Thursday, 28 June 2018
Interactive Gambling Amendment (Lottery Betting) Bill 2018; Second Reading
I rise to contribute to this evening's debate about the Interactive Gambling Amendment (Lottery Betting) Bill 2018. Labor supports this bill. Labor has long been on the record with concerns about the impact of lottery betting, or synthetic lotteries, on Australian consumers and small businesses. These concerns prompted Labor to consult with a range of stakeholders, including lottery betting provider Lottoland and newsagents, in the lead-up to the launch of Lottoland's Gotta Go! campaign last year and since then too. Twice Labor has declined to support proposed Senate amendments to ban synthetic lotteries on the run, citing the need for stakeholder consultation. Now, and after careful consideration of the arguments and evidence, including extensive stakeholder consultation, Labor believes it is appropriate to support the bill to prohibit lottery betting in Australia.
The Commonwealth has responsibility for online gambling matters and is best placed to implement a national position in relation to lottery betting services in Australia. The bill will amend the Interactive Gambling Act 2001, which is administered by the federal regulator, the Australian Communications and Media Authority, to prohibit gambling service providers from providing to customers in Australia a service for betting on the outcome of, or a contingency in, Australian and overseas lottery draws. This has the effect of banning synthetic lotteries such as Lottoland. Synthetic lotteries allow customers to bet on the outcome of a lottery draw without the need to purchase a ticket in the official lottery draw. Unlike with official lottery draws, ticket sales will not cover major payouts. Instead, these are covered by insurance policies. The bill follows moves in some states and territories to prohibit betting on the outcome of a lottery.
Labor supports the bill because it responds to concerns shared by Labor around the provision of synthetic lotteries in Australia and the potential expansion of these services in the future. While Lottoland has undertaken a range of actions to address concerns and be a responsible corporate participant, Labor is concerned that this fast growing but otherwise relatively small disruptor and other lottery betting services will cause adverse impacts on states and territories revenues, small businesses and consumers.
Over $1 billion in taxation revenue is currently received from states and territories each year from the sale of tickets in official lottery draws, which contributes to charitable causes and community services. State governments have voiced concerns that synthetic lotteries are siphoning tax revenue collections away from community services. Lottoland is licensed and does pays tax. It submits that it does not cannibalise official lotteries. Lottoland argues that its product offering has grown the market, that it targets a different demographic and that it is not a big enough player to have had a material impact on revenues.
The explanatory memorandum to the bill concedes there is insufficient data to determine the actual impact of lottery betting on state taxation revenue. However, it otherwise maintains that any increase towards lottery betting and away from official lotteries would have a negative impact on states and territories funding community and other government-funded causes.
Here I wish to state that Labor regards lotteries to be a distinct product, compared with other forms of online wagering. Labor acknowledges the logic of the monopoly model for official lotteries in the offline environment and potential impact of synthetic lotteries in the online environment. Official lotteries are heavily regulated and taxed, with the majority proportion of every dollar invested back into the prize pool and a significant proportion going to state revenue. State and territory governments decide whether or not to issue lottery licences as monopolies. They do so based on analysis done by treasuries to determine what is most sustainable and what is in the best interests of the community. For example, the Victorian government has recently gone through a full licensing process and decided to award a single operator licence, clear evidence to governments around the country that a single operator model is the most effective and best approach to maximising state returns. Similarly, in 2016 the Queensland government considered whether or not they should issue two lottery licences but concluded that it was not in the state's interest and therefore renewed the monopoly arrangement.
The community benefits derived from monopoly arrangements to lotteries have a long history. Around Australia, state lotteries have been used to provide funding to hospitals, health initiatives, the performing arts and sports. Lotteries in New South Wales have been used to fund, in part, the Sydney Harbour Bridge and the Opera House, and to finance Sydney's successful bid for the 2000 Olympic Games. While online wagering companies may be taxed and also return funds to state and territory revenue, these are calculated differently and amount to a great deal less than the taxation regime applying to official lotteries. Further, by betting on the outcome of a lottery rather than buying a ticket in an official lottery, the fundamental product at the core—the lottery—is impacted. It's only by purchasing a ticket in a lotto that a lotto prize pool will grow. Therefore, the logic is that betting on the outcome of a lottery and increasing the number of lotteries has a deleterious effect on the official lottery.
