Lottoland Australia Pty Ltd v Australian Communications and Media Authority

On 31 January 2019, the Defendant (the Australian Communications and Media Authority)(ACMA) wrote to the Plaintiff (Lottoland Australia Pty Ltd)(Lottoland) informing them that they were investigating whether the Plaintiff was, by offering particular gambling products, contravening Part 2 of the Interactive Gambling Act 2001 (Cth) (IGA). On 27 May 2019, the Defendant wrote to the Plaintiff communicating its ultimate findings to the effect that many of the Plaintiff’s gambling products contravene Part 2 of the IGA.

By summons filed 6 June 2019, the Plaintiff sought:

The Impugned Products are the gambling products offered by Lottoland through its website; “Mon & Wed Jackpot”, “Tue Jackpot”, “Thu Jackpot”, “US Millions” and “US Power” (together the Impugned Products).

On 7 June 2019, I fixed the matter for expedited hearing. The matter was heard over one day on 26 July 2019.

The Lottoland Group is an online lottery betting company. The Plaintiff is a subsidiary of Lottoland Holdings Ltd, a company registered in Gibraltar.

The Plaintiff was incorporated on 29 October 2014 and commenced trading in Australia in January 2016. The Plaintiff holds a sports bookmaker licence issued by the Northern Territory of Australia under the Racing and Betting Act 1983 (NT). Under the terms of the licence, betting services can only be provided if they relate to “bets on approved sporting events”, this includes “other declared betting events”. The Northern Territory government publishes a list of approved sporting events on their website.

When the Plaintiff commenced operations in Australia it offered a number of products which allowed consumers to bet on the outcome of lotteries. The Interactive Gambling Amendment (Lottery Betting) Act 2018 (Cth) came into effect on 9 January 2019 and prohibited “lottery betting services”. In response to the legislative change, Lottoland launched a different range of betting products in late 2018, early 2019. Approval for these new products was obtained from the Northern Territory Government (Northern Territory Racing Commission) (NTRC).

ACMA is a statutory body empowered under the IGA to investigate complaints, write investigation reports, and undertake enforcement and compliance monitoring activities.

There was little to no factual dispute about how the Impugned Products operated and no controversy in the evidence. One witness from the Plaintiff and one witness from the Defendant each gave evidence on the operation of the Impugned Products. Neither witness was cross-examined.

I note that the use of the word ‘bet’ or ‘game’ or ‘win’ is not intended to be a conclusion as to the particular questions of fact in issue here. Rather, the terms are used as a matter of convenience.

There are five particular Impugned Products that are the subject of these proceedings:

Lottoland offers one other product called the “Daily Millions’. ACMA did not declare that this product breached the prohibition against interactive gambling, and thus the product was not the subject of the litigation.

Prior to placing any ‘bet’ on a product, a customer must create an account with Lottoland. A customer cannot create an account until they have accepted the terms and conditions.

In each of the products offered by Lottoland, the payout amount is fixed, independent of how many customers participate. Generally speaking, customers will ‘win’ when their chosen number (their ‘Customer Number’) matches designated parts of specified financial indices at the appointed time (the ‘Winning Result ID’).

Lottoland obtains insurance policies that will respond to larger jackpot wins.

As part of the Homepage on the Lottoland Website, is a tab and link to the page “What is Jackpot Betting?”. At the time of ACMA’s investigation, by clicking on the link, a customer was taken to a page which included the following information:

At the time of hearing, by clicking on the link, a customer is taken to a page which includes the following information:

These words were changed at some point between June and late July 2019.

Entries for the Mon & Wed Jackpot close every Monday and Wednesday at 11pm.

Customers place ‘bets’ on opening value of designated financial indices as recorded at 9:30am Eastern Time each Monday and Wednesday morning. A customer is paid the jackpot if their ‘Customer Number’, ‘matches’ the ‘Winning Result ID’. The Winning Result ID is determined as follows:

A ‘division’ prize is won when there is a partial match between a participant’s chosen Customer Number and the Customer Number associated with the Winning Result ID.

The customer places a ‘bet’ by choosing a ‘Customer Number’, a string of six numbers. A customer is shown a box or a ‘bet slip’ of numbers 1 to 45. A customer can choose which number each of the six places in the ‘Customer Number’ should be. Alternatively, by selecting the ‘Quicky’ option a randomly generated sequence of six numbers is selected for them.

Each ‘bet slip’ and each ‘customer number’ represents a wager of $1.00. By selecting “Double Jackpot”, this can be doubled to $2.00. A customer can make multiple entries by choosing different customer numbers.

There is also the option for a customer, to use the “Number Shield” tool. This enables a customer (for a fee) to guarantee the entire Jackpot, regardless of the number of customer(s) who also choose the winning Customer Number.

In the Mon & Wed Jackpot, the opening values of the designated financial indices are transposed into the ten-digit Winning Result ID. The numbers are determined by the opening values of particular financial market indices. Because the Result ID is made of 10 numbers, there are 10 billion possible combinations. The Customer Number is made up of six numbers and there are 8 million possible combinations. Every possible Result ID is linked with a single Customer Number, and every Customer Number is linked to 1227-1228 Result IDs. The link between the Customer Numbers and Result IDs is fixed and unchanging. The correlations are fixed, in the sense that a given Customer Number will always link with the same set of Result IDs; and a given Result ID will always link with the same Customer Number.

Essentially, the possible combinations of Result IDs are listed in ascending numerical order, and a Customer Number (also listed in ascending numerical order) is assigned to each Result ID. When the combination of Customer Numbers is exhausted the list of Customer Numbers commences again. This process was referred to as ‘mapping’ by the parties.

These correlations are ascertainable using the “Result Generator” tool on the Lottoland website.

