Racing Amendment Bill

  • discharged on 17 October 2018

Racing Amendment Bill

Government Bill

288—1

Explanatory note

General policy statement

This Bill seeks to amend the Racing Act 2003 (the Act) to implement a range of provisions that are designed to—

  • improve the competitiveness of the New Zealand Racing Board’s (the Board) betting operations; and

  • require offshore betting operators to—

    • pay to use New Zealand racing and sporting information in their betting products (an information use charge); and

    • pay when they take bets on racing or sporting events (or both) where those bets originate in New Zealand (a consumption charge); and

  • provide for regulations to be made to revise the formula that is used for allocating proceeds from sports betting between the racing and sports sectors.

The Board is the sole legally authorised provider of racing and sports betting in New Zealand. However, betting operators based in other jurisdictions may offer bets to New Zealanders over the Internet and may offer bets on New Zealand sports and racing to all of their customers, regardless of the location of those customers. Those offshore betting operators are not bound by New Zealand law, other than a prohibition on them advertising in this country. Unlike the Board, therefore, offshore operators are not required to contribute to the New Zealand racing and sports industries or to gambling harm services in this country.

The amendments in this Bill reflect recommendations from the Offshore Racing and Sports Betting Working Group (Working Group), which was established by the Minister for Racing in 2015. The Working Group was asked to review the issue of offshore gambling and its impact on the Board’s income.

The Bill provides for the information use and consumption charges to be inserted into the Act (as new Part 6AA). The Bill provides that the Department of Internal Affairs will administer the charges as the “designated authority”. The Department may delegate its functions and powers as designated authority to, without limitation, the Board, a Crown entity as defined in section 7 of the Crown Entities Act 2004, or another department.

The Bill requires offshore betting operators to seek the permission of the designated authority before they can use New Zealand racing and sporting information. Offshore betting operators must enter into agreements with the designated authority in respect of the information use charge. New Zealand law will apply in relation to any disputes that may arise in respect of those agreements and enforcement of those agreements, including recovery of outstanding charges and penalties. The designated authority may issue a penalty notice to an offshore betting operator if the betting operator has failed to get permission to use New Zealand racing and sporting information, failed to enter into an agreement in respect of the information use charge, failed to pay an amount owing under the charges, or provided the designated authority with false or incorrect information.

The Bill provides that the Minister must set the specified rate or rates of the charges, and that regulations may be made to specify the penalty rates and the minimum betting revenue that offshore betting operators must receive for a financial year from their betting operations involving New Zealand before becoming liable to pay the charges for that year.

The Bill provides that existing commercial agreements between the Board and offshore betting operators continue to have effect and are not affected by provisions of the Bill. The Bill also provides for the Minister to grant exemptions to specific offshore operators from the requirements to pay either or both of the charges when an agreement is entered into. This provision is intended to minimise the risk of double-charging in circumstances where offshore betting operators enter into separate commercial contracts regarding the use of New Zealand betting information.

The Bill has a safeguard in place to ensure that it does not target offshore betting operators unfairly. The total proportion of revenue or profit required to be paid by offshore betting operators should not exceed the equivalent proportion of revenue or profit that the Board pays to New Zealand racing and sports organisations.

The Bill provides that purposes for which any money received from the charges may be applied include the following:

  • promotion of the long-term viability of New Zealand racing and sports:

  • covering the cost of administering enforcement and collection of the charges:

  • funding measures to prevent and minimise harm from gambling.

In addition to providing for betting information use charges and consumption charges, the Bill also amends the Act to—

  • permit the Board to offer in-race betting; and

  • allow the Board to enter into betting agreements with Sport and Recreation New Zealand (Sport NZ) in circumstances where there is no qualifying national sporting organisation (NSO) for a particular sport; and

  • permit the Board to make rules declaring sporting events to be or not to be New Zealand sporting events for the purposes of new Part 6AA and attracting the charges.

These additional amendments, to enhance the TAB’s products and services, also came from recommendations of the Working Group. Permitting in-race betting would enable the Board to compete on a more even basis with offshore betting operators who may already offer this type of product.