I turn now to the impact on small business. Newsagencies and other small businesses across Australia rely on the commissions from the sales of official lottery tickets to earn an income and cover the costs of running a business. The concern they express is that the synthetic lottery services divert customers away with the promise of substantially higher jackpot amounts compared to those prizes that can be offered under the official lottery draw. In 2017, some Labor members received, and tabled, petitions in support of the Lottoland's Gotta Go campaign on behalf of some newsagents, including newsagents represented by the Australian Lottery and Newsagents Association. Lottoland, in return, has run a concerted campaign to argue its case for survival as a lottery betting agency, arguing that it does not undermine newsagencies. Lottoland and some other newsagents, including newsagents represented by the Newsagents Association of New South Wales and ACT, and by a Victorian association, have voiced concerns that the bill will leave newsagents and small businesses worse off and exposed to monopolistic behaviour by Tatts and Tabcorp, and deprive some newsagents of a revenue stream obtained via profit-sharing arrangements with the lottery-betting services.
The explanatory memorandum concedes there is limited data available to quantify the financial impact on small businesses, but acknowledges that any increase towards lottery betting and away from traditional lottery sales would have a negative impact on small business revenue. Furthermore, Labor notes the concerns of the Australian Hotels Association, which indicated it would reject any partnership deal with Lottoland and emphatically asserts that Keno helps hotels support more than 50,000 community groups at grassroots level.
Labor acknowledges concern around consumer awareness and confusion as to whether synthetic lotteries are official lotteries or lottery betting services. Despite steps taken by Lottoland—for example, to state on its website that it is a bookmaker and not a lottery operator, and to explain lotto betting—in 2017 Labor formally requested the ACCC to undertake an investigation into representations made by companies that offer betting on lottery results, such as Lottoland, given concerns that they may mislead or deceive consumers into believing they are purchasing a lottery ticket or directly participating in a lottery. The ACCC responded by undertaking to continue to review developments and complaints received in relation to Lottoland.
Official lotteries are heavily regulated to protect customers, to guarantee that prizes are paid out to winners and to make sure they are funded by the proceeds of the lottery sales. Lottery-betting services are not subject to the same regulatory regime as official lottery operators and can provide incentives to attract customers, such as paying a premium to guarantee a win rather than having to divide the prize equally between winners. Further, the intent of the interactive gambling bill is to minimise problem gambling by limiting access to rapid-style interactive gambling services by Australians. While the bill permits lottery draws, only a small number are conducted each week; a much higher number of synthetic lottery draws occur around the world on a weekly basis with much higher jackpots ranging to hundreds of millions, which could lead to problem and at-risk gambling.
In closing, I reiterate that Labor has long been on record with concerns about the impact of synthetic lotteries, like Lottoland, on Australian consumers and businesses. There's genuine cause for concern that any increase towards lottery betting will be at the expense of consumers, small business, the community, and other government causes funded by official lotteries. Labor notes that Lottoland is a legitimate service that pays tax in Australia and is a disruptor seeking to offer consumers greater choice in gambling product. However, this is not the kind of disruption or choice we seek to promote in our community. We also note that Lottoland is not the only provider of lottery betting in Australia. In addition to the number of current providers of lottery betting in Australia, Labor does share concerns about the impact of a growth in lottery betting in Australia. Labor will support this bill.
This legislation, as far as it goes, is fairly simple. It has been, I might say, fairly adequately explained by the previous speaker, so I won't go over in great detail the provisions of the legislation or the consequences of it. It's pretty widely known that it's explicitly aimed at Lottoland and any other variants of what they do. It's known as, I guess, contingency betting, where people don't bet on a lotto but on the outcome of a lotto. Rather than buying a Powerball ticket, they bet on the outcome of the Powerball in a sort of second-hand way. Doing so online, whether through an Australian or an overseas lottery agency, is potentially opening up another whole area of problematic gambling in the online arena.
I'll say at the outset that I'm not opposed to gambling per se and I'm not opposed to online gambling per se. I dabble in it very occasionally in very small amounts, as I'm sure many people do in Australia, but, as we all know, it can cause significant problems for some people and it causes huge problems for a significant number of people in Australia, and, when that happens, it can have massive flow-on consequences for their families and their friends. We all know the stories of bankruptcies, people losing their houses, suicides and families being split asunder because of problem gambling and gambling addiction. Whilst I'm certainly not laying all of that at the feet of Lottoland, I am certainly saying that anybody can run into problem gambling with any type of gambling, even if it's just buying scratchies at the newsagent. All of the evidence demonstrates that the type of gambling that occurs through pokies in particular is the area that is by far the most damaging and the most addictive. I say as an aside that it's pleasing to see the Senate today make the decision to agree to a Senate committee inquiry into so-called loot boxes in gaming—another area of online activity, often involving children. It's quite deliberately designed to be akin to the mechanisms that addict people to pokies.
