A bet or a game? The Lottoland case

On 16 August 2019, the Supreme Court of New South Wales (Supreme Court) ruled in favour of the plaintiff, Lottoland Australia Pty Ltd ACN 602 590 429 (Lottoland), in its action against the Australian Communications and Media Authority (ACMA) for their investigative findings against them stating their online products were in contravention of the relevant legislation: Lottoland Australia Pty Ltd v Australian Communications and Media Authority [2019] NSWSC 1041.

What was the alleged contravention by Lottoland?

Lottoland is an online lottery betting company.  It was alleged by ACMA that five (5) of Lottoland’s products: Mon & Wed Jackpot; Tue Jackpot, Thu Jackpot, US Millions and US Power (Gambling Products) contravened Part 2 of the Interactive Gambling Act 2001 (Cth) (IGA).  ACMA is a statutory body empowered under the IGA to investigate complaints, write investigation reports, and undertake enforcement and compliance monitoring activities.

Pursuant to s 15 of the IGA , intentionally providing a prohibited interactive gambling services (Prohibited Interactive Gambling Services) in Australia is a criminal offence.

Prohibited Interactive Gambling Services pursuant to s 5 of the IGA are defined as a gambling service where:

• The service is provided in the course of carrying on a business;
• The service is provided to customers using the following communications services:
  • an internet carriage service;
  • any other listed carriage service;
  • a broadcasting service;
  • any other content service; or
  • a datacasting service.

The definition of “gambling service” is defined in s 4 of the IGA as a service for the conduct of a game where:

• the game is played for money or anything else of value;
• the game is a game of chance or of mixed chance and skill; and
• a customer of the service gives or agrees to give consideration to play or enter the game.

However, s 5(3) of the IGA provides a list of excluded services from being classified as a prohibited interactive gambling service.  Relevantly in Lottoland’s case, s 5(3)(aa) of the IGA provides the exclusion of ‘wagering service’ (Excluded Wagering Service).

An Excluded Wagering Service has three limbs, the first is a positive limb contained in s 8A(5)(a)(i)(ii)(iii) of the IGA which states that an Excluded Wagering Service is as service that relates to betting on an event, a series of events or a contingency.  The two negative limbs are contained in s 8A(5)(b) and s8A(5)(c) which details what the service must not be in order to be an Excluded Wagering Service.

It was alleged by ACMA that Lottoland’s Gambling Products were not an Excluded Wagering Service and that they were not in relation to a “betting on” an “event”.

What is the difference between a “bet” and a “game” for the purposes of the IGA?

His Honour noted that there was not detailed or technical definitions in the IGA and that it was therefore appropriate to read the words in their natural and ordinary meaning within the context of the IGA.^[1]  His honour at paragraphs 90 to 92 utilised the Macquarie dictionary and the Oxford English Dictionary to define “bet”, “wager” and “game”.  The reason why “wager” was defined is because in s 4 of the IGA, “bet” is defined to include a wager.  The below utilised dictionary definitions are included below for your reference:

• “bet”:

“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.”

• “wager”:

“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”:

‘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.

His honour also considered common law to clarify the concept of a “bet”.  His honour then discussed the Acts Interpretation Act 1901 (Cth) s 15AB which 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.  His honour at paragraph 172 states that the ordinary meaning of ‘game’ would not render the IGA absurd.  His honour at paragraph 173 stated that the authorities provide that which extraneous material is helpful, it cannot “usurp the meaning of the legislation”.

As a result, his Honour examined the meanings as contained in the bill for the IGA’s explanatory memorandum (EA) and supplementary explanatory memorandum (SEA). His Honour at 174 notes that the EM and SEM refer to ‘virtual roulette’ and ‘internet poker machines’ and “games” and therefore some analogy can be made between such activities as the products in question.  His Honour stated that roulette for instance has “lights, graphics, ‘bells and whistles” and “fan fair”.  His honour stated that Lottoland’s Gambling Products contained none of this.  His honour believed the EM and SEM’s context “fortified the ordinary meaning of the words bet and game”.

As a result, his honour provided clarity into the difference between a “game” and a “bet” in relation to the IGA; they are to be defined by their ordinary meaning stated above.

Lottoland’s Gambling Products – held to be an Excluded Wagering Service

Instead of numbers written on ping-pong balls which are randomly selected to collate a string of numbers which creates the winning numbers, Lottoland’s Gambling Products use designated parts of specified financial indices at the appointed time to create the string of numbers.  The financial indices being selected at an appointed time was held to be an “event”.

As a result, Lottoland’s Gambling Products satisfied the positive limb of being an Excluded Wagering Service.  Furthermore, because Lottoland’s Gambling products were held to be a “bet” and not a “game”, the two negative limbs of the IGA did not apply.

In short Lottoland’s ‘big win’ was due to the fact they were excluded from the IGA for being an Excluded Wagering Service.

Links and further references

Legislation

Acts Interpretation Act 1901 (Cth)

Interactive Gambling Act 2001 (Cth)

Interactive Gambling Bill 2001 (Cth)

Interactive Gambling Bill 2001 (Cth) Explanatory Memorandum

Cases

Lottoland Australia Pty Ltd v Australian Communications and Media Authority [2019] NSWSC 1041

Further information about internet law

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Disclaimer

This article contains general commentary only.  You should not rely on the commentary as legal advice.  Specific legal advice should be obtained to ascertain how the law applies to your particular circumstances.

[1] Lottoland Australia Pty Ltd v Australian Communications and Media Authority [2019] NSWSC 1041 [87].

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