The Bill will provide that in-race betting would apply only to bets on the final outcome of a race, as opposed to events within a race (for example, lead changes or horses retiring prematurely). It would therefore not permit new types of gambling and would align racing bets with in-play betting on sports events, which the Board is already allowed to offer.

Currently, betting is permitted on domestic and overseas sporting events only if the Board has a betting agreement with the relevant New Zealand NSO for the sport. The Board therefore cannot offer betting products for sports that may be popular internationally but have limited participation or formal organisation in New Zealand. The Bill will provide that, where sports are not represented by a qualifying domestic NSO, the Board can offer betting if the Board enters into an agreement with Sport NZ. Sport NZ would then determine the distribution of betting income.

The Bill also provides for a regulation-making power to update the formula by which proceeds from betting on New Zealand sporting events are allocated between the racing and sports sectors. Sport NZ and the Board believe that the current formula in the Act for allocating this money is no longer fit for purpose.

Departmental disclosure statement

The Department of Internal Affairs is required to prepare a disclosure statement to assist with the scrutiny of this Bill. The disclosure statement provides access to information about the policy development of the Bill and identifies any significant or unusual legislative features of the Bill.

Regulatory impact statement

The Department of Internal Affairs produced a regulatory impact statement on 3 March 2017 and Sport and Recreation New Zealand also produced a regulatory impact statement to help inform the main policy decisions taken by the Government relating to the contents of this Bill.

Clause by clause analysis

Clause 1 is the Title clause.

Clause 2 is the commencement clause and provides that the Bill comes into force on the day after the date on which it receives the Royal assent.

Clause 3 provides that the Bill amends the Racing Act 2003.

Clause 4 replaces the definition of sporting event to take into account the meaning of that term for the purposes of new Part 6AA. The clause also extends the definition of New Zealand national sporting organisation in section 55(3) to apply to the whole Act.

Clause 5 inserts new section 5A, which gives effect to all transitional, savings, and related provisions arising from this and any subsequent amendment Act. Under the new section, all those provisions will be found in new Schedule 1AA.

Clause 6 amends section 50, consequential on the amendment made by clause 7.

Clause 7 replaces section 52(3) to remove the current prohibition on betting on the outcome of a race once the race has started.

Clause 8 amends section 54(2) to provide for the Board to declare sporting events to be, or not to be, New Zealand sporting events for the purposes of new Part 6AA. The clause also inserts new subsections (3) and (4), which require the Board to consult Sport and Recreation New Zealand before making a declaration and publish the declaration on the Board’s Internet site.

Clause 9 inserts new section 55A, which enables betting to take place on sporting events held in New Zealand or overseas where the sport concerned is not represented by a sports organisation in New Zealand capable of entering into an agreement with the New Zealand Racing Board (the Board) in compliance with section 55. New section 55A permits the Board to enter into an equivalent agreement with Sport and Recreation New Zealand in those circumstances.

Clause 10 replaces section 57(1)(d), which currently sets out a formula for calculating the amount that is to be paid to national sporting organisations from money received from sports betting. The replacement provision provides for the necessary formula (or formulas) to be established by regulations.

Clause 11 inserts new Part 6AA (new sections 65AA to 65AV).

New section 65AA sets out the purpose of new Part 6AA and provides a broad overview of the Part.

New section 65AB provides for the territorial scope of new Part 6AA.

New section 65AC defines terms used in the new Part.

New section 65AD

  • designates the department responsible for the administration of the Act (currently, the Department of Internal Affairs) as the entity responsible for implementing the 2 schemes provided for by the new Part (the designated authority). These are the schemes under which offshore betting operators are required to pay charges in New Zealand in respect of their betting operations involving this country (the scheme for betting information use charges and the scheme for consumption charges):

  • provides for the functions and powers of the designated authority.

New section 65AE provides for the designated authority to delegate its functions and powers in respect of either or both schemes, or any parts of the schemes (other than the delegation power itself and the authority’s power under new section 65AR(4) to review decisions to impose penalties on offshore betting operators).

