Daily BulletinHoliday Centre

The Conversation

  • Written by Charles Livingstone, Senior Lecturer, School of Public Health and Preventive Medicine, Monash University
image

The South Australian government will introduce from July a “point-of-consumption tax” to claw back some of the gambling tax revenue it is seeing disappear over the border.

The new tax is a reasonable response to a growing problem, and probably won’t send bookmakers to the wall. But it does highlight the current regulatory mess surrounding how we tax internet wagering in Australia.

Bookmakers flee north

In 2008, the High Court decided it was unlawful for a state government to protect local wagering operators from the emerging competition provided by online bookmaker Betfair.

The case turned on Section 92 of the Constitution, which provides for free trade between the states. What the decision meant was internet bookies licensed in one Australian jurisdiction (the Northern Territory, for example) could offer their wares to anyone living anywhere in Australia. It led to dramatic increases in the promotion and advertising of internet betting, and also to very rapid growth in that commodity.

One of the consequences of this has been a decline in racing revenue going to governments. In 1990-91, the SA government derived A$52.6 million in racing tax revenue. By 2012-13, this had declined to less than A$1 million (both numbers in real terms, at 2014-15 values).

Meanwhile, in the NT, growth in wagering revenue – for both racing and sports betting – has been exponential.

People in the NT have not taken to racing and sports betting like there’s no tomorrow. But the NT has become home to most of Australia’s internet bookies, thanks to a low-tax regime and relatively loose regulation.

There are 18 internet bookies registered in the NT, including William Hill, CrownBet, bet365 and Ladbrokes. They get most of their revenue from other states – including SA.

They also don’t pay a lot of tax. In 2014-15, with total wagering expenditure of A$937.6 million, the NT government collected taxes amounting to a little over A$10 million. That’s a bit less than 1.1% of the money gamblers lost. So, it’s easy to see why the bookies like the NT.

The SA government has decided to try to get a slice of that action, or to dissuade the bookies from marketing their wares into the state – or perhaps a bit of both.

State governments have to pick up the pieces when their residents suffer gambling harm and its effects. This includes domestic violence, job loss, suicide, mental and physical health problems, and so on. It’s pretty galling when another state takes all the benefits (at a discount rate) and doesn’t contribute to the costs involved.

What is South Australia’s tax designed to do?

The SA tax is intended to take 15% from net wagering revenue (that is, gambler losses).

All wagering operators will pay the tax – not just the internet bookies. So, it may not amount to a discriminatory or protectionist measure. This is important: if it is discriminatory, the High Court would probably find it unconstitutional, as the Western Australian government’s actions in the Betfair case were deemed to be.

It is abundantly clear that the federal government has the power to regulate internet gambling, via the Constitution’s telecommunication provision. It has adopted legislation that does just that, although in a minimal way.

The federal legislation provides for bookmakers licensed in any Australian jurisdiction to be able to offer wagering services throughout Australia. Their actual regulation, however, is left to the state jurisdictions. This is how we’ve ended up in the current mess.

The federal government recently convened a ministerial meeting to propose new consumer protection regulations to the states. The government has sensibly realised that inadequate regulation at state level has to be tackled.

But this leaves at least two key issues unresolved.

The main concern of ordinary people when it comes to internet gambling is the continuing bombardment of bookies’ ads accompanying sports broadcasts. These are consumed by millions of children because there is an exemption for sport in the TV broadcast self-regulation code. This needs to be tackled, and the federal government is the only jurisdiction with the clear authority to do so.

Also, the tax regimes of the various states differ; the NT clearly leads the race to the bottom. The federal government can regulate and tax the bookies uniformly, if it wishes, and distribute the revenue according to a GST-style formula – or some variation thereof.

That might diminish the NT revenues a little. But it would at least regularise the industry, enable uniform regulation and stop the states trying to pinch each other’s revenue base.

Earlier this week, online bookmaker CrownBet announced a deal with ClubsNSW to provide internet wagering with the co-operation of clubs, which would recruit their members to the cause. In return, the deal would allow the clubs to get a slice of the action. If this works, club-based TABs will see their revenue decline.

In effect, this means a transfer of revenue from the New South Wales government to the NT government. No state wants to see its revenue base decline – particularly when the jurisdiction benefiting doesn’t even tax (or regulate) its bookies as well as it might.

Maybe it’s too much to ask for a sensible national gambling policy with uniform tax rates and reasonable consumer protection and harm-prevention measures in place. But allowing state governments to regulate internet-based services seems like a fairly 19th-century approach to regulation. We can probably do better than that.

Authors: Charles Livingstone, Senior Lecturer, School of Public Health and Preventive Medicine, Monash University

Read more http://theconversation.com/south-australias-gambling-tax-highlights-the-regulatory-mess-of-online-betting-72495

INTERWEBS DIGITAL AGENCY

The Conversation

Politics

Scott Morrison on Credlin

PETA CREDLIN: Thank you for your time tonight, PM I know you've got a lot on your plate. I'll get to the issue of bushfires in just a moment, but I can't let it go unremarked that with Australia Day...

Peta Credlin - avatar Peta Credlin

Scott Morrison interview with Ray Hadley

RAY HADLEY: Prime Minister, good morning.    PRIME MINISTER: G’day Ray.    HADLEY: Jeez you copped a hammering while I was away.   PRIME MINISTER: Goes with the job mate.    HADLEY: Well, yo...

Ray Hadley - avatar Ray Hadley

Immediate small business support for bushfire affected communities

In response to the devastating bushfires, the Morrison Government has today announced a comprehensive suite of measures to immediately support impacted small businesses.    This initial package ...

Scott Morrison - avatar Scott Morrison

Business News

2019 Hottest FinTech Startups Overview

Modern technology is experiencing rapid growth, so many industries expect a so-called revolution, and the financial world is no exception. Over the past ten years, people have witnessed the emergence ...

News Company - avatar News Company

Australians need to look out for this US Crypto-platform

Good news for Aussie sports fans as UssCyber is soon to launch its very own crypto-currency sports trading platform. UssCyber, a blockchain-oriented company based in Florida, is introducing “World S...

News Company - avatar News Company

How to Choose the Right Data Recovery Solution for your Business

In the modern business environment, data is one of the most important commodities. A typical B2C seller, for instance, offering home delivery service cannot deliver the product to the right addres...

News Company - avatar News Company

Travel

The Family Travel Handbook from Lonely Planet

Everything you need to know to take unforgettable trips with your children   Full of practical advice, ideas and inspiration for every type of family, Lonely Planet's The Family Travel Handbook ...

Adam Bennett - avatar Adam Bennett

3 Ideas for a Family-Friendly Holiday to Bali

A family holiday is always an exciting time, but it can often come with its fair share of challenges, especially when trying to keep every member of the family happy. Thankfully, the beautiful islan...

News Company - avatar News Company

The Best Things to Do in Adelaide Hills

Adelaide Hills has long been a relaxing escape for the people of Adelaide and beyond. Its proximity to the capital makes it an accessible destination that feels like you’re miles away from the hustl...

News Company - avatar News Company

ShowPo