Totalizator (Amendment) Bill

The Hon. R. J. WEBSTER (Minister for Planning and Minister for Energy) [2.50]: I move:

That this bill be now read a second time.

I seek the leave of the House to incorporate my second reading speech in Hansard.

Leave granted.

The purpose of this bill is to update the provisions of the Totalizator Act 1916 so as to bring the Act into line with current day practices.

Totalisator betting in its present form commenced in New South Wales in 1916 with the enactment of the Totalizator Act. The impact this decision would eventually have on the State's racing industry could not have been envisaged, with totalisator betting continuing to grow to the stage where it has become the major revenue source for the industry.

As honourable members would be well aware, significant revenue is also derived for the State from commissions deducted from totalisators, thereby enabling additional funding to be made available in areas such as health, education, housing and law enforcement.

In the last financial year, revenue of some $299 million accrued to the State from the $3.7 billion invested with on-course and off-course totalisators.

In recognising the importance of totalisator betting to the viability of the racing industry and the economy, the Government considers it essential that the legislation meets the needs of both the industry and investors.

The Totalizator Act currently provides for the establishment and operation of totalisators on racecourses in New South Wales.

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In addition, it prescribes the rates of commission deductable from the various forms of totalisator betting and allows for the making of rules and regulations which govern the use of totalisators.

So as to ensure that the provisions of the legislation accurately reflect the manner in which totalisators are operated, the Government established a working party comprising representatives of the major racing clubs, the various totalisator companies, the TAB and the Department of Sport, Recreation and Racing to undertake a complete review of the Act in consultation with other interested parties in the racing industry. The recommendations of the working party are reflected in the bill now under review.

The bill will amend the formula for the disbursement of commissions in respect of totalisator investments made at metropolitan galloping racecourses on race meetings conducted elsewhere in New South Wales.

Many race clubs in country areas have adopted a form of betting commonly known as "intercity betting" or "cross betting" which enables the country clubs to conduct totalisator betting on events held by other racing clubs with such bets being transmitted for inclusion in the totalisator being conducted by the host club.

This form of betting has proven to be most successful in enabling smaller clubs to provide improved totalisator facilities and in allowing patrons on country racecourses to bet into the larger metropolitan pools.

However, cross betting from metropolitan racecourses to country racecourses has not been as prevalent because of the commission rates payable to the Crown from totalisator investments made in the metropolitan area.

These rates provide no incentive for the country clubs to allow cross betting into their pools.

Measures have been taken in the bill to vary the commission rates so as to make it viable for the metropolitan clubs to offer cross betting to their patrons without jeopardising the viability of country race clubs.

The bill will also give long overdue recognition to the role of independent totalisator companies in the running of totalisators.

As the Act stands, it only provides for the operation of totalisators by racing clubs. In reality however, the majority of totalisators are operated on behalf of the clubs by private totalisator companies.

These companies have played an important role in the development of totalisator betting over the years, not only in this State but throughout Australia and in many other countries. They have been at the forefront in technology development and have enhanced the reputation of the State's racing industry in many parts of the world. It is only fitting that the legislation recognises the role of these companies. At the same time, this amendment will give added protection to the significant public investment on totalisators.

Also included in the bill is a proposal to include a new offence and appropriate penalties within the Act for persons making an investment after a race with the knowledge that the race has been run.

It should be stressed that comprehensive controls have been implemented to guard against totalisator betting continuing after the start of the race and these controls have in the main proved most successful.

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However, some instances have occurred where persons have been able to place bets after the running of an event. This has usually arisen in respect of away meetings, where broadcasts to the racecourse have been interrupted and has, in the majority of cases, involved persons placing bets after a race without knowledge of the result.

In such cases, the persons involved have gained no unfair advantage and there was obviously no intent to commit fraud.

Unfortunately, on at least one occasion unscrupulous persons have taken advantage of the situation and obtained a substantial gain by placing investments with knowledge of the result of the race.

Prosecution action ensued and although the court was of the view that the evidence was sufficient to sustain that the persons involved had knowledge of the result of the race prior to placing their investments, it ruled that there was no offence disclosed by the evidence.

As honourable members would agree, this is clearly an unacceptable situation and the bill before the House will close this apparent "loophole" in the law.

A further amendment contained in the bill will increase from 16 years to 18 years the age under which a person may not be detained as a result of a failure to pay a penalty for under-aged betting.