The jackpot is paid if the Winning Result ID matches one of the correlating 1226 or 1227 Customer Numbers chosen by a particular customer. That is, the Customer Number chosen by an individual does not correspond directly to the parts of the opening values of the financial market indices. If two or more customers choose the winning Customer Number, they will share the Jackpot unless the “Number Shield” tool is used.

Division payouts are given in the Tue & Wed Jackpot for ‘partial matches’. For the purpose of determining partial matches two ‘bonus’ numbers are added to a Customer Number. The addition of the bonus numbers in effect extends a Customer Number from 6 to 8 numbers, and thus increases the odds of a partial match. The Results ID has a corresponding set of 8 numbers of which 6 correspond to the Customer Number and the 2 additional “Bonus” numbers exist only for the purpose of settling the lesser payout tiers. The relationship between the Winning Result ID and the Bonus Numbers is also fixed and ascertainable using the Result Generator tool.

Payouts are settled automatically by a computer program described as a “settling engine”. For larger payouts and jackpot payouts, the entry will be reviewed manually before payment into an account.

Initially, there was no direction to the Result Generator tool when the Customer was using the product. Now, when the customer is choosing numbers on the bet slip, there is text at the bottom of the page noting; “To use our Result Generator tool, navigate to Mon & Tue Jackpot Results tab above and click on “see details on how the results are generated””.

The Tue Jackpot operates in substantially the same way as the Mon & Wed Jackpot, however there are several small differences between the products.

Entries for the Tue Jackpot close on Tuesday night. The Customer Number in the Tue Jackpot is comprised of seven numbers. The standard ‘bet’ is $2, but a customer can place a “Double Jackpot” of $4. Customers can make as many entries as they want.

A customer is paid the jackpot if their ‘Customer Number’, ‘matches’ the ‘Winning Result ID’. The Winning Result ID is determined by the opening values of the various financial indices. There are approximately 45 million different combinations of Customer Numbers. Therefore, each Customer Number is linked with 220 or 221 different Result IDs. The ‘mapping’ process operates in the same way as the Mon & Wed Jackpot. The link between the Customer Numbers and the Result IDs is fixed and unchanging.

‘Division’ payouts are also made for partial matches.

Initially, there was no direction to the Result Generator tool when the Customer was making an entry. Now, as in the Mon & Wed Jackpot, there is information directing a customer to the Result Generator tool.

The Thu Jackpot operates in substantially the same way as the Mon & Wed Jackpot, however there are several small differences between the products.

Bets for the Thu Jackpot close on Tuesday night. The Customer Number in the Thu Jackpot is comprised of seven numbers between 1 and 20. The standard ‘bet’ is $3, but a customer can place a “Double Jackpot” of $6. Customers can make as many entries as they want.

A customer is paid the jackpot if their ‘Customer Number’, ‘matches’ the ‘Winning Result ID’. The Winning Result ID is determined by the opening values of the various financial indices. There are approximately 135 million different combinations of Customer Numbers. Therefore, each Customer Number is linked with 74 or 75 different Result IDs. The ‘mapping’ process operates in the same way as the Mon & Wed Jackpot. The link between the Customer Numbers and the Result IDs is fixed and unchanging.

‘Division’ payouts are also made for partial matches.

Currently, there is no direction to the Result Generator tool when the customer is using the product. However, according to the Affidavit of Oliver Scott, dated 23 July 2019, Lottoland is in the process of including directions to the Result Generator tool, similar to the other products.

The US Power operates in substantially the same way as the Mon & Wed Jackpot, however there are several small differences between the products.

Entries for the US Power close every Tuesday and Thursday night. The Customer Number in the US Power is comprised of five numbers between 1 and 69, as well as a ‘super number’ between 1 and 26. The standard ‘bet’ is $5, and there is no “Double Jackpot” option. Customers can make as many entries as they want.

A customer is paid the jackpot if their “Customer Number”, ‘matches’ the ‘Winning Result ID’. The Winning Result ID is determined by the opening values of the various financial indices. There are approximately 292 million different combinations of Customer Numbers. Therefore, each Customer Number is linked with 34 or 35 different Result IDs. The ‘mapping’ process operates in the same way as the Mon & Wed Jackpot. The link between the Customer Numbers and the Result IDs is fixed and unchanging.

‘Division’ payouts are also made for partial matches.

Initially, there was no direction to the Result Generator tool when the customer was making a bet. Now, as in the Mon & Wed Jackpot, there is information directing a customer to the Result Generator tool.

The US Millions operates in substantially the same way as the Mon & Wed Jackpot, however there are several small differences between the products.

Entries for the US Millions close every Wednesday and Friday night. The Customer Number in the US Millions is comprised of five numbers between 1 and 70, as well as a ‘super number’ between 1 and 25.

A customer is paid the jackpot if their “Customer Number”, ‘matches’ the ‘Winning Result ID’. The Winning Result ID is determined by the opening values of the various financial indices. There are approximately 302 million different combinations of Customer Numbers. Therefore each Customer Number is linked with 33 or 34 different Result IDs. The ‘mapping’ process operates in the same way as the Mon & Wed Jackpot. The link between the Customer Numbers and the Result IDs is fixed and unchanging.

Initially, there was no direction to the Result Generator tool when the customer was using the product. Now, as in the Mon & Wed Jackpot, there is information directing a customer to the Result Generator tool.

The Daily Millions was not one of the Impugned Products and thus not the subject of the litigation, however it is appropriate to briefly set out the product here.

Again, the Daily Millions allows customers to place bets on the value of various pre-defined stock market indices at a set point in time. Entries close for the Daily Millions Jackpot every weekday evening at 11 pm.

Again customers place a ‘bet’ by choosing their Customer Number. Each Customer Number represents a separate bid of $2.50, this can be doubled by selecting the “Double Jackpot” option. There is no limit to the number of entries a customer can make.

