Strengthening Integrity in Sports Betting: A New Regulatory Framework in Victoria, Australia?
By Jamie Nettleton and Kylie Mathison

Sports betting in the Australian state of Victoria is regulated by the Gaming Regulation Act 2003 (GRA) and the Racing Act 1958; however, a new bill currently before the Victorian Parliament puts forward a new statutory regime to regulate sports and other non-racing events betting held wholly or partly within the state. The proposed changes will have an international impact in that both Australian and overseas betting providers will need to comply with the new regulatory framework in order to legally offer bets on Victorian sporting events, and in order to avoid breaching new prohibitions on when and which bets may be offered to the public.[1]

The proposed Gambling and Racing Legislation Amendment (Sports Betting) Bill 2007 aims to strengthen public confidence in the integrity of sports that are the subject of betting activity, as well as to provide an opportunity for financial returns to sporting bodies. Victorian Minister of Gaming David Andrews asserts that the bill is an important step in ensuring sports in Australia are not compromised by the betting that takes place on them.[2]

The bill follows the introduction of similar legislation for the Victorian racing industry in 2006, which aimed to "assist in return of revenue and [maintain] integrity in wagering across racing codes."[3] Under section 2.5.16A of the Gaming Regulation Act 2003, the integrity of racing is strengthened by prohibiting wager service providers from publishing information relating to Victorian race fields, unless approved by the relevant racing controlling body; and by enabling the racing industry to derive revenue from operators that wager on Victoria thoroughbred racing.[4] This was heralded as a "critical step for the Australian racing industry."[5] Victoria is currently the only state in Australia to have fully implemented such legislation.

Similarly, the new bill has also been heralded as being at the forefront of Australian sports betting policy.[6]

The current regulatory regime for sports betting in Victoria, which is contained in Part 5, Chapter 4 of the GRA, provides that the minister has the power to permit approved betting competitions on racing, sporting and other events or contingencies within events, subject to "any conditions the minister determines."[7] An approved betting competition must specify whether it is a competition with fixed odds or a competition conducted on a totalisator, and its approval may be revoked or varied at any time.[8]

The proposed changes will introduce a far more detailed system of sports betting regulation in Victoria.

Proposed Changes
The power to enable betting on all sporting and other non-racing events will be conferred on the Victorian Commission for Gambling Regulation (VCGR), while only the power to grant approval in respect to racing events will remain with the minister.[9]

Before betting activities will be allowed to take place on sporting and other non-racing events in Victoria, approval for betting on the event must be granted by the VCGR.[10] The VCGR will only grant approval for sporting events that have proper integrity processes in place. This will require consideration of matters such as whether betting on the event will expose it to unmanageable integrity risks; whether it is administered by an organization capable of managing integrity risks; and whether it is offensive or contrary to public interest.[11] This approval can be varied or revoked at any time by the VCGR.[12]

The next step will require those sporting bodies that wish to benefit from the rights provided for by the bill, such as the right to negotiate a financial return from the betting activities conducted on their events, to seek approval from the VCGR as a "sports controlling body."[13] Approval will only be granted after the VCGR has considered a number of criteria. As a threshold issue, the sporting body must have control over, or organize, the event.[14] Other criteria include whether the applicant:

• has adequate rules, codes of conduct and policies in place to ensure the integrity of the event;
• has the expertise and resources to enforce and monitor the integrity systems;
• has policies on the provision of information relevant to the betting market and on the sharing of information with sports betting providers for the purpose of investigating suspicious betting activity; and
• is overall the most appropriate body to be approved as the sports controlling body, and approval is in the public interest.[15]

The VCGR is also entitled to take any other matter they consider relevant into account.[16] Subsequently, the VCGR may also vary or revoke, for any reasonable cause, the approval by written notice to the sports controlling body.[17]

Under the bill, betting providers in Victoria - and elsewhere - will be prohibited from offering bets on a sporting event held wholly or partly within Victoria unless they have:

• entered into an agreement with the relevant approved controlling body; or
• received a favourable determination from the VCGR.[18]

Any agreement between the sports controlling body and a sports betting provider that offers a betting service on the event must share information between the parties to ensure the betting "protects and supports the integrity of sports and sports betting," and states "whether or not a fee is payable by the sports betting provider to the sports controlling body in respect to betting on the sports betting event" and how that fee is to be calculated.[19] Allowing sporting bodies to negotiate fees with those who offer wagering on their events indicates that the policy underpinning the bill is the incentive for sporting bodies to put integrity measures in place, thereby strengthening the integrity of their sports in a betting context.

If, however, no such agreement is successfully negotiated, the sports betting provider may apply to the VCGR for a determination to resolve the dispute.[20]

The bill also prohibits bets on certain contingencies. It will be illegal for a sports betting provider to offer, accept or facilitate a bet on prohibited contingencies, and a monetary penalty will be imposed.[21] The VCGR, by instrument, will have the power to prohibit betting on a contingency if doing so may expose the relevant event or class of events to unmanageable integrity risks; is offensive or contrary to the public interest; is unfair to investors; or should be prohibited for any other reason.[22] Once again, this prohibition may be varied or revoked at any time by the VCGR.[23] The Victorian Minister for Gaming has described the introduction of this offence as "an important plank in the suite of measures designed to protect sporting and other non-racing events from match-fixing scandals and other inappropriate betting."[24]

Overall, the bill aims to ensure that betting providers, sporting bodies and the general public can have greater confidence that "every outcome within a match is determined in the spirit of the game and free of manipulation."[25]

The bill is one of the first legislative measures worldwide that provides a mechanism for sports to receive revenues directly from wagering operators. In this respect, the bill should be applauded, as it encourages both wagering operators and sports to work together to maximize integrity.

However, the measures introduced by the bill are complex, and it is probable that sports will have to put detailed measures in place to achieve the benefits contemplated by the bill. Such complexity is also likely to give rise to the risk of disputes between sports and wagering operators.

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[1] Gambling and Racing Legislation Amendment (Sports Betting) Bill 2007 ss 4.5.31, 4.5.21. All references to sections are in relation to this bill unless specifically stated.

[2] Minister for Gaming David Andrews. Second Reading Speech. Victorian Legislative Assembly, 3/15/07.

[3] Victorian Sports to Benefit from New Betting Regime. Media release from the Minister for Gaming, 10/13/06.

[4] Racing Victoria Limited Policy for Assessing Applications for Authorisation to Public Victorian Race Fields 7/6/06

[5] Ibid.

[6] Ibid.

[7] S 4.5.1.

[8] S 4.5.4.

[9] Div 3 - Approval of other events for betting purposes.

[10] S 4.5.6.

[11] S 4.5.8(1).

[12] S 4.5.11(1).

[13] Div 4, s 4.5.12(1).

[14] S 4.5.14(1)(a).

[15] S 4.5.14(1).

[16] S 4.5.14(3).

[17] S 4.5.17.

[18] S 4.55.22(1).

[19] S 4.5.23(1)-(2).

[20] S 4.5.24(1).

[21] S 4.5.31(1).

[22] S 4.5.29(1).

[23] S 4.5.29(2).

[24] Minister for Gaming David Andrews, Second Reading Speech delivered in the Victorian Legislative Assembly, 15/3/07

[25] Ibid.

Jamie Nettleton is a partner for Addisons and can be reached at jamie.nettleton@addisonslawyers.com.au. Kylie Mathison is a Law Clerk for Addisons and can be reached at kylie.mathison@addisonslawyers.com.au.