This amendment is in line with the Government's policy of not detaining juveniles for fine default.

The bill also includes a number of other amendments which will repeal certain sections of the Act that have become redundant with the passing of time and with the introduction of new technology.

Finally, amendments of a minor or consequential nature will be made to other sections of the Act.

I commend the bill.

The Hon. B. H. VAUGHAN (Deputy Leader of the Opposition) [2.52]: The Opposition supports the Totalizator (Amendment) Bill. The proposed amendments will update the provisions of the Totalizator Act 1916 so that the Act will accurately reflect the current situation in respect of totalisator operations. During 1989 the then Minister, the Hon. R. B. Rowland Smith, a punter's friend and a punter himself, approved of the establishment of a working party comprising representatives from the Department of Sport, Recreation and Racing, the Totalisator Agency Board of New South Wales, the major totalisator companies and the Australian Jockey Club/Sydney Turf Club Computer Centre, to undertake a complete review of the Totalizator Act in order that the Act would be amended to take into account current practices and technology. In establishing the working party the Hon. R. B. Rowland Smith was mindful that although the Totalizator Act had been subject to many amendments over the years it had not been changed in substance since its enactment in 1916, despite the rapid advances in computer technology over the past 15 to 20 years. The establishment of that working party was a credit to the Minister at the time. The proposed amendments to the Act reflect the recommendations made by that working party. They obviously have the absolute approval of the Hon. R. B. Rowland Smith.

The proposals were to recognise the role of independent totalisator operating contractors in the conduct of totalisator betting; to change the formula for the disbursement of totalisator commissions in relations to totalisator investments made at metropolitan galloping courses or on race meetings conducted on other race courses in
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New South Wales; to include a new offence and appropriate penalties within the Act for persons making investments on a totalisator after the running of the race and with knowledge of the result of that race; to increase from 16 to 18 years the age under which a person may not be detained as a result of a failure to pay a penalty for under-age betting; to repeal a number of sections of the Act which have become redundant with the passing of time and the introduction of the new technology, to which I referred earlier; and to make certain consequential amendments to sections 2, 3, 8, 8A, 11, 16, 17, 18 and 19 which will provide for a clear definition of a totalisator and will make changes of an administrative or mechanical nature that do not affect the intent of the legislation. It seems to me that small clubs in particular will benefit from this very good piece of legislation.

The Hon. R. B. ROWLAND SMITH [2.56]: I thank the Deputy Leader of the Opposition for his kind remarks. It is not often I get accolades from the other side of the House. I do want to make one thing clear. The Hon. Barrie Unsworth once described me as a "big gambler". Let me put the record straight; I am a small investor. The proposed amendments seek to update the provisions of the Totalizator Act 1916 so that the Act will accurately reflect the current situation in respect to totalisator operations. Whilst there have been many amendments to the old Act, which was enacted in 1916, there has not been a thorough review of this important piece of legislation. Accordingly, as Minister for Sport, Recreation and Racing, in 1989 I approved the establishment of a working party comprising representatives from the Department of Sport, Recreation and Racing - I pay tribute here to Mr Daryl Lowenthal, who I am pleased to see is advising here this afternoon - the Totalizator Agency Board of New South Wales, the major totalisator companies, and the Australian Jockey Club/Sydney Turf Club Computer Centre, to undertake a complete review of the Totalizator Act in order that that Act could be amended to take into account current practices in technology.

It is important to remember that the total investments on on-course and off-course totalisators during the 1990-91 financial year amounted to $3.7 billion, with revenue of $299 million accruing to the State. In view of the importance of totalisator betting to the viability of the racing industry and to the economy of New South Wales, it is essential that the legislation meets the needs of the industry and of investors. The working party made certain recommendations which are reflected in the proposed amendments to the Totalizator Act, and these include the five which the Deputy Leader of the Opposition read out. This legislation gives long overdue recognition to the role of independent totalisator companies in the running of totalisators. The Act, as it presently stands, provides for the operation of totalisators by racing clubs only. In reality, however, the majority of totalisators are operated on behalf of the clubs by private totalisator companies. Those companies include: AWA Universal Totalisators, which unfortunately had a bit of a hiccup at Newcastle during the running of the Newcastle Cup, but I believe these things do happen in the world of computers; Automatic Totalisators and Racecourse Totalizators Pty Limited, which operate Kembla Grange racecourse and numerous provincial and country racecourses - and sitting alongside the Deputy Leader of the Opposition is a big gambler who can be seen at most of the race meetings.