A jackpot is paid if a customer’s Customer Number exactly matches a set of 8 numbers determined from the financial indices. That is, there is no ‘mapping’ process.

Division payouts are made if there is a partial match between a Customer Number and the numbers of the various financial indices.

In 1999, the Productivity Commission released its Australian’s Gambling Industries Report (Report), which provided a detailed overview on the social and economic impact of the gambling industries in Australia. In particular the Report highlighted the impact of the internet on the way that Australian’s gamble and raised concerns about the increasingly easy access to internet gambling (Volume 1; 50-51):

Further (Volume 2; 18-11-12):

The Report also considered the possibility of regulating such online gambling (Volume 2; 18-54):

In response, and as a precursor to the eventual IGA, the Interactive Gambling (Moratorium) Act 2000 (Cth) (Moratorium Act) prohibited the launch of new interactive gambling services for one year from 19 May 2001.

The Explanatory Memorandum to the Moratorium Act (EM Moratorium), begins (at pg 1-2):

The EM Moratorium, then goes on to address the issue of interactive gambling in Australia (pg 3):

And further notes on the definition of ‘interactive gambling service’ (at pg 18-19):

The EM Moratorium then makes clear that certain products are not prohibited interactive gambling services, specifically telephone betting services and services which relate to entering into contracts that are, under Corporations Law, exempt from a law relating to gaming or wagering (at pg 22).

There were subsequent amendments to the Moratorium Act. The Revised Explanatory Memorandum to the Moratorium Act (REM Moratorium), outlines some of these changes, in particular comments on the expanded definition of excluded services (at pg 22):

Following, there were additional changes and a Supplementary Explanatory Memorandum to the Moratorium Act (SEM Moratorium) which further specified that certain ‘ball-by-ball’ betting services where not excluded from the moratorium (pg 4-5).

Ultimately, the Moratorium Act defined interactive gambling services and the relevant exclusions as follows:

In 2001, the Commonwealth Government introduced the IGA.

Explanatory Memorandum to the IGA (EM) emphasises that the Government is ‘concerned that new interactive technology, such as the Internet and datacasting has the potential to greatly increase the accessibility to gambling and exacerbate problem gambling among Australians’. There are several key sections of the document set out below. With regards to the definition of ‘gambling service’, the EM notes (at pg 26-27):

Section 8A was not initially included in the first draft of the IGA. However under clause 10, the Minister was able to determine that each service in a specified class of services is an exempt service for the purposes of the Bill (EM pg 36). After the Bill had been read, there were a number of proposed amendments.

A consequential Supplementary Explanatory Memorandum (SEM) was read into Parliament. Section 8A was added to the new Bill providing that certain services or products would be ‘excluded’ from the prohibition. The SEM outlined the proposed Government amendments to the first version of the Bill (pg 1-2):

Of the new clause 8A and the definition of ‘excluded wagering service’ the SEM noted (pg 10-12):

The Second Reading Speech on the amended Interactive Gambling Bill 2001 given 28 June 2001 noted (pg 25334):

The IGA was amended several times over following years. Although not necessary to detail all the amendments in full, it is helpful to outline some of the more substantial changes.

In 2017, the IGA was amended by the Interactive Gambling Amendment Act 2017 (Cth), the amendments were primarily directed at enhancing ACMA’s enforcement of the IGA and introducing a civil penalty regime. The Explanatory Memorandum to that Bill noted (pg 51):

The Second Reading speech noted (pg 3454):

Following this amendments were made to the Bill, primarily exempting ’on-course bookmakers’ from the general prohibition from wagering operators (page 2 of the Supplementary Explanatory Memorandum to the Bill). The Act passed and amended the IGA, clarifying the definition of ‘excluded wagering service’ under s 8A.

In 2018, the IGA was amended by the Interactive Gambling Amendment (Lottery Betting) Act 2018. The Explanatory Memorandum to that Bill, explains that the amendment is intended to prohibit the betting on the outcome, or a contingency that may or may not happen in the course of the conduct, of a lottery (pg 2):

On the amendments to the IGA (pg 4-5):

The Second Reading Speech to the Bill notes (pg 3054):

Subsequently, the IGA was amended, adding ss 8A(5)(c)(iii) and (iiia).

Before addressing some of the operative sections of the legislation, it is important to set out some of the relevant definitions:

Section 15 of the IGA, operates to prohibit interactive gambling services in Australia:

Section 8 describes an Australian-customer link:

Section 5 provides the definition of prohibited interactive gambling services:

As noted above, a ‘gambling service’ is defined in the Dictionary in s 4.

For the purposes of this matter, the dispute concerns whether the Impugned Products are an excluded wagering service under s 8A. If they are an ‘excluded wagering service’ they will not be an interactive gambling service and not be in breach of the prohibition:

Of particular interest in the case is the relevant definition of ‘bet’ and ‘game’. Absent detailed or technical definitions in the Act, it is appropriate, in my view, to read the words in their natural and ordinary meaning within the context of the Act.

It is a common rule of statutory construction that “In determining the meaning of any word or phrase in a statute the first question to ask always is what is the natural or ordinary meaning of that word or phrase in its context in the statute” (Pinner v Everett [1969] 3 All ERD 257 per Lord Reid at 258) (see also Thompson v His Honour Judge Byrne & Ors (1999) 196 CLR 141 at 158 per Gaudron J; Maunsell v Olins [1975] 1 All ER 16 at 18 per Lord Reid; Cody v JH Nelson Proprietary Ltd (1947) 74 CLR 629 at 646-648 per Dixon J).

