Ladbrokes Digital Australia Pty Ltd v Liquor & Gaming NSW

1. [1]

   SIMPSON AJA: These proceedings come to the Court by way of case stated by a judge of the District Court pursuant to s 5B of the Criminal Appeal Act 1912 (NSW), following conviction of the appellant (Ladbrokes Digital Australia Pty Ltd) in the Local Court on 10 charges brought under cl 12(1)(h) of the Betting and Racing Regulation 2012 (NSW) (“the Regulation”). The convictions were upheld on appeal to the District Court. At the relevant time, cl 12(1)(h) of the Regulation prohibited “a licensed wagering operator” (and specified others) publishing any “gambling advertising”:

2. [2]

   At the request of the appellant, his Honour Judge Blackmore SC DCJ, submitted three questions of law for determination. They are set out below.

3. [3]

   The questions of law concern the meaning to be ascribed to the apparently innocuous and uncontentious collocation of words “offers an inducement” as it appears in cl 12(1)(h). Apparently innocuous and uncontentious though the collocation of words may be, the answers to the questions of law raised are anything but easy. There is much to be said on each side of the debate; the arguments are finely balanced.

4. [4]

   The District Court has “a criminal and special jurisdiction” to entertain certain appeals against criminal convictions in the Local Court: Crimes (Appeal and Review) Act 2001 (NSW), ss 11 and 18. By s 5B(1) of the Criminal Appeal Act, a judge of the District Court may submit any question of law arising for determination on any such appeal to this Court, which may make any order or give any direction to the District Court as it thinks fit.

5. [5]

   By subs (2) that jurisdiction extends to appeals that have been disposed of, provided that the question of law is submitted no later than 28 days from the end of the District Court proceedings, or in such longer period as this Court may allow.

6. [6]

   By s 5B(3) of the Criminal Appeal Act, in connection with the determination of a question of law submitted in proceedings which have been disposed of, this Court may quash any acquittal, conviction or sentence of the District Court following appeal to that court.

7. [7]

   The questions of law involved were not submitted within the prescribed period. The appellant therefore seeks an extension of time. An adequate explanation has been given for the failure to submit the question within the statutory period, and, there being no opposition from the respondent, it is appropriate to extend the time. In this respect, apart from the satisfactory explanation for the delay, it is relevant that it is in the interests of both parties that the questions be resolved as they have ongoing significance.

8. [8]

   Blackmore SC DCJ, as he was required to do, set out the relevant facts. They are stated as follows:

FACTS

1. [9]

   The three questions of law submitted by Blackmore SC DCJ for the determination of this Court are formulated as follows:

2. [10]

   The answer to each question depends upon what is encompassed in the collocation of words “offers any inducement”. The appellant urges that questions 1 and 2 be answered “No”, and, if it is considered necessary to answer question 3, that question also be answered “No”. The respondent urges that each question be answered “Yes”.

3. [11]

   The respondent contends:

4. [12]

   The appellant’s contention (as I understand it) is, simply, that an inducement must be something extraneous to the product ordinarily made available, offered in exchange for participating or participating frequently in gambling activity and that, in each case, what was offered was part of the product, and not something additional to it, such as to amount to an inducement. The “product” was the opportunity to place bets (at odds specified by the appellant) with the chance of winning.

5. [13]

   It is important to note that, although in ordinary language the use (and the very purpose) of advertising might be seen as directed to inducing recipients of the advertising to take up the product offered, that does not assist in the construction of cl 12(1)(h). That is because, as will be seen in the survey of the relevant legislation that follows, there is no general prohibition on the advertising of gambling products by licensed wagering operators. Accordingly, it would be too simplistic to conclude that the advertisements constituted an inducement to participate, or participate frequently, in any gambling activity and therefore came within the prohibition imposed by cl 12(1)(h).