New section 65AF requires offshore betting operators to obtain permission from the designated authority before using New Zealand racing and sporting information in their betting operations and to enter into an agreement setting out the terms and conditions on which permission is granted (a betting information use agreement).

New section 65AG sets out terms and conditions required to be included in a betting information use agreement.

New section 65AH requires the Minister to set the rates of the betting information use charges that offshore betting operators must pay and provides for the manner in which that must be done.

New section 65AI provides for the designated authority’s powers to issue legal proceedings to enforce betting information use agreements.

New sections 65AJ to 65AL provide for matters relating to the scheme for consumption charges, including—

  • a requirement for offshore betting operators to pay consumption charges:

  • a requirement for the Minister to set the rates of those charges and the manner in which that must be done:

  • information that offshore betting operators must provide for monitoring purposes.

New section 65AM sets out the basis on which the Minister must set betting information use charges and consumption charges. The clause also provides for matters concerning the process for setting those charges. Under the provision, the Minister must use the proportion of the Board’s total racing and sporting revenue or profit that the Board pays to New Zealand racing and sports organisations each financial year as the benchmark for setting the charges. The Minister must try to ensure that the rates set for the 2 charges do not result in offshore betting operators paying, by way of those charges, any greater proportion of their total revenue or profit from betting operations involving New Zealand than the benchmark proportion referred to.

New section 65AMA provides for a minimum threshold of revenue or profit that an offshore betting operator has to receive from its operations involving New Zealand before the operator becomes liable for information use charges and consumption charges. New section 65AMA sets the threshold at NZ$60,000 and provides for this amount to be adjusted by regulations.

New section 65AN restricts the purposes for which the money received from betting information use charges and consumption charges may be applied. Although the money cannot be applied for any purpose other than the 3 purposes specified in the provision, the designated authority can decide whether to apply all or any of that money for one or more of those purposes.

New section 65AO provides for the Minister to exempt offshore betting operators from requirements under the new Part and sets out criteria that must be met in order for an exemption to be granted.

New section 65AP provides for the Minister’s powers to vary or revoke an exemption.

New section 65AQ specifies the status of an instrument granting an exemption under the Part for the purposes of certain provisions of the Legislation Act 2012 relating to drafting and publication. The new section declares an exemption notice to be a disallowable instrument but not a legislative instrument for the purposes of that Act. This means that the exemption notice must be presented to the House of Representatives not later than the 16th sitting day of the House after the date on which the exemption is granted. However, the Parliamentary Counsel Office will not draft the exemption notice and will not publish the notice on the official site for New Zealand legislation (http://www.legislation.govt.nz) as a legislative instrument. Instead, new section 65AQ requires the granting of the exemption to be notified in the Gazette and requires the notice itself to be published on the Internet site of the designated authority.

The reasons why the exemptions are disallowable instruments but not legislative instruments are that they affect a narrowly defined group of persons only (betting operators located offshore that take the types of bets involving New Zealand specified in the new Part), the underlying matters to which the exemption powers relate are relatively detailed and technical, and they do not include criminal offence provisions or impose taxes.

New sections 65AR to 65AU provide for the designated authority to impose penalties on offshore betting operators for failing to pay betting information use or consumption charges, or for providing false or incorrect information to the authority, and provide for matters relating to that power, including—

  • the maximum amounts of penalties that may be imposed:

  • the right for an offshore betting operator to request a review of the authority’s decision to impose a penalty and the effect of that request on the betting operator’s obligation to pay:

  • the legal status of outstanding charges and penalties as debts that the designated authority can issue legal proceedings to recover, the application of New Zealand law in relation to the recovery of those debts, and the jurisdiction of the courts of New Zealand to hear and determine legal proceedings for their recovery.

New section 65AV is a regulation-making power for the purposes of new Part 6AA.

Clause 12 inserts new Schedule 1AA (transitional, savings, and related provisions).

Clauses 1 and 2 of Schedule 1AA preserve the rights and obligations of parties to certain agreements that are entered into before new Part 6AA comes into force and relate to matters provided for in the new Part.