In such a situation, it is helpful to turn to the Dictionary definitions to ascertain the natural and ordinary meaning. I note briefly, the comments of Mason P in House of Peace Pty Ltd v Bankstown City Council (2000) 48 NSWLR (at [28]):

‘Bet’ is defined in the Macquarie Dictionary as; (1) to pledge as a forfeit to another who makes a similar pledge in return, in support of an opinion; stake; wager; (2) to predict (a certain outcome); (3) to lay a wager. The term is defined in the Oxford English Dictionary as; (1) the backing of an affirmation or forecast by offering to forfeit, in case of an adverse issue, a sum of money or article of value, to one who by accepting, maintains the opposite, and back his or her opinion by a corresponding stipulation; the staking of money or other value on the event of a doubtful issue; a wager; also, the sum of money or article staked; an amount staked on the result of a card-game; (2) to stake or wager (a sum of money, etc.) in support of an affirmation or on the issue of a forecast; to lay wager.

Of particular note, ‘bet’ as defined in the IGA Dictionary includes a ‘wager’. ‘Wager’ is defined in the Macquarie Dictionary as; (1) something staked or hazarded on an uncertain event; a bet; (2) the act of betting; (3) the subject of a bet. ‘Wager’ in the Oxford English Dictionary is; (1) a solemn pledge or undertaking; (2) something (esp. a sum of money) laid down and hazarded on the issue of an uncertain event; a stake; the prize to be won in a contest; (3) an agreement or contract under which each of the parties promises to give money or its equivalent to the other according to the issue of an uncertain event; a betting transaction; (4) to stake or hazard (something of value) on the issue of an uncertain event or on some question to be decided, to bet.

‘Game’ is defined in the Macquarie Dictionary as; (1) an amusement or pastime; (2) the apparatus employed in playing any of certain games; (3) a contest for amusement in the form of a trial of chance, skill, or endurance, according to set rules; a match. It is further defined in the Oxford English Dictionary as; (1) amusement generally; amusement, sport, fun, pleasure, enjoyment; (2) an activity which provides amusement or fun; (3) jest, sport.

Although the primary matter for determination before me concerned the statutory construction of the relevant provisions, I consider some assistance can be gleaned from the older authorities as to the determination of particular definitions in question. Of course the particular sections in question here have not been subject to judicial consideration.

There was significant discussion on the history of the interpretation of ‘bet’, beginning with the traditional understanding that all contracts for bets were to be regarded as null and void; Thacker v Hardy (1878) 4 QBD 685 (at 695):

In Carlill v Carbolic Smoke Ball Company [1892] 2 QB 484, one of the issues in dispute was whether the contract was in fact a ‘bet’ and therefore void. Hawkins J found that the contract was not a ‘wagering’ contract (at 490):

This position has not been without controversy however. The High Court in Automatic Totalisators Ltd v Federal Commissioner of Taxation (1920) 27 CLR 513, did not consider that it was essential that one party must either win or lose (at 518):

Carlill has further had a mixed reception in subsequent English authorities in relation to the meaning of ‘bet’; see e.g.; Earl of Ellesmere v Wallace [1929] 2 Ch 1 at 25-26 per Lord Hanworth HR; at 36 per Lawrence J and 49 per Russell LJ; Tote Investors Ltd v Smoker [1968] 1 QB 509 at 516 per Denning MR; at 158 per Wilberforce L.

In the NSW Court of Appeal in Petranker v Brown (1984) 2 NSWLR 177, the judgement exposed divergent understandings of the term ‘bet’. There Samuel JA focused on whether there was one party that won and another that lost (at 181), whereas Priestly JA considered that to ‘profess a view’ was the essential element (at 195).

One particular case which was drawn to my attention was Waterhouse v Racing Appeals Tribunal [2002] NSWSC 1143. In that case, Young CJ in Eq considered the concept of a ‘bet’ and discussed the previous authorities on the matter (at [35]-[37]):

It should be noted however that the decision in Waterhouse was based on a particular set of factual circumstances quite different from the situation currently before me.

In addition there are several English authorities on the definition of ‘game’ that were referred to me by the parties. In Armstrong v DPP [1965] 1 AC 1262, the House of Lords held that a weekly postal bingo was not a ‘game’ because obtaining a set of numbers and then waiting for a result did not involve the degree of participation necessary to characterise the activity as a game. Relevantly Lord Pearson held (at 1283):

However, His Honour did note (at 1284):

In the case of DPP v Regional Pool Promotions [1964] 1 QB 244, the Court held that something more than merely nominal participation was required in order for something to be considered a game. In this case the filling out a membership which entitled the allocation of a series of numbers and entry into a weekly bingo draw, amounted to participation insufficient to characterise the activity as a game (at 253).

In Adcock v Wilson [1967] 2 QB 683, Widgery J made the following observations (at 702-703):

In dismissing an appeal, Lord Morris of Borth-y-Gest in Adcock v Wilson [1969] 2 AC 326, acknowledged (at 335):

More recently in IFX Investment Company Ltd v The Commissioners for Her Majesty’s Revenue and Customs Commissioners [2017] 1 All ER 45; [2016] 1 WLR 3952, the Court reviewed the previous cases and decided that there was no firm rule that there must be interaction between players before there is a game. Arden LJ stated (at [29]-[41]):

Courts can make use of extraneous materials to assist in the construction of a particular provision. Of course it is common now, under s 15AB of the Acts Interpretation Act 1901 (Cth) for recourse to be had to such materials:

However, recourse to such materials can be of limited utility. In Re Bolton; Ex parte Beane (1987) 162 CLR 514, Mason CJ, Wilson and Dawson JJ stated (at 518):

Further as observed by Gray J in Sandoval v Minister for Immigration and Multicultural Affairs (2001) 194 ALR 71; [2001] FCA 1237 (at [45]); “unless an explanatory memorandum gives a clear guide as to the intention behind the drafting of legislation, it is an unsafe guide.”