6. [14]

   It is time to turn to the relevant legislation, which is not without complexity. The complexity is probably due to the conflicting governmental imperatives or interests that underlie the legislation: on the one hand, protection of vulnerable gamblers/citizens from succumbing to the lure of illusory or hard to obtain riches and the recognition of harm that can eventuate from uncontrolled gambling; on the other hand, the lure of the revenue to be gained from imposts on gambling enterprises. This is no mere speculation: the conflict is spelled out in s 3 of the Betting and Racing Act 1998 (NSW), to which I will shortly turn to.

7. [15]

   Another layer of complexity is added by reason of periodic amendments to the legislation, some of those amendments having come about by reason of the decision of the High Court in Betfair Pty Limited v State of Western Australia (2008) 234 CLR 418; [2008] HCA 11. It is unnecessary, for the purposes of these proceedings, to explore the ramifications of that decision.

8. [16]

   It may also be observed that, within a week of the hearing of these proceedings, the legislation underwent further amendment. I will refer to the relevant legislation, and maintain the present tense.

The relevant legislation

1. [17]

   The relevant terms of cl 12(1)(h) are:

2. [18]

   “Gambling advertising” is defined in cl 11 as:

3. [19]

   The Regulation contains no definition of “inducement” or “offers an inducement”. Nor do the Regulation or the Act define “gambling activity”.

4. [20]

   Apart from cl 12(1)(h) of the Regulation, the relevant legislation is the Betting and Racing Act 1998 (“the Act”) (formerly known as the Racing Administration Act 1998 (NSW)). Section 3 of the Act states its objects as:

5. [21]

   Part 4 of the Act is concerned with “Betting Information and Advertising”. In s 27 thereof relevant terms are defined. “Betting information” is defined to include:

6. [22]

   Section 29(1) prohibits the publication, by “a person”, of “any betting information”. However, subs (2) expressly excludes from the operation of subs (1) the prohibition of, relevantly:

7. [23]

   Section 30 deals with “Advertising betting information and betting services”. Subsection (1) prohibits the publication, by “a person” of advertisements:

8. [24]

   Subsection (2A) provides:

9. [25]

   Section 37 provides, in general and familiar terms, for the making of regulations not inconsistent with the Act, and, in subs (4), expressly permits the making of regulations making provision for or with respect to (inter alia):

10. [26]

    The Regulation was made in 2004 and relevantly amended in 2015. Clause 11 of the relevant version of the Regulation defines “gambling advertising” (for the purposes of Part 2, Division 2 of the Regulation in which cl 12 appears) as:

11. [27]

    It will be observed that ss 29(2) and 30(2) exempt “licensed betting service providers” from the prohibitions contained in subs (1) of each provision. That term is not otherwise defined in the Act. In s 4(1), “betting service” is defined as:

12. [28]

    It will be recalled that the prohibition imposed by cl 12(1)(h) is directed to “licensed wagering operator[s]”, and that the appellant was found by the primary judge to have been a licensed wagering operator, licensed under Norfolk Island legislation. Nowhere in the Act or the Regulation are “wagering operator” or “licensed wagering operator” defined. It was, however, common ground that, for the purposes of ss 29 30, the appellant was a licensed betting service provider, and entitled to the exemptions provided in those sections.

13. [29]

    It was contended on behalf of the appellant, and not contested by the respondent, that a definition of “licensed wagering operator” that appeared in s 27 of the Racing Administration Act until its removal in 2014 (Racing Administration Amendment (Sports Betting National Operational Model) Act 2014 (NSW)) was applicable. “Licensed wagering operator” was there defined as:

14. [30]

    Despite the varying language of the legislation, it was not in issue that the appellant was a “licensed wagering operator” for the purpose of cl 12(1)(h) of the Regulation, entitled to the exemptions provided to “licensed betting service providers” by subss 29(2) and 30(2), but otherwise subject to the prohibitions contained in cl 12(1). The terms “licensed wagering operator” and “licensed betting service provider” appear to have been used interchangeably.

