Deborah O'Neill (NSW, Australian Labor Party, Shadow Assistant Minister for Innovation) Share this | Hansard source

I rise to contribute to this evening's debate about the Interactive Gambling Amendment (Lottery Betting) Bill 2018. Labor supports this bill. Labor has long been on the record with concerns about the impact of lottery betting, or synthetic lotteries, on Australian consumers and small businesses. These concerns prompted Labor to consult with a range of stakeholders, including lottery betting provider Lottoland and newsagents, in the lead-up to the launch of Lottoland's Gotta Go! campaign last year and since then too. Twice Labor has declined to support proposed Senate amendments to ban synthetic lotteries on the run, citing the need for stakeholder consultation. Now, and after careful consideration of the arguments and evidence, including extensive stakeholder consultation, Labor believes it is appropriate to support the bill to prohibit lottery betting in Australia.

The Commonwealth has responsibility for online gambling matters and is best placed to implement a national position in relation to lottery betting services in Australia. The bill will amend the Interactive Gambling Act 2001, which is administered by the federal regulator, the Australian Communications and Media Authority, to prohibit gambling service providers from providing to customers in Australia a service for betting on the outcome of, or a contingency in, Australian and overseas lottery draws. This has the effect of banning synthetic lotteries such as Lottoland. Synthetic lotteries allow customers to bet on the outcome of a lottery draw without the need to purchase a ticket in the official lottery draw. Unlike with official lottery draws, ticket sales will not cover major payouts. Instead, these are covered by insurance policies. The bill follows moves in some states and territories to prohibit betting on the outcome of a lottery.

Labor supports the bill because it responds to concerns shared by Labor around the provision of synthetic lotteries in Australia and the potential expansion of these services in the future. While Lottoland has undertaken a range of actions to address concerns and be a responsible corporate participant, Labor is concerned that this fast growing but otherwise relatively small disruptor and other lottery betting services will cause adverse impacts on states and territories revenues, small businesses and consumers.

Over $1 billion in taxation revenue is currently received from states and territories each year from the sale of tickets in official lottery draws, which contributes to charitable causes and community services. State governments have voiced concerns that synthetic lotteries are siphoning tax revenue collections away from community services. Lottoland is licensed and does pays tax. It submits that it does not cannibalise official lotteries. Lottoland argues that its product offering has grown the market, that it targets a different demographic and that it is not a big enough player to have had a material impact on revenues.

The explanatory memorandum to the bill concedes there is insufficient data to determine the actual impact of lottery betting on state taxation revenue. However, it otherwise maintains that any increase towards lottery betting and away from official lotteries would have a negative impact on states and territories funding community and other government-funded causes.

Here I wish to state that Labor regards lotteries to be a distinct product, compared with other forms of online wagering. Labor acknowledges the logic of the monopoly model for official lotteries in the offline environment and potential impact of synthetic lotteries in the online environment. Official lotteries are heavily regulated and taxed, with the majority proportion of every dollar invested back into the prize pool and a significant proportion going to state revenue. State and territory governments decide whether or not to issue lottery licences as monopolies. They do so based on analysis done by treasuries to determine what is most sustainable and what is in the best interests of the community. For example, the Victorian government has recently gone through a full licensing process and decided to award a single operator licence, clear evidence to governments around the country that a single operator model is the most effective and best approach to maximising state returns. Similarly, in 2016 the Queensland government considered whether or not they should issue two lottery licences but concluded that it was not in the state's interest and therefore renewed the monopoly arrangement.

The community benefits derived from monopoly arrangements to lotteries have a long history. Around Australia, state lotteries have been used to provide funding to hospitals, health initiatives, the performing arts and sports. Lotteries in New South Wales have been used to fund, in part, the Sydney Harbour Bridge and the Opera House, and to finance Sydney's successful bid for the 2000 Olympic Games. While online wagering companies may be taxed and also return funds to state and territory revenue, these are calculated differently and amount to a great deal less than the taxation regime applying to official lotteries. Further, by betting on the outcome of a lottery rather than buying a ticket in an official lottery, the fundamental product at the core—the lottery—is impacted. It's only by purchasing a ticket in a lotto that a lotto prize pool will grow. Therefore, the logic is that betting on the outcome of a lottery and increasing the number of lotteries has a deleterious effect on the official lottery.

I turn now to the impact on small business. Newsagencies and other small businesses across Australia rely on the commissions from the sales of official lottery tickets to earn an income and cover the costs of running a business. The concern they express is that the synthetic lottery services divert customers away with the promise of substantially higher jackpot amounts compared to those prizes that can be offered under the official lottery draw. In 2017, some Labor members received, and tabled, petitions in support of the Lottoland's Gotta Go campaign on behalf of some newsagents, including newsagents represented by the Australian Lottery and Newsagents Association. Lottoland, in return, has run a concerted campaign to argue its case for survival as a lottery betting agency, arguing that it does not undermine newsagencies. Lottoland and some other newsagents, including newsagents represented by the Newsagents Association of New South Wales and ACT, and by a Victorian association, have voiced concerns that the bill will leave newsagents and small businesses worse off and exposed to monopolistic behaviour by Tatts and Tabcorp, and deprive some newsagents of a revenue stream obtained via profit-sharing arrangements with the lottery-betting services.

The explanatory memorandum concedes there is limited data available to quantify the financial impact on small businesses, but acknowledges that any increase towards lottery betting and away from traditional lottery sales would have a negative impact on small business revenue. Furthermore, Labor notes the concerns of the Australian Hotels Association, which indicated it would reject any partnership deal with Lottoland and emphatically asserts that Keno helps hotels support more than 50,000 community groups at grassroots level.

Labor acknowledges concern around consumer awareness and confusion as to whether synthetic lotteries are official lotteries or lottery betting services. Despite steps taken by Lottoland—for example, to state on its website that it is a bookmaker and not a lottery operator, and to explain lotto betting—in 2017 Labor formally requested the ACCC to undertake an investigation into representations made by companies that offer betting on lottery results, such as Lottoland, given concerns that they may mislead or deceive consumers into believing they are purchasing a lottery ticket or directly participating in a lottery. The ACCC responded by undertaking to continue to review developments and complaints received in relation to Lottoland.

Official lotteries are heavily regulated to protect customers, to guarantee that prizes are paid out to winners and to make sure they are funded by the proceeds of the lottery sales. Lottery-betting services are not subject to the same regulatory regime as official lottery operators and can provide incentives to attract customers, such as paying a premium to guarantee a win rather than having to divide the prize equally between winners. Further, the intent of the interactive gambling bill is to minimise problem gambling by limiting access to rapid-style interactive gambling services by Australians. While the bill permits lottery draws, only a small number are conducted each week; a much higher number of synthetic lottery draws occur around the world on a weekly basis with much higher jackpots ranging to hundreds of millions, which could lead to problem and at-risk gambling.

In closing, I reiterate that Labor has long been on record with concerns about the impact of synthetic lotteries, like Lottoland, on Australian consumers and businesses. There's genuine cause for concern that any increase towards lottery betting will be at the expense of consumers, small business, the community, and other government causes funded by official lotteries. Labor notes that Lottoland is a legitimate service that pays tax in Australia and is a disruptor seeking to offer consumers greater choice in gambling product. However, this is not the kind of disruption or choice we seek to promote in our community. We also note that Lottoland is not the only provider of lottery betting in Australia. In addition to the number of current providers of lottery betting in Australia, Labor does share concerns about the impact of a growth in lottery betting in Australia. Labor will support this bill.