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The Hon. B. H. Vaughan: Alone? Always alone?

The Hon. R. B. ROWLAND SMITH: No. In addition, two other companies, Advance Wagering Systems and P.C. Totalizators, which are based in New South Wales, do not at present have contracts with race clubs in this State. These five companies provide facilities and services for various interstate race clubs and totalizator agency boards. They are major producers of totalisator equipment. These companies have played an important role in the development of totalisator betting over the years, not only in this State but throughout Australia and many other countries. They have been at the forefront of technology development and have enhanced the reputation of the State's racing industry in many parts of the world. It is only fitting that the legislation should recognise the role of these companies. At the same time the proposed amendment will give added protection to the significant public investment on totalisators. I might add here that the legislation really applies to totalisators on-course rather than to the State-run Totalizator Agency Board offices off-course.

As stated in the second reading speech the bill will amend the formula for the disbursement of commissions in respect of totalisator investments made at metropolitan galloping race courses on race-meetings conducted elsewhere in New South Wales. A mechanism currently exists whereby race clubs in country areas may conduct totalisator betting on events held by other racing clubs with such bets being transmitted for inclusion in the totalisator being conducted by the host club. This is known as "intercity betting" or "cross betting". If the Hon. Franca Arena would be quiet for a moment, she would learn just exactly what it is all about. The third matter applies to a new offence for persons making investments after a race with the knowledge that the race has been run. Though controls have been implemented to guard against tote betting continuing after the start of a race, some instances have occurred where people have been able to place bets after the running of an event and have made a killing. Such matters were subsequently taken to court.

The Hon. Franca Arena: This is good going, if you can get it.

The Hon. R. B. ROWLAND SMITH: Let me warn the honourable lady not to go into it because, if she does, she will find out exactly what will happen if they find out about her. The evidence in one case was that the defendant placed a bet on a totalisator at the Hawkesbury racecourse on a race that had taken place in Victoria. The evidence showed that bets were placed some minutes after the race had been completed. Documents produced in court implied that the defendant knew the result of the race at the time he placed his last five bets. As a result he gained the sum of $58,000 from the totalisator company. In deciding the matter the magistrate noted there was evidence the bets had been placed after the completion of the event and the evidence showed that the defendant knew the result of the race. However, the magistrate had to conclude that no offence had been committed. Clearly this is an unacceptable situation and the legislation aims to close the loophole.

In addition to enforcing a monetary penalty of $2,000 the legislation will empower the court to order any person convicted of obtaining moneys in such a way to pay those moneys into the Consolidated Fund. The prosecution action failed as the court was not convinced that an offence had occurred. The fourth matter contained in the bill
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relates to the question of age. The amendment will increase from 16 years to 18 years the age under which a person may not be detained as a result of a failure to pay a penalty for under-age betting. This is in line with the Government's policy of not detaining juveniles for fine default. There are other minor and consequential amendments, but in all this is a good piece of legislation and, I believe, is overdue, but nevertheless the issue has been addressed and I support the bill.

Reverend the Hon. F. J. NILE [3.2]: On behalf of Call to Australia I wish to express concern about the Totalizator (Amendment) Bill, the objects of which are as follows:

(a) to recognise the use of independent contractors by racing clubs in the conduct of totalisator betting at racecourses operated by those clubs; and

(b) to change the formula for the disbursement of totalisator commission deducted from investments made under section 3B of that Act (Common-pool totalisator betting) where those investments are made at a metropolitan racecourse and transmitted to a racecourse outside the metropolitan area; and

(c) to make it an offence for a person to make or attempt to make an investment on a totalisator after the end of a race if the person knows that the race has already finished; and

(d) to increase from 16 years to 18 years the age under which a person may not be detained as a result of a failure to pay a penalty imposed on the person for under age betting;

The bill provides for minor and consequential amendments also. Our concern relates to what are referred to as independent contractors. I suppose it could be argued that it is a form of privatisation of the betting industry. In the past New South Wales, the gambling State of Australia if not of the South Pacific, has been compared to places such as New York where the mafia run a great deal of illegal gaming activities, such as the numbers game and so on. In New South Wales such activities are run by the Government. Some people thought that at least if the Government ran them, they should be honest and clean because the Government has rules and regulations that control public servants and so on. Now the door is open for private companies to be involved in totalisator betting.

