09 May 2018

I rise to speak on the Interactive Gambling Amendment (Lottery Betting) Bill 2018. Labor has long been on 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 the newsagents national body, in the lead-up to the launch of the Lottoland's Gotta Go! campaign, as well as with lottery betting provider Lottoland, as an example. These concerns prompted Labor to formally request the ACCC to undertake an investigation into representations made by companies that offer betting on lottery results, such as Lottoland, given concerns 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 these services. Twice, Labor declined to support proposed Senate amendments to ban synthetic lotteries on the run, citing the need for stakeholder consultation.

Labor has kept a watching brief on these issues for over a year now, including the measures that have been implemented or are being considered by individual states and territories. For example, last year the Northern Territory government introduced a prohibition on betting on the outcome of Australian lotteries. This was a welcome step but didn't address all the concerns associated with lottery betting services. South Australia does not permit lottery betting services, and it appears that this has been effective in stopping these services being provided to South Australian residents. The Tasmanian government announced in October last year that it will take steps towards banning lottery outcome wagering. Media reports have indicated that Victoria, New South Wales and Western Australia are currently considering laws to prohibit lottery betting services being offered to persons in their respective jurisdictions. Labor has undertaken extensive consultation on these issues and considered these arguments carefully. There are arguments for and against banning synthetic lottery products. After extensive stakeholder consultation and on balance, Labor believes it is appropriate to support the bill to ban lottery betting in Australia.

I want to turn to the issue of Commonwealth jurisdiction. While the states and territories have made some moves, as I've described, it is the Commonwealth that has responsibility for online gambling matters. The Commonwealth is best placed to implement a national position in relation to lottery betting services in Australia. This will be consistent with the National Consumer Protection Framework, harm minimisation measures across all states and territories and the new credit betting prohibition in the IGA that came into effect on 17 February this year. The ACMA would be responsible for compliance and can respond to any complaints about lottery betting services being provided by either Australian or international operators. The intent of the Interactive Gambling Act 2001 is to minimise the scope of problem gambling in Australia. Lottery draws are permitted under the IGA as there have traditionally been only a small number of draws conducted each week—some seven draws conducted across a week, typically, with a day's break in between. On the contrary, lottery betting services allow consumers to bet on the outcome of up to 25 lottery draws being conducted around the world each week, with the promise of massive jackpots ranging up in the hundreds of millions of dollars, which could lead to problem and at-risk gambling. While Lottoland, for example, is a disruptor seeking to offer consumers greater choice in gambling products and change the dynamic between Tatts, Tabcorp and retailers like the newsagents and other such outlets, this is not the kind of disruption or choice we seek to promote in our community.

The bill will amend the IGA to prohibit gambling service providers from providing to customers physically present in Australia a service for betting on the outcome of, or a contingency in, Australian and overseas lottery draws, including keno-type lotteries, with the effect of banning synthetic lotteries such as Lottoland. This is not a decision that Labor has taken lightly. Synthetic lotteries allow customers to bet on the outcome of a lottery draw without the need to purchase a ticket in that official lottery draw. Unlike official lottery draws, ticket sales will not cover major payouts. Instead, these are covered by insurance policies. A contingency would include the drawing of a particular number, for example, at a particular position or in a particular sequence. As I said, the bill follows those moves by some states and territories to prohibit betting on the outcome of a lottery and action by the Northern Territory government to prohibit betting on the outcome of an Australian lottery. On balance, Labor supports the bill because it responds to concerns, which we share, that the provision of synthetic lotteries in Australia and the potential expansion of these services in the near future will cause adverse impacts on states and territories, small businesses and consumers.

It should be noted that Lottoland has already undertaken a range of actions to address these concerns and be a responsible corporate participant, and is prosecuting what one may say is an arguable case as a fast-growing but otherwise relatively small disruptor, seeking to increase choice, competition and innovation in the market. However, as I said, on balance, we feel that lottery betting is not the kind of disruption, choice, competition or innovation that Labor seeks to promote as a first-order issue. Further, some measures are subject to investigation by regulators, and there is no assurance that other synthetic lottery providers who enter the market will seek to address those concerns.