I think it is pretty clear that the approach that Lottoland and similar organisations use is problematic, even before you get into the issues of its impact on small businesses and newsagencies. People involved in newsagencies have come to see me from different areas and with different perspectives. Senator O'Neill spoke about those perspectives—the different concerns and the different views about this legislation, what the impact might be on newsagents and similar small businesses, whether there might be other ways of doing things and what some unintended consequences of this legislation might be. One thing I will say, particularly in this area online, is that, when you do put your finger on one thing and say, 'This is a problem. We'll squish that,' it can be a bit like with a balloon, where it will just pop up somewhere else. It may be that that will happen, but, in my view, that's not a sufficient reason not to address the immediate problem that is there. It's an area that needs continuing, ongoing monitoring. I know that it's something that governments at the state and federal levels have talked about. Personally, I think, they're small gains, but in this area any gain is worth acknowledging when it comes to tackling problem gambling and gambling addiction.
The online gambling protections that were agreed by gambling ministers towards the end of last year are good, as far as they go. The fact that the government has acted relatively quickly in this area to ensure that it could be addressed before it got out of control—if it's not Lottoland; it's another organisation using a similar business model doing the same sort of thing, potentially in a more irresponsible way—is good as far as it goes. But the point does have to be made that the big elephant in the room—in fact, about 20 elephants' size—is the pokies themselves. They are not being addressed. We can get quick action on these companies and we can paint them all as bad guys from overseas and all of that sort of stuff, but the major harm that is being caused by problem gambling and gambling addiction—which is quite knowingly being generated; indeed, it is a business model that the pokie barons rely on—is not being addressed.
I do give credit to the Tasmanian Labor Party for their attempt to rid pokies from their state in the last state election. We all know about the absolute avalanche of money that the pokies lobby poured in. In fact, we don't know yet how big that avalanche of money was, because it still hasn't been disclosed and won't be for some time. But we all know there was an avalanche of money that came in from the pokies industry to try to ensure that pokies remained in Tasmania and so there couldn't be an example of pokies introduction being wound back. It is, of course, quite possible for a state to be a flourishing, vibrant community and have a thriving economy—with the same sort of number of jobs and the same sorts of community benefit funds from all sorts of other avenues—without having pokies in every second pub throughout the place, because that's the case in WA. They had them in the casino there, of course—and that's another sweetheart deal—but at least they haven't been spread like the plague, like an electronic version of the cane toad, around the rest of the country, as has happened, unfortunately, everywhere else. That is where our attention needs to be.
Whilst it's good that there has been cross-party and rapid action on this small area that creates a potential problem—and I acknowledge alongside that its potential local small business impact and the disputed views about what that might be and, indeed, who else might move into this space—the one thing I would say is that, whilst the Greens don't oppose this legislation; we do need to keep watching this space about who else might move into similar sorts of things in similar sorts of ways. As we all know, particularly when it comes to online stuff, the landscape is constantly changing. People who are looking to make a buck out of gambling, as we have all seen in the sports betting arena, are always looking for different ways to get to the consumer. It's not so much about giving people the opportunity to bet—as I say, I do that myself occasionally—but is more about finding the people who are vulnerable and to find the addict.
It is worth noting that the federal government has been able to get agreement from online betting agencies in Australia about some responsible gambling measures and some consumer protection measures—things like self-exclusion registers and the like. If that can be done so readily in the amorphous space of the online world then surely it can be done when it comes to the, not quite bricks and mortar, but the plastic and lots of flashing lights of the poker machines, particularly because they are all interlinked now. I am quite sure that the federal government, if it had the political will, could use its own powers, including through the communications or corporations laws or a combination thereof, to put in place the requirement for any large-scale pokie operations, at least to put those same basic consumer protection measures in as a matter of law, as well as some of the other measures that unfortunately were not able to be got through during the time of the Gillard government—basic measures like $1 bet limitations, for example.
The conservative government in the UK managed to implement single bet limits that are much lower than what apply here. Why can't we do it here? We know why: because of the massive donations that the pokies lobbies give to both parties of the political establishment here. Their clout is undeniable and pretty much undenied. There was a written guarantee from the Gillard government to Andrew Wilkie and others about some not massively revolutionary consumer-protection measures to minimise gambling addiction and problem gambling in regard to pokies, and they somehow never quite managed to happen. Even over three years it couldn't quite happen. It shows how powerful that lobby is. That, however, is no reason to give up on that, and certainly the Greens won't give up on that.