The submissions of the parties

1. [31]

   As indicated above, the central tenet of the appellant’s argument was that to “offer an inducement” to participate, or to participate frequently, in any gambling activity involves the offer of something additional and extraneous to the gambling product the subject of the advertising. The appellant put its submissions this way:

2. [32]

   The appellant sought to support its argument in a number of ways. First, it relied on the text of cl 12(1)(h). In the absence of any statutory definition, the appellant began by referring to the Macquarie Dictionary definition of “inducement”. That Dictionary contains a number of definitions, of which those relied on by the appellant are:

3. [33]

   The verb “induce” is relevantly defined as:

4. [34]

   The appellant drew a distinction between “offer[ing] an inducement” and “in induc[ing]”. To construe “offers an inducement” as the equivalent of “induces”, it submitted, would give the words “offers an” no work to do. As an accepted principle of statutory construction, legislative provisions should be construed, so far as possible, to give every word work to do: Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355; [1998] HCA 28. Moreover, such a construction would effectively prohibit gambling advertising – something that, as can be seen from ss 29(2) and 30(2), the legislation does not do.

5. [35]

   The appellant then turned to what it called “context”. It again invoked ss 29 and 30 of the Act, for the proposition that a licensed wagering operator is not prohibited from advertising its products. (As the respondent pointed out, this is no more than a restatement, in different terms, of the preceding proposition).

6. [36]

   Finally, the appellant pointed to some legislative history. Immediately prior to its insertion in the Regulation in 2015 (Racing Administration Amendment Regulation 2015 (NSW)) the prohibition in cl 12(1)(h) was on any gambling advertising:

7. [37]

   The appellant acknowledged that the new form of wording is not limited to the offer of “any credit, voucher or reward” but stopped short of accepting that the effect of the amendment was expansionary. It pointed to the Explanatory Notes provided when the amendment was introduced, which stated that the purpose of the amendment was:

8. [38]

   In this context, the appellant sought to draw comfort from the provisions of cl 13 of the Regulation, which provides:

9. [39]

   This, the appellant contended, gave support for its proposition that an inducement must be something extraneous or additional to a betting transaction.

10. [40]

    The respondent also referred to the Macquarie Dictionary definition, but argued that the second meaning is “the more apposite” – that is, an inducement is “something that induces or persuades, an incentive”. It argued that “the Odds Boost Products are each an inducement” on that definition. The Odds Boost features, the respondent contended, provide an incentive to place a bet at least once a day, or on a particular event.

11. [41]

    The respondent referred to the decision of the Full Court of the Federal Court of Australia in The Heating Centre Pty Ltd v Trade Practices Commission (1986) 9 FCR 153; [1986] FCA 72. There, the meaning of “inducement” arose in the context of the Trade Practices Act 1974 (Cth), which (apparently - in this respect the judgment is a little obscure) prohibited, inter alia, a supplier of goods inducing or attempting to induce another person selling the goods at a price lower than that specified by the supplier. A supplier of goods had suggested that, if a retailer did not sell the goods at the price it recommended, the supplier might cut off the supply of goods to the retailer. A judge of the Federal Court of Australia found that that suggestion amounted to an inducement within the meaning of the relevant legislation. That decision was upheld by the Full Court. At 164 of the Report, Pincus J considered the meaning of “inducement” and said:

12. [42]

    His Honour went on to find that it appeared that there was, in fact, an inducement by way of a threat to discontinue supplies.

13. [43]

    It appears that the respondent relied upon this passage in support of a proposition that “some proffered advantage or disadvantage” would suffice to constitute an inducement and that the Odds Boost features were such an inducement.