On second reading speeches in particular, Campbell JA in Amaca Pty Ltd v Novek [2009] NSWCA 50, stated (at [73]-[78]):

It is also relevant to note that s 15 is a penalty provision. The appropriate construction of such ‘penal’ provisions has been considered many times in Australian courts. The High Court in R v Adams (1935) 53 CLR 563 (at 567-8):

Importantly, as noted by Gibbs J in Beckwith v R (1976) 135 CLR 569 (at 576):

More recently McHugh J in Krakouer v R (1998) 194 CLR 202 remarked (at 223):

It is worthwhile briefly setting out some of the matters which are, I think, uncontroversial.

Under the prohibition in s 15, a person will commit an offence if the person intentionally provides a prohibited interactive gambling service and the service has an Australian-customer link.

It is clear that the Impugned Products have an ‘Australian customer-link’ in the sense that customers of Lottoland are present within Australia (s 8).

The meaning of ‘prohibited interactive gambling service’ is found within s 5 of the IGA. The Impugned Products are offered in the course of carrying on a business using an internet carriage service, per s 5(1). The products are further a ‘gambling service’ within the meaning of s 4. The Plaintiff submits the Impugned Products are a ‘gambling service’ under s 4(a), whereas the Defendant (although does not make this point explicitly) presumably argues that the products are a ‘gambling service’ under s 4 (e). Therefore, the Impugned Products will be a prohibited interactive gambling service unless one of the exceptions within s 5(3) applies.

It is also, I think, uncontroversial that the only potential exclusion which may apply to the Impugned Products is contained within s 8A, that is, the products may be an ‘excluded wagering service’. For example, the exclusions related to a ‘telephone betting service’ (in s 8A), an ‘excluded gaming service’ (in s 8B), or ‘excluded lottery service’ (in s 8D), do not apply to the Impugned Products.

It is plainly clear that the Impugned Products do not involve ‘horse, harness, or greyhound races’ (s 8A(1)) or ‘sporting events’ (s 8A(3)).

The Impugned Products are not an ‘in-play betting service’ for the purposes of s 8A(5)(b) as the products do not involve betting on the outcome of, or contingency in the course of a sporting event, where bets are placed after the event has begun (s 10B).

The Impugned Products will not be considered an ‘excluded wagering service’ if they fall within one of the categories in s 8A(5)(c). The Impugned Products are clearly not for the conduct of, or supply of tickets in a scratch lottery or other instant lottery (ss 8A(5)(c)(i) or 8A(5)(c)(ii)). The products are further not a service relating to betting on the outcome of a lottery, or a contingency that may or may not happen in the course of a lottery (ss 8A(5)(c)(iii) or 8A(5)(c)(iiia)). There are no relevant conditions to be determined under ss 8A(6).

The Plaintiff submits that the Impugned Products are not in contravention of the prohibition against interactive gambling services in s 15(2A) because they fall within the definition of ‘excluded wagering services’ found in s 8A (Plf sub [29]).

At the outset, the Plaintiff notes that as the provisions in question are part of a penal provision and should be construed strictly (Plf subs in reply [3]).

The Plaintiff submits that the Impugned products relate to betting on ‘an event, series of events or contingency’ within s 8A(5)(a), in particular the products relate to betting on a ‘series of events’ (Plf subs [33]). The ‘series of events’ is the opening values of the relevant financial indices. Movements in the levels of financial indices are generally acknowledged as ‘events’ (Plf subs [35]).

The Plaintiff submits that the term ‘bet’ in the IGA does not require that a person profess a view, it is merely the ‘hazarding of money upon a contingency’ (T5/29). It is in fact common practice to make random wagers were no particular view is held. (Plf subs in reply [11]). The Plaintiff refers to the ‘mystery trifecta’ that involves betting on horse racing without expressing any view (Plf subs in reply [13]). In particular the Plaintiff notes that the SEM makes it clear that there was no intended limitation on the kinds of outcomes or events which could be made the subject of bets by virtue of s 8A(5)(a) (Plf subs [34]).

The Plaintiff states that the dictionaries provide only “illusory comfort” as to common usage, and do not provide a basis for a conclusion as to the legal meaning of a term (Plf subs in reply [12]).

Further, the structure of s 8A does not suggest that ‘bet’ involves ‘professing a view’. In particular a ‘scratch lottery or other instant lottery’ cannot be said to involve ‘professing a view’, yet the draftsperson clearly contemplated that a ‘service relating to betting’ may encompass a ‘service for a scratch lottery’. This is apparent from text of s 8A(5)(c) which notes “to the extent which the service is not covered by any of the following paragraphs”, all of the subparagraphs are therefore logically matters which, but for the carve out, would be regarded as betting services under s 8A(5)(a) (Plf subs in reply [15]). This is further supported by the term ‘betting’ used in 8AA(1) with respect to a lottery (T5/34).

The Plaintiff points to the somewhat ambiguous definition of ‘bet’ in various English and Australian authorities. The Plaintiff submits that based on the authorities, the court should not consider that to ‘profess a view’ is an essential element of bet (Plf subs in reply [26]).

In any case, if ‘bet’ does require one to form a view, the Plaintiff submits that customers using the Impugned Products do possess such a view. The Plaintiff notes that there is no evidence that customers do not turn their mind to the outcome of the financial indices. Moreover, when using the products the website now does invite customers to consider the financial markets (Plf subs [29]-[33]).

The Plaintiff submits that the Impugned Products cannot be captured under ss 8A(5)(c)(iv) or 8A(5)(c)(v) because the products cannot be characterised as ‘games’ within the meaning of the IGA (Plf subs [42]).

The Plaintiff notes that there is no definition of ‘game’ in the IGA (aside from ‘game including an ‘electronic game’) but notes that the dictionary definitions of the term involve three elements; a contest, players, and rules. The Plaintiff submits that the Impugned Products do not involve any of these elements (Plf subs [43]).