I want to speak briefly on the impact on state and territory revenues. I note that state governments have voiced concerns that synthetic lotteries are siphoning tax revenue collections away from community services. 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. Lottoland is licensed in the Northern Territory. It pays GST and corporate taxes. It supports, as it has asserted, paying state point-of-consumption taxes, and it makes community contributions. Furthermore, Lottoland submits that it does not cannibalise official lotteries, because its product offering has grown the market and 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. Reductions in lottery revenue could be the result of a number of factors, including the growing prevalence of other gambling products, including online wagering services, for example. However, the explanatory memorandum 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 supported causes.

I want to talk about why lotteries are special. Here I'd like to reflect on what Labor believes sets lottery betting apart from other forms of online wagering, of which there are a lot. Lotteries are a distinct product. They are heavily regulated and taxed, with around 60 per cent of every dollar invested back into the prize pool, and around 20 per cent going to state revenue. State and territory governments decide whether to issue lottery licences as monopolies. They do so based on analysis done by treasuries to develop what is most sustainable and what is in the best interests of the respective communities involved.

To illustrate, there was the move by the Victorian government to split the lottery licence in 2008, with a licence being awarded to Tatts for major national draw games and another licence being awarded to Intralot for instant scratch games, Keno and some other minor games. The splitting of the licence into two parts within the one market was a first in the Australian lottery industry. Years before expiry, Intralot surrendered their licence in Victoria and Tatts's licence was amended to add instant scratch-its and Keno from February 2015.

The Victorian government has recently gone through a full licensing process and has decided to award a single operator licence to Tatts Tabcorp for 10 years commencing in July 2018. This is clear evidence that governments around the country know that a single operator model appears to be the most effective and best approach to maximising state returns. In 2016 the Queensland government considered whether they should issue two lottery licences. They concluded that it was not in the state's interest, and therefore renewed the monopoly arrangement.

We all know the community benefit derived from monopoly arrangements in lotteries has a long history. In New South Wales, the State Lotteries Office was established in 1930 to provide funding for hospitals during the Depression. Lotteries in New South Wales have been used in part to fund the Sydney Harbour Bridge and the Opera House, and to finance Sydney's successful bid for the 2000 Olympic Games.

In Queensland, Golden Casket originated from a patriotic fund to support war veterans and their families in 1916. The Brisbane women's hospital built in 1938 was completely funded by Golden Casket funding. Since it began, Golden Casket has always played an intrinsic role in helping the Queensland community. It was originally set up to raise funds for veterans of World War I, and the profits went on to fund many worthwhile projects across that state, from hospitals to baby clinics to the Queensland Performing Arts Centre and the Red Cross. Even the Gabba got its lights thanks to Golden Casket. In 1975, profits from Golden Casket were moved to a new cultural capital development fund. The money helped fund an extensive range of state-wide sporting, educational, arts and community projects—everything from the Queensland performing arts complex at South Brisbane to cultural centres in each local authority in Queensland, and even, as I said, the multimillion-dollar lights at the iconic Gabba sporting complex. Today, this legacy continues through programs such as Rainbow Kids and the Golden Casket Foundation and the hundreds of millions of dollars returned to government each year for use in worthwhile community initiatives.

More recently, public lotteries generated $427 million in lottery taxation revenue for Victoria in 2015-16, and will generate approximately $4 billion over the full 10-year licence held by Tabcorp. Public lottery taxation is paid into the consolidated fund, and then to the hospitals and charities fund, and the mental health fund. In Western Australia, Lotterywest provided $265 million in charitable grants in 2016-17, providing vital funding for not-for-profit organisations and local governments to support charitable or benevolent purposes. In Western Australia, more than 30 per cent of revenue—that's $265 million—was poured back into the community in 2016-17 including $121 million for health, $15 million for sport, $15 million for culture and the arts, and $114 million directly invested into 764 not-for-profits and local government authorities. Similarly, in South Australia millions were returned to the community in 2016-17 including over $74 million to the hospitals fund and $140,000 to the recreation and sport fund.

I note that, while online wagering companies may be taxed and may 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 the lotteries I've described. The logic is that by betting on the outcome of a lottery or increasing the number of lotteries, the fundamental product at the core, the lottery, is impacted. It is only by purchasing a ticket on a lotto that the lotto prize pool will grow. Labor acknowledges the logic of the monopoly nature of a lottery in the offline environment, and the potential impact on lottery betting in the online environment.