We do not oppose this measure in itself inasmuch as it addresses a problem area. We congratulate the government in moving quickly on it, but, really, pokies are the problem. The focus needs to be on pokies. It is something that the federal government can act on. Obviously it would be better if the states would work alongside that. In my own state of Queensland the performance of the state government has been appalling. We've even got a situation now where there's a licence proposal for, I think, 45—certainly a sizable number—poker machines to go into a pub that's attached to the Indooroopilly Shopping Centre in inner-western Brisbane. That's where we're at in Queensland. We've still got proposals for extra casinos with extra pokies in them in urban areas, and we all know that those casinos, as much as they talk about relying on high rollers, actually, over time, rely more on locals going in and playing the pokies.
The Greens will certainly do what we can leading into the federal election to push for real action on the real problem, which is the pokies and the massive influence of that industry and lobby. Part of it is legislative reform to try to reduce the number of pokies and put in place consumer protection. But of course it all ties in, at the end of the day, to political donations reform and eliminating the ability of that industry to pour hundreds of thousands of dollars into the pockets of the parties of the political establishment.
I recognise that we are in a time of incredibly fast change, especially in the business world. Newsagents and lottery agents have been going through an enormous transition in their businesses over the last decade or more. We've seen an assault on their core lines by supermarkets, who compete with the sale of gift cards, wrapping paper, newspapers and magazines, and other big box retailers. I very clearly remember buying schoolbooks for my kids from local newsagents in Ipswich at the start of every year, whereas most people now shop at Officeworks or even order their schoolbooks online.
Newsagents across this country have, however, been resilient, and they have had to change their business models to achieve more sales in other areas, like gifts, homewares, toys and even coffee, as a result of more people sourcing their news content through online services like social media.
I might take the opportunity right now to thank newsagents for their work in helping to save the iconic Darrell Lea brand. Newsagents played a very significant role in the restructuring of how Australia's favourite non-halal-certified chocolate brand reached consumers across the country.
Shop rents are absolutely excruciating, especially if you're in a shopping centre. And let's not forget the hours that go into any small business—I know; I've had one of them—especially newsagencies, which are often open seven days a week, as are takeaways. It's bloody hard being in small business these days, but I am glad that so many persevere and so many newsagents have taken the necessary steps to evolve. They continue to employ over 15,000 Australians and contribute many billions of dollars in annual turnover to the economy, along with significant taxes.
However, there are some industries that should not be able to evolve, because of their impact on the consumer and on business. One of these industries is lotteries. This is a tightly regulated industry, and, as such, Australians who want to have a punt are protected. But when a loophole exists that allows businesses to exploit an industry, it is at the expense of the consumers whom the regulations exist to protect. These are the same regulations that make it illegal to sell a scratchie online or play a poker machine online. But a loophole in the federal Interactive Gambling Act has allowed online bookmakers to use questionable practices to promote misleading betting on underlying lotteries while siphoning money offshore. Meanwhile, the newsagents, whose customers are being targeted and who offer genuine lotteries, must follow the regulations that they adhere to, ensuring that customers are protected and that the prizes are in the regulated pool for each draw. The problem here is not that newsagents are restricted by regulations; it is that fake lotteries are not.
The truth is that taxes collected from genuine Lotto sales purchased in newsagencies across Australia generate the state and territory governments over $1 billion—money that goes towards hospitals, community groups and not-for-profits. Tell me: how much does the Queensland government receive from fake lotteries' taxes? Nothing. How much does the New South Wales government receive from fake lotteries' taxes? Nothing. How about the Western Australian government? You guessed it: zip. Not one state benefits from fake lotteries, because the money gets siphoned offshore—to countries like Gibraltar, which operates as a tax haven.
Call me a protectionist if you like. I want Australian dollars to stay here in Australia. And anyone who votes against this bill is anti-Australian. They clearly don't like supporting Aussie charities and sick kids. You're just horrible, heartless people.
To the 4,000-plus mum-and-dad newsagent business owners across Australia today: you deserve our respect. You deserve our vote. And I'm proud that One Nation gave you the initial voice to have this bill put to our parliament, to give you hope long into the future. The One Nation senators, Senator Peter Georgiou and I, will support the passage of this bill, the Interactive Gambling Amendment (Lottery Betting) Bill 2018, with the greatest of pleasure.