The Plaintiff supports this construction by reference to the EM and SEM, as well as several English cases. The Plaintiff notes that the specific examples of games given in the EM, such as roulette, blackjack, or an interactive television-based quiz game, demonstrate the legislature was not striving towards a catch-all definition of ‘game’ (Plf subs [45]). These examples share certain features regarded as typical in games; there is interaction, the game is dynamic, and the game is run according to set rules or procedures (Plf subs [45]). Further these features have been considered important by various English authorities (Plf subs [46]-[52]).

The Plaintiff further notes that the SEM draws a specific contrast between a ‘game’ and a ‘wager’. The Plaintiff submits that when a customer does not participate in the actual event or contingency, the activity is properly characterised as a bet or wager, rather than a game (Plf subs [55]).

The Plaintiff notes that in the Impugned Products there is no interaction between ‘players’, and there is no communication between different customers. Customers are not able to ascertain any other customers’ selected numbers, nor are any winnings contingent on participation of other customers. There is no participation by ‘players’ in the activity which is the subject of the wager (that is the financial market indices). Further, there are no rules or procedures that govern the outcome of the wager, only the terms and conditions of Lottoland which only relate to the actual placing of the bet (Plf subs [56]). The absence of features common to games in the Impugned Products, such as participation, interaction and rules, supports a finding that the products cannot be characterised as ‘games’ (Plf subs [57]).

In particular, the Plaintiff submits that the process of ‘mapping’ is not rules that govern a game, but is rather a long list of correlations. The correlation between the Result IDs and the Customer Numbers are fixed and ascertainable (Plf subs [59]).

The Plaintiff submits that the background and legislative history of the IGA indicate that the Act was concerned only with prohibiting ‘continuous’ or ‘instant’ betting, and micro-wagering. The legislature made specific ‘carve outs’ of the sort of ‘instant’ gambling that was to be exempt from the exclusion. This background militates against an expansive definition of ‘game’ (Plf subs [63]-[69]). The Plaintiff submits that the Impugned Products do not have these ‘instant’ and ‘continuous’ features, rather bets placed using the products are on events that only happen at most once per day. The products are not, therefore, the type of gambling that the prohibition was intended to cover (Plf subs [70]), and a broad construction of the term ‘game’ would therefore not be consistent with the legislative purpose behind the IGA (Plf subs in reply [37]).

The Plaintiff points to significant differences between the Impugned Products and roulette; namely roulette involves a croupier, a spinning wheel, and significant fanfare (Plf subs in reply [45]).

The Plaintiff submits that the issue is not advanced by analysis of whether the Impugned Products are “games of chance” or “games of mixed chance or skill”. Rather it is the content of the term ‘game’ which is significant (Plf subs in reply [35]).

The Plaintiff further submits, that the broad definition contended for by ACMA, would devoid s 8A(5) of meaning. Under the broad definition, nearly any activity would be capable of being described as ‘game’. Moreover virtually any bet involves some kind of choice and some mechanism for determining a winner, but every bet should not be considered a game. The words of an act must be given some meaning (Plf subs in reply [40]-[42]). Further there is a clear distinction between a ‘game’ (as in s 8A(5)(c)(iv)) and ‘betting on the outcome of a game’ (s 8A(5)(c)(v)). It follows that the legislature did not conceive that a bet on the outcome of a game was, in and of itself, a game (Plf subs in reply [46]). This is fatal to ACMA’s definition of ‘game’ as betting on the outcome of game is undoubtedly a pastime with rules and a winner (Plf subs in reply [48]).

ACMA submits that the Impugned Products are in breach of the prohibition against interactive gambling in s 15 of the IGA. ACMA contends that the Impugned Products are not ‘excluded wagering services’ under s 8A as the products are not services that relate to ‘betting on an event’ for the purposes of s 8A(5)(a). Further the Impugned Products are services that fall within s 8A(5)(c)(iv) or 8A(5)(c)(v) (Def subs [9]).

The Defendant contends that ‘betting on an event’ and ‘betting on a series of events’ refers to a situation where a person can be said to have professed a view as to the outcome of an event or events, and where the person stakes money on that view (Def subs [19]).

The Defendant states, that in the absence of a definition in the Act (aside from ‘bet includes wager’), the term must therefore bear its ordinary and usual meaning (Def sub [19]). The Defendant refers to the dictionary definition of ‘bet’, as well as the case of Waterhouse to support their view (Def sub [20];[22]).

The Defendant also points to the context of the subsection. They note that the other ‘excluded wagering services’ (as in ss 8A(1) and 8A(3)) are typical examples of ‘betting on events’, e.g. horse racing or sporting events. Viewed in that context, s 8A(5) was intended to apply to services which are similar to the kinds of wagering services specified in ss 8A(1) and 8A(3), that is events on which one could effectively form an opinion on (Def sub [21]).

The Defendant submits that the Impugned Products do not involve customers ‘betting on’ particular parts of the opening values of financial market indices in a manner that is consistent with the ordinary meaning of that phrase (Def sub [23]). Customers do not profess any view about the particular indices for the following reasons;

The Defendant also highlights the difference between the Impugned Products and the Daily Millions, the product that was not found to be in breach. In particular, because the Winning Result ID correlates exactly with a participant’s chosen Customer Number, the participant forms a view about the opening values of the financial indices and thus makes a bet (T46/21).In the Impugned Products, there is no correlation between the Customer Number and the financial indices, and customers do not profess a view about the financial markets. Therefore, there is no bet on an ‘event’ being the financial markets (T50/35; T52/30).

The Defendant submits that the Impugned Products are a service for the conduct of a ‘game of chance’ or a service relating to betting on the outcome of a game of chance operated by Lottoland, and accordingly fall within ss 8A(5)(c)(iv) or 8A(5)(c)(v) of the IGA (Def subs [29]).