We know that the former Labor Government, when it was considering the establishment of casinos, had problems in trying to find suitable clean companies that had no association with crime. Even reputable companies such as Hookers Harrah, through some of the individuals connected with it, such as Mr. Herscu, were found to be involved with bribery and corruption. This shows how difficult it is to get private companies that can be guaranteed not to be infiltrated by organised crime. During the hearings into the proposed casinos, at which I gave evidence, I noticed representatives of private companies as well as representatives of private companies associated with poker machines, and of private companies that have been linked with criminal activity. This raises the question of how the Government can guarantee over a period of time that the privatisation would be legitimate and not infiltrated by organised crime. The Hon. R. B. Rowland Smith acknowledged that the amendment to make it an offence for a person to bet on a race after the end of the race has been included because this has been happening.

The Hon. R. B. Rowland Smith: No, on one or two occasions.

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Reverend the Hon. F. J. NILE: Yes, it has been happening and not by a curious person experimenting. I believe that what the authorities detected on that occasion at the Hawkesbury racecourse would have been one of a number of cases. We know that betting and racing have been used to launder money. We know that criminals have made arrangements with bookies to place money on a horse after a race and that this was done as a business transaction, with payments to the bookie so that he would add bets to the betting sheet after the race was run. This was used as a means of laundering money and the police have been active in trying to prevent that practice by conducting forensic tests to establish whether the rule-off line has been rubbed out and moved down the page, so that the name of the person who placed the bet after the race could be added. This work by the police has had a positive effect. The temptation will exist for an individual with enough money to come to an arrangement with a private company to defraud the totalisator system or, worse still, one of the private companies could be associated with corrupt individuals.

One would think that, so far as a clean record is concerned, the security industry would be one of the toughest. However, we have information that criminals have set up security companies, supposedly to keep criminals out of banks and so on where large amounts of cash may be kept. I believe the royal commission into the building industry has received evidence that some security companies employed standover men who were then used in industrial disputes and so on to intimidate and even to physically bash someone. I believe the Government is opening the door and it may live to regret it.

The Hon. R. B. Rowland Smith: It is tightening it.

Reverend the Hon. F. J. NILE: The Government is not tightening it up. It is opening the door to private industry, with the difficulties of ensuring that those independent contractors are above question. Where in the legislation are the requirements to ensure that independent contractors are people of good repute?

The Hon. R. B. Rowland Smith: Is Reverend the Hon. F. J. Nile saying that these people are not of good repute?

Reverend the Hon. F. J. NILE: No, I am asking the honourable member how in the future it can be guaranteed that independent contractors will be of good repute and what the machinery is to ensure that they are. Some people will be rubbing their hands with glee because this legislation has opened the door for them. I have always been concerned with the expansion of gambling in New South Wales and the Government's increasing dependence upon it. I shall speak more about that during the Budget debate. Figures released show that over the past few years, particularly with the Greiner Government, there has been a growing dependence on gambling and betting revenue. The Government has a vested interest in how gambling may be made more efficient, with more people gambling and those activities being taxed to obtain revenue for the Government. No one would question that revenue is needed but I question the Government's dependence upon revenue from gambling and betting. In 1988-89 gambling and betting revenue increased by 13 per cent. In 1989-90 the increase was 8 per cent; in 1990-91 the increase was 11 per cent - and this is during a recession. It is anticipated in the Government's forecast for 1991-92 that the increase will be 5.2 per
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cent. Our values are wrong when gambling increases while other areas of activity decline.

This is emphasised by the proposal for two legal casinos given priority by the Liberal Party-National Party. That is not what the voters or the membership of those parties want. I have received letters from Liberal Party branch secretaries in this State expressing support for my views. The Government is moving in a dangerous area. These changes occur gradually - one bill today, another in two weeks' time and another in a month's time. The pattern is developing where there is a priority in the Government's planning, with legislation favouring the gambling industry. The Government has not offset that with the social costs. This will result in more revenue being needed for the family and community services portfolio. On the one hand the Government is expanding gambling and, on the other hand, is trying to patch up the damage caused by gambling legislation. It is time the Government resolved those opposing situations, enabling it to move closer towards adopting my policies.

