as a minimum standard for all sports. This may assist the smaller sports in putting together the building blocks of their integrity systems. The VCGR has advised that it considers its application forms to be a guide to applicants for sports controlling body status as to best practice in integrity assurance. While the review is confident that the VCGR has properly assessed applications and that the sports controlling bodies have satisfied the legislative requirements, it is a concern that there is no postapproval monitoring function. An issue raised with the review was the need for sports betting providers to retain and make available information to the sports controlling bodies that will assist them in their investigations, for example, telephone caller identification and IP address information. The evidence suggests that the quality of information available varies depending on the sports betting provider. The review considers that, while this is a reasonable request, it requires an 3 Report of the Sports Betting Integrity Panel February 2010 20

Australia-wide approach. It is noted that the issue has been raised by COMPPS with the Federal Minister for Sport. Recommendations That the sports controlling bodies be encouraged to share information with each other about their integrity policies and processes in the interests of ensuring best practice. That the sports controlling bodies, either through COMPPS or some other mechanism, consider developing a model code of conduct and guidelines for the conduct of education programs that would act as a minimum standard for all sports. That the Minister place the issue of retention and supply of betting information by sport betting providers on the agenda of the COAG Select Council on Gambling Reform or other appropriate national forum. 21

The prohibition or otherwise of betting on certain contingencies, including betting in the run. Approval of an event allows for betting to occur on any type of contingency. For example, in AFL, bets may be taken on the winning margin, half time result, player who kicks the most goals and so on. The VCGR approval does not specify what contingencies can or cannot be bet on. Certain types of contingencies are more vulnerable to manipulation and fixing than others. For example, betting on how many wides are bowled in the first over of a cricket match may raise greater integrity concerns than betting on the winning team. The GRA empowers the VCGR to prohibit a contingency that it considers inappropriate for betting purposes. The GRA makes it an offence for a sports betting provider to offer or place bets on a contingency that has been prohibited by the VCGR. The GRA allows for the VCGR to prohibit betting on a contingency if it: would expose the relevant event to unmanageable integrity risks; or is offensive; or is contrary to the public interest; or should be prohibited for any other reason. No contingency has been prohibited by the VCGR to date. Betting on contingencies is an area of concern in relation to the integrity of sports. As noted above, some contingencies are more vulnerable to manipulation and fixing than others, and despite the fact that such manipulation may not affect the ultimate outcome of a game or match, it represents an enormous risk to the integrity of sports. It was put to the review that some sports controlling bodies would like an absolute power of veto over the contingency markets offered by sports betting providers. Perhaps unsurprisingly, sports betting providers expressed concern about the potential application of such a power, and the possibility that sports controlling bodies may choose to veto some sports betting providers from offering certain markets, but not others, or use the power to effectively ban betting altogether. Sports controlling bodies are able to negotiate veto arrangements as part of their agreements with sports betting providers. It was suggested to the review that the concerns of sports betting providers about the application of such a power could be allayed somewhat if the agreements were clear that such a power would only be invoked where the sports controlling body has reasonable integrity concerns. Additionally, the VCGR s power to determine an application by a sports betting provider, if the sports betting provider and the sports controlling body cannot reach agreement, could be extended to include an adjudication power if the parties cannot reach agreement on the banning of a particular contingency. There was widespread agreement amongst all stakeholders that the ban on internet betting in the run contained in the Interactive Gambling Act 2001 (Cwlth) serves no useful purpose. If betting consumers wish to bet in the run, they are still able to do this over the telephone or 22

over the counter at TAB outlets and, if they prefer to do so online, they are able to do so with overseas sports betting providers. The net result of this is that Australian bookmakers lose customers and, consequently, sports controlling bodies lose both revenue and access to betting information. It was also put to the review that, in some cases, in the run betting was to be preferred. Certain betting markets may be better served from an integrity perspective if they can only be bet on during the game, as this would avoid the possibility of pre-game collusion. Recommendations That the sports controlling bodies be encouraged to negotiate agreements that include the power to ban betting on contingencies that raise reasonable integrity concerns. That consideration be given to amending the GRA to provide for the VCGR to adjudicate if a sports controlling body and a sports betting provider cannot reach agreement on the banning of a particular contingency. That the Minister place the issue of amending the Interactive Gambling Act 2001 to remove the ban on internet betting in the run on the agenda of the COAG Select Council on Gambling Reform or other appropriate national forum. 23