The Defendant submits that the meaning of ‘game’ for the purposes of a ‘gambling service’ in paragraph (e) of the definition, is construed by the textual limitations in sub-paragraphs (i)-(iii) (Def subs [30]). In particular, a game must constitute a “game of chance” or a “game…of mixed chance and skill”. ‘Game’ therefore means a pastime or activity which has rules, and whereby the winner is determined either by chance or by mixed chance and skill.

The Defendant submits that the Impugned Products can be analogised to ‘roulette’ a well-known game, as identified by the legislature (Def subs [32]). In the Impugned Products, as in roulette, the players or customers choose a set of numbers, and the winning number is randomly generated (Def subs [33]).

The Defendant submits that as the Impugned Products are played for monetary prizes, and because customers give consideration to play or enter, both sub-paragraphs (e)(i) and (e)(iii) are satisfied. Therefore the Impugned Products are games of chance within the meaning of paragraph (e) of the definition of ‘gambling service’ in s 4 of the Act and fall within s 8A(5)(c)(iv) (Def subs [35]).

The Defendant submits that the Plaintiff’s narrow construction of ‘game’ should be rejected. The authorities on which the Plaintiff relies do not establish that ‘interaction’ between players is a defining feature of a game nor that interaction is particularly important (Def subs [37]-[42]). Further, the Plaintiff’s contention that the Impugned Products do not involve any participation should also be rejected. Rather, the customers must select a set of numbers to participate in the products, in that way, the customers actively participate in the operation of the products (Def subs [43]).

The Defendant submits that the relevant ‘rules’ with respect to the Impugned Products, are simply the Terms and Conditions for the Impugned Products (Def subs [45]).

The Defendant submits that, the Plaintiff’s contention that the Impugned Products were not intended to be captured by the prohibition because they are not ‘continuous’ or ‘instant’ is not supported by the actual text of the statute (Def subs [46]-[47]). There is no textual indication in paragraph (e) or in s 8A(5)(c)(iv) that show they were intended to be limited to situations where games are played ‘continuously’ (Def subs [48];[53]). Further, there is no evidence in the legislative history of the IGA that the legislature only intended games played instantly or continuously should fall within the prohibition (Def subs [53]; [59]-[66]). Looking at the exclusions contained within the Moratorium Act, it is clear that the legislature wanted to exclude from the exclusion certain lotteries, which would not necessarily be considered ‘continuous gambling’ (Def subs [60]). Further, the SEM does not make any indication that the ‘game’ must be continuous. Rather, what was intended to be excluded from the prohibition was particular industries such as the racing industry, which was thought important for Australia’s economy (Def sub [64]-[65]).

The legislature deliberately chose to include specific words of limitation in relation to in-play betting and in relation to instant lotteries, it is clear that the legislature could have included such limitations in respect of ‘games’ if it had chosen (Def subs [53]). It is also not clear whether any limiting words should be read only into the particular section or apply to the Act as a whole (Def subs [54])

The Defendant submits that were a customer’s participation in relation to the Impugned Products to be characterised as a ‘bet’, the products would still be captured by s 8A(5)(c)(v).

Generally, the provisions in the IGA are not all that easy to construe.

Looking to the simplified outline of the Act in s 3, it is clear that Act does not in fact prohibit many forms of gambling. While s 15 purports to prohibit all interactive gambling services, the extensive exceptions to this provision indicate rather that only a select number of services are intended to be regulated and/or proscribed. Moreover, determining what an interactive gambling service is, as well as what the various exclusions cover is not an easy task. Of particular interest of course, is the provision the subject of dispute before me, s 8A(5). While first defining certain services as excluded from the prohibition, s 8A5(c)(i)-(v) then operates to exclude from the exclusion certain specified products. It goes without saying that the exclusion from the exclusion process is cumbersome and leads to some difficulty in construction.

Section 8A(5) essentially requires that a particular product satisfy three elements if it is to be considered an ‘excluded wagering service’:

The form of the important definitions, invites, in my view, the use of the ordinary and natural meaning of the key words. I am not persuaded that the legislature intended to prescribe any technical or specific definition to the key terms. In particular I note in the definition of ‘gambling service’ in s 4(f); a gambling service is… "a gambling service (within the ordinary meaning of that expression)” clearly indicates that the ordinary English parlance was intended to be employed.

There were two main issues that required determination. First, whether the Impugned Products involved placing ‘bets’ and secondly whether the Impugned Products could be accurately characterised as ‘games’ for the purposes of the IGA.

As noted above, bet is defined to include wager. The various dictionary definitions of both bet and wager are also set out above.

As submitted by the Defendant, the term bet, can in some circumstances involve the formation of an opinion, on the part of the person betting. However, in the case of the Impugned Products, the process of selection of the Customer Number appears somewhat entirely mechanical, i.e. it is pure guesswork. It is difficult to see how any skill could be involved in selecting the numbers. There is little to no rational basis, it seems, upon which the Customer Numbers are selected. Indeed customers may choose to relinquish all control and have their numbers automatically chosen for them. The process, in my view, is devoid of the notion of an expression of opinion. There is no obvious judgement or skill being employed and it is difficult to say the selection could be based on some belief.

Despite the fact that I do not believe choosing the Customer Numbers involves forming an opinion about the various financial indices, I regard that the process by which money is staked using the Impugned Products can nonetheless be defined as a bet. That is, in this context, I do not regard it as essential that one must profess a view in order to make a bet. This to me is clear from the definition in the IGA, that a bet means ‘wager’. As noted above, none of the dictionary definitions of wager require any sort of opinion or view about the outcome of a particular event.

It is clear that the purpose of the Act is intended to regulate gambling. There is further nothing in the text of the Act that suggests to me one should read in such limitations as forming an opinion or a view into the term ‘bet’. Rather, there are numerous examples of gambling, many specifically identified by the legislation, in particular various types of lotteries, whereby there could be no reason to presume that a customer would or could form an opinion about the outcome.

