Third Dimension: Changes to lottery laws in New South Wales – Community Gaming Bill 2018 (NSW)

By John Vaughan-Williams, Lawyer

Overview

Not-for-profits rely on many different sources of income, and it has long been common for not-for-profits to fundraise using raffles, or other games of chance. In each Australian jurisdiction, there is specific legislation in place which governs lotteries, and it will often be the case that a raffle conducted by a not-for-profit is captured by the legislative definition of a ‘lottery’, giving rise to regulatory obligations.

In many circumstances, not-for-profits are required to obtain lottery permits or licences before conducting raffles. Having said this, in most jurisdictions there are exceptions from requiring permits for raffles where the value of prizes and/or ticket sales is below a specified amount. These exceptions tend to be inconsistent across states and territories.

Current regime

The statutory regime surrounding lotteries is arguably outdated. The relevant legislation in several jurisdictions was drafted many decades ago, and has not taken into account recent changes to the ways in which lotteries are conducted (in particular, online raffles). Some jurisdictions have recently been reviewing their legislative framework surrounding lotteries, including Western Australia, which introduced the Gaming and Wagering Legislation Amendment Bill 2018 (WA) in Western Australia. New South Wales has recently taken similar action, passing the Community Gaming Bill 2018 (NSW) (Bill) in October 2018. The Bill will replace the Lotteries and Art Unions Act 1901 (NSW) (1901 Act), which has been in effect for more than 100 years.

The Bill’s purpose

The Bill intends to harmonise New South Wales’ regime with other jurisdictions, and to ensure that the legislation takes into account the current practices of not-for-profits, and does not place an undue regulatory burden on the sector. These changes follow the recent attempts taken by several jurisdictions to harmonise fundraising regulation, and to strike an appropriate balance between adequate regulation, and not causing undue red tape.

Clarification regarding online lotteries

The Bill brings about several changes from the regime under the 1901 Act.

A difficulty of all regulation of fundraising activities, whether through charitable fundraising, or the conduct of lotteries, is the impact of the Internet. It has long been a criticism of the regulation of both charitable collections and community lotteries that the legislation includes significant ambiguity regarding the treatment of activities conducted online. For example, if a raffle is conducted online by a not-for-profit in one state, which is then accessed by individuals in another state, the legislation could sometimes be interpreted as meaning that permits or licences are required in several jurisdictions. The Bill includes a clear provision in this regard, by stating that if a raffle is conducted outside of New South Wales and is authorised in the jurisdiction where it is conducted, then it will be deemed to be permitted in New South Wales. This clarifies the example provided above, as the not-for-profit would have no ambiguity as to whether it was required to obtain an authority in New South Wales to conduct an online lottery.

Streamlining with charitable fundraising regulation

As mentioned earlier, changes to the laws surrounding lotteries are contemporaneous with recent reform to fundraising law in Australia. At the same time as the Bill was passed through Parliament, the Charitable Fundraising Amendment Bill 2018 (NSW) was also passed. By passing both at the same time, the legislature has attempted to use the Bill to streamline lottery regulation with charitable fundraising legislation, since many charities will be subject to both frameworks. Accordingly, whereas the 1901 Act allowed for the issuing of ‘permits’, the Bill now provides for the issuing of ‘authorities’, which is the terminology used in the Charitable Fundraising Act 1991 (NSW) (NSW Fundraising Act) for New South Wales fundraising licences.

Structuring of the Bill

Many of the important regulatory issues from the 1901 Act, such as provisions regarding misappropriation of funds, and the right of winners to claim prizes, are replicated in the Bill. However, a criticism of the 1901 Act was that it was structured in an onerous way, and the Bill is intended to be easier to navigate for the layperson.

In the 1901 Act, there were inconsistencies regarding issues which would be dealt with in the regulations, and in the 1901 Act. For example, the permit requirements for art unions were dealt with in the 1901 Act, whereas the permit requirements for other types of lotteries were dealt with in the regulations. The Bill attempts to set out the overarching regulatory principles, where the more minute details will be set out in the regulations.

The Bill provides that the regulations will set out all details regarding exemptions from the requirement to hold authorities for certain types of lotteries, including depending on the value of prizes and/or ticket sales. Therefore, the exact exemptions which will be in place are still to be determined as part of the drafting process, and charities will need to be mindful of this.

Fair Trading powers

Charitable and not-for-profit raffles used to be regulated by Liquor & Gaming NSW, and this role was transferred to NSW Fair Trading on 1 January 2018. In line with this change, the Bill streamlines NSW Fair Trading’s investigatory powers with those under other legislation, such as the NSW Fundraising Act, the Associations Incorporation Act 2009 (NSW), and the Fair Trading Act 1987 (NSW).

Although the Bill aims to reduce the regulatory burden on charities and not-for-profits, the Bill also provides NSW Fair Trading with strong investigatory powers in instances of suspected non-compliance. In particular, the Bill allows an authorised officer to enter any non-residential premises without a search warrant, in order to investigate alleged legislative contraventions. The authorised officer is permitted to inspect documents, take copies and photographs. Therefore, there will still be strong enforcement mechanisms under the Bill.

Current status

The draft regulations, and a regulatory impact statement regarding the Bill, are yet to be drafted. There is expected to be a transitional period, before the new regime commences sometime in 2019. Charities and not-for-profits should keep up-to-date as to when further developments occur, and ensure that they inform themselves as to whether they are required to obtain authorities to hold raffles.

For further information, please do not hesitate to contact us.

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