I rise to indicate my opposition to the Interactive Gambling Amendment (Lottery Betting) Bill 2018. My concern is that, as a consequence of the passage of this bill, a business will have to close: a business that employs Australians, has directors and shareholders and is an entrepreneurial business, a new business in Australia having a go and doing all the things that we expect businesses to do. I thought about summarising my concerns about this bill in my own words, but I have actually decided that perhaps the best thing to do would be to read from a letter that I received from the Newsagents Association of NSW and ACT Ltd, which states:
Dear Senator Leyonhjelm,
We urgently write to inform you of the unified position of the representative bodies of the majority of Australian newsagents in relation to the Interactive Gambling Amendment (Lottery Betting) Bill 2018, currently before the Senate, a move by the Australian government to ban international lottery betting. Together, we represent 2,000 active newsagents which participate in our industry engagement activities across Australia in each state. Our members do not want a blanket ban on lottery betting, which will harm revenue for already struggling newsagents. It will allow the Tabcorp owned Tatts Group to have a complete monopoly over the lottery market.
This bill is the product of a misleading campaign instigated and funded by the most dominant player in Australian lotteries, Tatts Tabcorp, who are now under investigation by regulators in Victoria and New South Wales following complaints about misleading and inaccurate claims. As part of their campaign, Tatts has spent more than $5 million and has possibly provided financial support to the Australian Lottery and Newsagents Association, or ALNA, to participate in the campaign. ALNA does not represent the voice of Australian newsagents and has a minority of fewer than 750 paid members of the approximate 2,000 newsagents Australia-wide.
Our members were not consulted on the impact this would have on their business. The consequences would result in a monopoly who currently competes with its franchisees via its online websites. As Tatts' product sales are growing towards 20 per cent of all lottery sales, at the expense of instore lottery sales, they do not share any online commission with newsagents. Yet the proposed arrangement by Lottoland provides newsagents with a 12 per cent commission on all sales. This is valuable extra income which contributes to the sustainability of our industry.
We see overseas lottery organisations opening a new market to draw business into newsagents, with new customers entering our shops. Their customer base does not cannibalise domestic lottery markets and, in fact, is a complementary service that allows new revenue streams to be opened. A ban on overseas lottery betting will limit competition and economic growth, with serious ramifications for the long-term sustainability of our struggling industry.
That summarises my position quite well: we should not be closing down businesses, we should be encouraging them. This is a new area of activity, and this bill is a shameful protectionist measure to lock out a new and innovative business. I condemn this bill.
There is a saying that Australians would bet on two flies crawling up the kitchen wall. A cursory glance at websites such as Sportsbet and bet365 would suggest that there is very much truth in that statement. You can bet on everything from who will win the Miles Franklin Award to the outcome of Australian Ninja Warrior. You can even bet on the by-elections, particularly the Mayo by-election—in which case, if I were anyone in this room, I would be supporting Rebekha Sharkie.
Yes, possibly insider trading too! Australians are, sadly, spoiled for choice when it comes to gambling, but society will not mourn the loss of synthetic lotteries such as Lottoland. For those who are not aware, Lottoland is not a lottery; it is a glorified bookmaker that bets on lottery outcomes. Lottoland is registered in Gibraltar and pays no income tax on the money it earns overseas. It also avoids paying any local taxes—like those Tatts pays, for instance. The Interactive Gambling Amendment Bill 2016 made it illegal for overseas gambling companies to offer gambling products in Australia unless they held a licence from a state or territory. Lottoland secured its licence through the Northern Territory, allowing it to reach most Australians. Thankfully, synthetic lotteries have been banned in my home state of South Australia, so it gives me great pleasure to support this bill, which will see that ban extended across the nation.
However, I am disappointed to see that the government has failed to implement the national consumer protection framework for online wagering. The framework was a recommendation of the 2016 O'Farrell review. In its response to the review, the government agreed that it would work with the states and territories to establish minimum standards for consumer protection, such as a national self-exclusion register for online wagering and enhanced staff training for gaming operators. But here we are two years later and no further along. The aim had been to release the framework for national consumer protection at the end of last year, with a staged rollout to follow over the coming year. Why has this momentum stalled? Where is the final framework? We would encourage the government to continue its recent work to try to minimise the impact from interactive gambling and advertising, and progress this framework before we lose more time and more people to the harm caused by gambling.