The adequacy of sports controlling bodies policies, rules, codes of conduct and other mechanisms designed to ensure the integrity of an event. The existing regulatory regime requires the sports controlling bodies to have adequate policies, rules, codes of conduct or other mechanisms designed to ensure the integrity of the events being bet on, as well as the expertise, resources and authority necessary to administer and enforce those systems. The adequacy of sports controlling bodies policies, rules, codes of conduct and other mechanisms designed to ensure the integrity of an event is assessed by the VCGR as part of determining whether to approve an application for sports controlling body status. The VCGR has advised the review that it is confident that the sports controlling bodies are investigating all instances of suspicious betting. Aside from formal correspondence, the VCGR maintains less formal contact with the sports controlling bodies, via telephone and face-to-face meetings, to obtain assurance that all matters of concern are thoroughly investigated. To date, the number of incidents requiring investigation has been small and has included the allegations of tanking in the AFL and the NRL Melbourne Storm issue. The review is concerned, however, that there is no post-approval monitoring function to ensure that integrity mechanisms are being implemented. A sport may have comprehensive policies, rules and codes of conduct but they serve no purpose if they are not understood by the people that are bound by them. Consultation undertaken as part of the review suggests varying levels of enforcement by the sports controlling bodies. The agreement between the sports controlling bodies and sports betting providers is twoway. Whilst sports are entitled to be paid for putting on the show, equally, sports betting providers and their customers are entitled to expect those sports to enforce their integrity processes. Regular monitoring of integrity mechanisms would assist in ensuring that enforcement is occurring. Recommendation That the GRA be amended to provide for the VCGR to have an ongoing monitoring role to ensure that sports controlling bodies are applying their integrity policies and processes. 24

The role and powers of the VCGR in relation to sports betting, including in relation to alleged integrity breaches. The main role and powers of the VCGR in relation to sports betting are currently: Approval of events for betting purposes and the variation and revocation of an approval Approval of sports controlling bodies and the variation and revocation of an approval Determination of agreements between sports controlling bodies and sports betting providers if agreement cannot be reached, and the variation and revocation of a determination Prohibition of betting on contingencies. The major deficiency in these powers is the lack of a role for the VCGR in terms of postapproval monitoring. Although the GRA gives the VCGR the power to vary or revoke approvals, without an ongoing monitoring function, it is unclear on what basis such action would be taken. The power to conduct ongoing monitoring would assist in ensuring that enforcement of integrity mechanisms. Recommendation That the GRA be amended to provide for the VCGR to have an ongoing monitoring role to ensure that sports controlling bodies are applying their integrity policies and processes. 25

Other relevant matters Stakeholders, particularly the sports controlling bodies, were clear in their agreement that the sports betting legislation has genuinely benefited sports. However, it is also clear that mirror legislation in other states is needed for the regulatory regime to be fully effective. The sports controlling bodies are currently leveraging off the agreements they have made under the Victorian legislation to receive payment from sports betting providers for events occurring outside Victoria. However, this means that sports controlling bodies have differing ability to negotiate with sports betting providers. For example, the AFL, with the majority of games held in Victoria, has considerable power; withdrawal of their agreement to allow betting on AFL games in Victoria would have a significant effect on a sports betting provider. In contrast, the NRL, with most games held in NSW, does not have the same power. Withdrawal of their agreement to allow betting on NRL games in Victoria would be largely a token gesture. In terms of protection of sports integrity, the other missing link is specific cheating legislation. Such legislation would make it easier for Victoria Police to take action and also potentially act as a deterrent if significant penalties were attached. The NSW Law Reform Commission has commenced the development of legislation to deal with fraudulent sports betting and match-fixing and is currently undertaking public consultation and exploring international models. A recent meeting of the Sport and Recreation Ministers Council was advised that the NSW LRC has indicated that it is willing to share its considerations in an effort to promote a nationally consistent approach to this matter. The Sport and Recreation Ministers Council agreed to explore the development of a nationally consistent approach to legislation to deter and deal with match-fixing. The review considered whether there was a case for seeking a reduction in the $10,000 AUSTRAC reporting limit, albeit specifically for betting purposes, to say, $1,500. During the course of consultation, it become clear that this would only affect a small number of sports betting providers as the majority are purely account based and the reporting requirement relates only to cash. However, there was no evidence that such a reduction would serve any real purpose. In terms of integrity related incidents, for example, the irregular betting that took place on the NRL Bulldogs v Cowboys game was a series of $200 bets placed with Tabcorp on a particular contingency. In this case, a reduction in the reporting limit would not have assisted to identify the betting consumer in question. In any case, Tabcorp has in place procedures to identify suspect betting consumers, including the ability to withhold payment for a winning ticket until identification is produced. The review also considered whether all sports betting should be required to be account based. As a practical example, such a requirement would mean that a betting consumer could walk into their local TAB and have a $20 cash bet on Black Caviar but be required to have an account to have a $20 bet on the Western Bulldogs to beat Essendon. The other option would be to apply such a restriction to both sports and racing but this is an impractical solution when one considers on-course bookmakers. On balance, the review has concluded that, while compulsory account based betting may offer a small increase in integrity assurance, it is not a workable solution. There may be a case to require betting consumers to provide identification when placing cash bets or collecting winnings above a certain limit. However, for this to be effective it would need to apply nationally. While this would not be a panacea for cheating, it would 26