The Hon. R. S. L. JONES [3.14]: Proposed new section 7(9) is quite fascinating. It reads:

(9) Any racing club that has, before the commencement of Schedule 1 (5) to the Totalizator (Amendment) Act 1991, engaged an independent contractor to operate a totalizator on behalf of the club is declared to have and always to have had the power to enter into the engagement and the engagement of the contractor is declared to have been as lawful as it would have been if subsection (2) had been in force when the engagement was entered into.

The Minister in his second reading speech said that the Act, as it presently stands, provides only for the operation of totalisators by racing clubs. In reality, however, the majority of totalisators are operated on behalf of the clubs by private totalisator companies. The question is who are these companies, who owns them and who are behind them? Mr Rixon in another place mentioned the names of five of these. They are AWA Universal Totalisators, Automatic Totalizators and Racecourse Totalisators Pty Limited which operates at Kembla Grange. Two other companies are Advanced Wagering Systems and P. C. Totalizators which are based in New South Wales but do not at present have contracted race clubs in this State. Evidently these five companies are the ones that will be operating. It appears that they will not all remain viable. When competition becomes severe one or more will go to the wall. I should like to know why these companies were able to operate illegally and for how long they were operating illegally? How did it occur without action being taken. I should like more details on that. I should like to congratulate the Minister for increasing from 16 years to 18 years the age under which a person may not be detained as a result of failure to pay a penalty imposed on that person for under-age betting. This was an initiative of the Australian Democrats. I am pleased that the Government is gradually accepting this initiative as government policy. It is not appropriate to hold any person between the age of 16 years and 18 years in an institution because they have failed to pay a fine. Instead, these young persons should carry out community service. I applaud that provision and hope that follows on in other legislation.

The Hon. R. J. WEBSTER (Minister for Planning and Minister for Energy) [3.17], in reply: I thank the Deputy Leader of the Opposition, the Hon. R. B. Rowland
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Smith, Reverend the Hon. F. J. Nile and the Hon. R. S. L. Jones for their contributions to this debate. The Hon. R. B. Rowland Smith served this State with great distinction as the Minister for Racing. He knows more about racing and this general area than any other honourable member in this Parliament. I listened intently to Reverend the Hon. F. J. Nile. I do not wish to turn my reply into a debate about gambling but gambling has perplexed society and government for a long time. To suggest that people will not and should not gamble is almost like suggesting they will not breathe. People have always wanted to gamble. This Government and former governments in New South Wales have regulated the gambling industry better than any other government in the western world. Whatever my personal views of gambling, people want to and will gamble. We live in a democratic society where, generally speaking, governments try to accommodate the wishes of the majority. Equally, people can choose not to gamble. With the assistance of the Police Service and the judiciary, by taxing and regulating gambling, we have been able to ensure that illegal gambling and gambling of an exploitative nature are kept to a bare minimum.

Whilst I take on board the remarks of Reverend the Hon. F. J. Nile, it is a fact that taxes extracted from the gambling industry benefit the people of New South Wales. A good deal of that revenue is used for the rehabilitation of those who cannot control their gambling. I share the honourable member's concern about that. I felt that I should make those points. I understood what he said and why he said it. Nevertheless, we live in a society in which people have a wide variety of behavioural patterns. Some people like to go to the TAB every day. I am not one of them, but they do exist. The Government has to cope with that, as it does with many other problems. I should like to allay the fears of Reverend the Hon. F. J. Nile about privatisation. Totalisator companies have functioned since the mid 1920s. They have not operated illegally but have been engaged by clubs in the same manner as other contractors, such as caterers, are engaged. The legislation gives legal recognition to their operations and enables the Government to monitor more closely and control those operations for the protection of the public. I reiterate that racing and betting are not being privatised. The operation of totalisators will still come under the control of non proprietary race clubs. The legislation recognises that clubs contract private operators to operate the totalisators on their behalf. The operations will continue to be under the close scrutiny of government inspectors. I hope the points that I have made in reply have clarified the matters that were of concern to the Hon. R. S. L. Jones and Reverend the Hon. F. J. Nile. I commend the bill.

Motion agreed to.

Bill read a second time and passed through remaining stages.