14. [44]

    The respondent went on to submit:

15. [45]

    The respondent then argued that:

16. [46]

    The respondent then put a somewhat elusive argument, which I quote:

17. [47]

    The respondent disputed the appellant’s contention that a construction of “offers an inducement” that does not incorporate some advantage or benefit extraneous to the product advertised would give the words “offers an” no work to do. It contended that:

18. [48]

    The respondent also disputed the appellant’s contention that to construe cl 12(1)(h) as prohibiting advertising of its Odds Boost Products would amount to a complete ban on advertising gambling products. It submitted:

19. [49]

    The respondent, like the appellant, referred to the objects of the legislation, as stated in s 3 of the Act, contending that the construction favoured by the appellant would defeat the object of minimising the social harm caused by gambling. It gave as examples: …innumerable variations on “fifth bet for free”, changing [sic - charging] only 50 cents in the dollar for the first $10 dollars of bets each day … as conduct that would be permitted on the appellant’s construction. The respondent characterised the appellant’s fundamental argument, that an “inducement” must be something extraneous to the gambling product, as creating “an artificial distinction” that fails to advance the object of the prohibition.

20. [50]

    The respondent took issue with the appellant’s reliance on cl 13 of the Regulation. It pointed out that cl 13 applies to non-proprietary associations and licensed bookmakers, but not to licensed betting service providers or wagering operators and it does not apply to gambling advertising.

21. [51]

    The respondent described the appellant’s reliance on ss 29 and 30 of the Act as “misplaced”. (The appellant had relied on each of these provisions as an “important consideration of context”, indicating that cl 12(1)(h) does not operate as a prohibition against advertising gambling activities by licensed wagering operators). The respondent pointed out that s 29 is concerned with the publication of “betting information” (as defined) which does not include advertising.

22. [52]

    Finally, the respondent answered the appellant’s contention concerning the legislative history of cl 12(1)(h) by arguing that the purpose of the amendment was to expand the activities covered by the prohibition.

Resolution

1. [53]

   As I have indicated above, the resolution of these matters is not simple, and the competing arguments on each side have force. There were, however, some distractions in the arguments advanced.

2. [54]

   For example, a side issue developed concerning the relevance of ss 29 and 30 of the Act. The appellant’s reliance on those provisions as “important considerations of context” was directed to the proposition that cl 12(1)(h) could not be construed as prohibiting any gambling advertised by licensed wagering operators or licensed betting service providers. The respondent (correctly) pointed out that s 29 has no direct application, since it is concerned with the publication of betting information as defined in s 27, and it was not contended that the advertisements in question fall within that definition. The issue was a distraction because the proposition for which the appellant invoked ss 29 and 30 – that cl 12(1)(h) does not operate to prohibit any gambling advertising by licensed betting service providers or licensed wagering operators - was uncontested and was, indeed, common ground.

3. [55]

   Resolution of the issues depends upon two things: identification of the essential facts, and the meaning to be ascribed to the words “offers an inducement”.

4. [56]

   The essential facts, drawn from the stated case, as found by Blackmore SC DCJ are:

5. [57]

   The proper characterisation of the account is that it represents a contract, agreement or arrangement between the appellant and the customer. The terms of the contract, agreement or arrangement include the availability of the Odds Boost features.

6. [58]

   Although there is no definition of “gambling activity”, the product offered by the appellant to existing and potential customers was the opportunity to place bets in accordance with the contract, agreement or arrangement. The product was the opportunity to participate in gambling activity. Incorporated in that product was an opportunity to place bets at more favourable odds than would otherwise be available, but only on a limited number of occasions. That feature was a component of the product offered; it was not separate and distinct from the product offered.

7. [59]

   There was an internal contradiction in the respondent’s argument. On the one hand, it referred to “the Odds Boost Products”; on the other (for example, at [36] of its written submissions, extracted above at [45]) it contended that they were not “stand alone gambling products” and that it was doubtful that they were a gambling activity.