I want to turn to the impact on small business, which is one of the key concerns that's been raised in this debate. Newsagencies and other small businesses across Australia rely on the commissions from the sales of official lottery tickets. Over $350 million is earned by some 4,000 newsagencies and official lottery agents across Australia. These businesses rely on this commission to earn an income and to cover the costs of running a business. The concern here is that synthetic lottery services entice customers away from these businesses with the promise of substantially higher jackpot amounts, compared to those prizes that can be offered under the official lottery draw. In 2017—and again following consultation with Labor—newsagencies and official lottery agents staged a public campaign, 'Lottoland's gotta go,' raising awareness of the negative financial impacts of lottery betting services. I know that some Labor members received and tabled petitions in support of the 'Lottoland's gotta go' campaign. In return, Lottoland—as is their right—has run a concerted campaign to argue their case for survival as a lottery betting agency. Amongst other things, Lottoland submits that their services do not undermine newsagencies and that this bill in fact will leave newsagents and small businesses worse off and exposed to monopolistic behaviour by Tabcorp. Lottoland has reportedly offered a profit-sharing partnership deal to newsagents to address small business concerns, whereby newsagents receive a share in the sales generated by customers referred to Lottoland. Negotiations, as we understand from reports, are in progress, with the Newsagents Association of NSW & ACT, NANA, and VANA also in the mix.

I note that the explanatory memorandum concedes there is limited data available to quantify the financial impact on small businesses. Retailers operate across various business sectors, including independently owned grocery stores, pharmacies, petrol stations and newsagencies. However, any increase towards lottery betting and away from traditional lottery sales would have a negative impact on small-business revenues. Further, Labor notes that the state gaming regulators are exploring whether the aspects of these proposed partnership deals are in fact legal. Furthermore, Labor notes the concerns of the Australian Hotels Association, which indicated that it would reject any partnership deal with Lottoland and has emphatically asserted that Keno helps hotels support over 50,000 community groups at a grassroots level.

I turn now to the consumer impact. Concerns about state and territory impact and the small-business impact aside, there are also concerns about the impact on consumers. As I stated, in 2017 Labor formally requested that the ACCC undertake an investigation into representations made by companies that offer betting on lottery services, such as Lottoland, given the 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 any complaints received in relation to Lottoland.

Concerns around consumer awareness of whether Lottoland is an official lottery or a lottery betting service remain. This is despite the fact that Lottoland does state on its website that it is a bookmaker and not a lottery operator, and explains the term 'lotto betting' on its website. Official lotteries are heavily regulated to protect consumers—the harm minimisation component being paramount. There are guarantees that prizes are paid out to winners and are funded by the proceeds of 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.

While the EM acknowledges that to date the department has not been made aware of or received any complaints from consumers who have indicated that winnings have not been paid out by a lottery betting service provider, it notes that the combination of wagering incentives and the offering of higher jackpots at greater frequency by allowing customers to bet on international lotteries would arguably encourage customers to engage with lottery betting services and away from official lottery draws. The intent, as I said, of the IGA is to minimise problem gambling, by limiting access to rapid-style interactive gambling services by Australians. While the act permits lottery draws, only a small number are conducted each week, whereas 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 rather than tens of millions, which could, as I said, lead to problem and at-risk gambling. Concerns around consumer awareness of whether Lottoland is an official lottery or a lottery betting service remain. Again, I note that this is despite the fact that Lottoland does state on its website that they are a bookmaker and not a lottery operator.

I reiterate that Labor has long been on record with concerns about the impact of synthetic lotteries like Lottoland on Australian consumers and small businesses. These concerns prompted Labor to consult with a range of stakeholders. Labor has kept a watching brief on these issues for over a year, including the measures I've described that have been or are being considered by individual states and territories. Ultimately, as I said, it's the Commonwealth that has responsibility for online gambling and it's the Commonwealth that's best placed to implement a national framework in relation to lottery betting services. This would be consistent with the national consumer protection framework and the new credit betting system that came into effect in February this year. There is a genuine cause for concern that any increase towards lottery betting will be at the expense of consumers, small businesses, community and other government causes funded by official lotteries.

I want to make it clear in closing that Labor notes that Lottoland is a legitimate service that pays tax in Australia. It is indeed a disrupter seeking to offer consumers greater choice in a gambling product. However, this is not the kind of disruption or choice that Labor seeks to support on this occasion. 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, we have seen the recent entry of a new player, myLotto24, on the scene. Labor shares concerns about the impact of the growth in lottery betting in Australia, and Labor will not oppose this bill.