Turning in particular to the structure of s 8A(5). Section 8A(5)(a) first prescribes that to be excluded the service must relate to ‘betting’. The section then goes on to note; “to the extent to which the service is not covered by any of the following sub-paragraphs…a service for the conduct of a scratch lottery or other instant lottery”. It seems clear then that a “scratch lottery” would be considered “betting” lest the inclusion of s 8A(5)(c)(i) be unnecessary. There is further, no suggestion that one could form a ‘view’ as oppose to hazard a guess about the outcome of a scratch lottery.

I am further not satisfied that the Impugned Products can be accurately characterised as a ‘game’ for the purposes of the Act.

As I have previously noted, the process by which customers ‘participate’ in the service is limited to say the least. It simply involves the selecting of numbers. Because of the vast number of possible results, the selection is entirely random. The numbers may be chosen randomly by the customer or relate to a sentimental date such as a birth date or anniversary. Given not only the fact of the ‘mapping’ process whereby the Customer Numbers are linked to the various Result IDs, but the fact that the Winning Result ID is in fact chosen by looking at the decimal places of various financial indices, suggests to me that it would be near to impossible to make an accurate and/or informed decision about what the likely Winning Result ID would be. There is no evidence that there is in fact a scientific way or rational methodology of predicting the numbers at all.

While it is true that the authorities referred to are taken from diverse statutes in differing contexts, they point to certain features of a game that these services in my view do not share. There are no traditional elements of games present in the Impugned Products. I further note that the definition as contained in s 4 refers particularly to playing a game. The phrase together suggests that the amusement should be borne from the ‘playing’ aspect. Although it may be said some are amused or entertained by simply parting with money, there is no participation or competition with other players that one would usually associate with games. What is intended to encourage people to engage with the products is not so much entertainment, but the possibility, however remote, of winning the jackpot, or some other prize. A game must, in my view, be more than the simple process by which a person parts with his/her money with a chance of financial return.

To play a game, further indicates to me, a sense of positive action on the part of the participant. There must be a level of interaction in the sense that a participant’s actions to some extent affect the outcome of the activity. This idea can be seen repeated in some of the extraneous materials (for example see pg 10-12 of the SEM extracted at [72] above). Here there is no participation in the sense that the ongoing actions of the participant can influence the outcome. There is little to no interaction in the sense that nothing that the customer may do will affect the ultimate Wining Result ID.

It seems to me, that because the legislature has left the term ‘game’ in effect relatively undefined, alluding to ordinary or historical understandings is permissible. Much attention was given to the potential analogy between the Impugned Products and roulette (either online or at a casino), which had been described at various points in the extraneous materials to be a game of chance. Although indeed in roulette, the process by which a number is selected is random, or because a particular colour or number is perhaps lucky or special to the individual, it has, significantly in my opinion, historically been regarded as a game, particularly because the ‘game’ is played against the house or other ‘participants’, and there is therefore a level of interaction involved.

The extremely broad definition contended for by ACMA would seem to me to leave the term ‘game’ virtually meaningless. Any ‘activity’ with ‘rules’ and some limited participation, could effectively capture any sort of bet, wager or gambling as a ‘game’, thus removing any meaningful distinction between the terms. That is not what this legislation does. I further note that the legislature indeed makes a distinction between s 8A(5)(c)(iv) and (v). As emphasised by the Plaintiff, a broad concept of ‘game’ would envelop the concept of ‘betting on the outcome of a game’, thus removing the need for such distinction.

The legislature has pointed to particular products to exclude, a choice that seems to some extent based on certain historical or economic concerns. However I am not persuaded that the Plaintiff’s contention that only ‘instant’ or ‘continuous’ games were intended to be regulated and thus the definition should be confined in this way.

Section 15AB of the Acts Interpretation Act, of course enables recourse to certain extraneous material when a provision is ambiguous or obscure; or when the ordinary meaning would lead to a result manifestly absurd or unreasonable. It is clear that reading the ordinary meaning of ‘game’ would not render the Act absurd or unreasonable. Here is not a situation where there are two potential meanings that need to be resolved. Rather the confusion if any comes from the lack of specificity to which the legislature has excluded particular gambling products.

Ultimately, the use of extraneous material, while helpful in certain situations is limited; it cannot, as the authorities make clear, usurp the meaning of the legislation.

Indeed, the EM and SEM appear to refer to virtual ‘roulette’ and internet poker machines as ‘games’, and there is perhaps some analogy that may be made between such activities and the products in question. However, as I have noted above, I am of the view that there is a particular historical context that is employed in characterising roulette and poker machines as ‘games’. As noted by the Plaintiff, in the game of roulette, even online, and indeed in online poker machines, there are lights, graphics, ‘bells and whistles’ so to speak that amount to a degree of fan-fair entirely absent from the Impugned Products. There is nothing in the extrinsic materials that indicates a use beyond the natural and ordinary meaning of the particular term is what was intended.

It is worth observing, s 15 is a penal provision. It is arguably appropriate according to some of the authorities to give the section a restrictive interpretation. I have referred to the cases above. In this context if anything, I consider that this rather fortifies the natural and ordinary meaning of the words ‘bet’ and ‘game’.

I note finally that it was not particularly clear, on ACMA’s case how the Impugned Products could fall into s 8A(5)(c)(v), even if they were characterised as a game. If the product is to be called a ‘game’, then the bet forms part of the game. The making of the bet is the only, limited participation there is. I cannot see how the product involves betting on the outcome of a game and I do not regard that construction as tenable.

In summary, for the reasons above, I find that the Impugned Products are excluded wagering services and are therefore not in breach of the prohibition against interactive gambling in s 15. I invite the parties to prepare short minutes of order to reflect these reasons. I will also deal with any outstanding costs questions should they arise.