8. [60]

   Either way, the argument fails. Either “the Odds Boost Products” were themselves a gambling activity, (and permitted to be advertised), or they were not. If they were not, they were an integral part of the gambling activity offered by the appellants. They could not be used except in association with the gambling activity offered. The respondent was correct to contend that they were not “stand alone gambling products”; but the question then arises: what were they? The answer is that they were part of the gambling activity legitimately advertised. It is of some importance, in this debate, that the finding of fact made by the primary judge was that they were “features”. I take that to mean that Odds Boost and Odds Boost Extra Racing were offered as characteristics of the gambling activities.

9. [61]

   The respondent further placed reliance on the fact (as found by the primary judge) that a customer is required to have a betting account before being able to take advantage of the Odds Boost products. That is true, but it is irrelevant. As indicated in the stated case, a customer is required to have an account before participating in the gambling activity offered by the appellant; the requirement that a customer have an account is immaterial to whether or not the advertisements offered an inducement to participate (or participate frequently) in any gambling activity.

10. [62]

    The fallacy in the respondent’s argument is exposed most clearly at [34] and [35] of its submissions (extracted at [44] above). The respondent there submitted that:

11. [63]

    The product offered was a gambling activity which the appellant was entitled to advertise. Its “nature and characteristics” included the Odds Boost features; in order to avail himself or herself of the product offered, the recipient of the advertising necessarily must participate (even if not frequently) in a gambling activity. But the same can be said of any gambling activity; no person can obtain the benefit of a gambling activity product other than by participating in that gambling activity. If the respondent’s argument were correct, every advertisement of a gambling activity would be an inducement to participate in a gambling activity (and prohibited by cl 12(1)(h)). It was not the respondent’s contention that that was the case.

12. [64]

    Advertising is, by its very nature, intended to “induce’ its recipients to purchase or consume the product advertised. That is, the advertising is designed to persuade or influence its recipients to purchase or consume the product advertised. Ordinarily, or at least frequently, the inducement is the nature and quality of the product itself (or, to adopt the respondent’s language, “the nature and characteristics” of the product). But it is not uncommon for an additional inducement to be offered: tickets to a sporting or cultural event, a bonus coffee cup, the opportunity to be placed in a draw for glittering prizes, or the once ubiquitous set of steak knives. It is this latter kind of inducement that is prohibited by cl 12(1)(h).

13. [65]

    If the inducement were the product itself – in this case the opportunity to participate in gambling activity offered by the appellant – advertising any form of gambling activity would be caught by the prohibition. And it was common ground that cl 12(1)(h) does not do that.

14. [66]

    The appellant is correct in its contention that, to constitute “an inducement” within the meaning of cl 12(1)(h), what is offered must be something over and above, and separate from, the product advertised. The Odds Boost features were not over and above, and separate from, the product the appellant offered; they were an integral part of it. While they may have (in ordinary language) persuaded or attracted recipients or customers to participate in the gambling activity offered by the appellant, they did so because the nature and quality of the product was presented as attractive to those recipients who responded.

15. [67]

    Once it is accepted that the Odds Boost features are part of the product offered by the appellant (and advertised) it is apparent that there is no inducement, additional to the product itself, offered. It was the product itself, which was presented sufficiently attractively to recipients or customers that induced participation in gambling activity. Advertising that product was not prohibited. Offering a set of steak knives by way of incentive to participate may well have been prohibited.

16. [68]

    If cl 12(1)(h) were to be construed to exclude advertising of an integral feature of the product being advertised, it is difficult to see how any advertisement of a gambling product would not also offer an inducement to gamble. To prohibit advertising of a feature of a product which is permitted to be advertised would cut across the permission given to licensed wagering operators by s 30(2) of the Act to advertise their products. For that reason, some departure is warranted (and necessary) from what might be seen as the ordinary and natural meaning of “offers any inducement”. The inducement must be additional to the product being offered and advertised.

17. [69]

    Accordingly, I would answer each question as proposed by the appellant.

18. [70]

    The consequence is that the convictions must be quashed.

19. [71]

    The orders I propose are:

20. [72]

    WILSON J: I agree with Simpson AJA.

21. [73]

    LONERGAN J: I agree with Simpson AJA.