All bets are off for Norfolk Island to grant wagering licences

Minister for Territories Paul Fletcher today revoked Norfolk Island’s gaming authority’s power to license betting operators.

The federal government today stripped Norfolk Island of all powers to grant wagering licences after a decision by the island gaming authority last year opened up the multi-billion dollar Australian thoroughbred industry to worldwide ridicule.

In an unprecedented and dramatic intervention by the federal government into thoroughbred administration, the Minister for Territories, Paul Fletcher, yesterday revoked the island’s gaming authority’s power to license betting operators in Australia.

The island gaming authority had previously licensed the reputable Ladbrokes to operate in Australia, but a decision in March last year to grant permission for betting exchange BetHQ, effectively opened Australia up to Citibet, the largest illegal bookmaker in the world.

The link was discovered only early last month and was most embarrassing for Australian racing after it had spoken out strongly at the Asian Racing Federation conference earlier this year against the dangers of illegal operators to the global sport’s health and integrity.

Racing Australia chief executive Peter McGauran told The Australian yesterday: “We welcome the quick intervention by the federal government for which we are most grateful.

“The minister has acted decisively to repair the reputational damage to Australian racing by the actions of Norfolk Island.

“Racing Australia will make a submission into the government inquiry into the future of the Norfolk Island authority, in which we will call for its permanent disbandment given its inability to properly assess applicants for wagering purposes,” McGauran said.

The minister’s direction prohibits the island authority from issuing and renewing gaming licences, and “requires the authority to seek approval from a delegate of the commonwealth minister before performing certain other functions such as varying a licence or transferring a licence”.

The direction effectively demands the authority stand down until a full audit of its procedures, previous decisions and protocols. Yesterday’s direction by the minister demands the authority co-operate with the audit which will start in July and is expected to take three months.

To that end yesterday’s direction by the minister also ruled “the authority must not destroy or dispose of any item of correspondence or other document, electronic or otherwise, that is held by the authority …. at or after the commencement of this direction.” It is believed licences granted before yesterday’s minister’s direction will not be affected.

The Pacific island is an Australian territory and deemed an Australian racing jurisdiction. Last week when The Australian contacted the director of the Norfolk Island Gaming Authority, Roderick McAlpine, he briefly commented: “We are waiting to hear from Racing Victoria and Racing NSW. Once we know more then we will (comment). We are not fobbing you off,” McAlpine said. When asked specifically about BetHQ he hung up.

CitiBet is licensed in The Philippines but bets on racing (including in-running), spread betting on foreign exchange price movements, stock indices price movements and commodities price movements. It also bets on racing around the world but without the correct agreements and product fees which makes the wagering illegal. BetHQ, which the NIGA acknowledged had a “white label” arrangement with CitiBet last March, also bets — by agreement — on AFL football and the rugby codes, cricket and soccer.

Chief executive of the Australian Wagering Council, Ian Fletcher, backed the government’s move yesterday.

He said the council, which represents heavyweight betting operators — bet365, Betfair, Sportsbet, Unibet and William Hill Australia — was right to prohibit the Norfolk Island Gaming Authority from issuing and renewing gaming licences, without the prior approval of the commonwealth.

“Australian consumers, racing and sports bodies and the legitimate onshore wagering industry itself must have confidence in the licensing and regulation of wagering providers and the government’s proposed audit of the NIGA is welcomed. We are sure that important lessons will be learned,” Fletcher said.

“The complexities of the global wagering marketplace, coupled with increasing threats to sports integrity provide support for the longstanding view of the AWC that Australians need and deserve a rational, national regulatory framework for wagering.”

In a meeting critical to yesterday’s decision, the minister met McGauran and representatives from Racing NSW and Racing Victoria on Monday. Racing argued how the Norfolk Island decision had put the sport at risk and hurt the industry’s reputation. Both Victoria and NSW have revoked BetHQ’s permit to legally bet on their race fields.

The federal government acted in June last year to bring Norfolk Island more under the Australian tax and social security umbrella and it takes effect from July. It means the island will be less self-governing.

As part of this shift in power the island’s government business enterprises will be reviewed. It is expected then that the NIGA’s future will be decided.

The Hong Kong Jockey Club head of security and integrity Martin Purbrick told the recent Asian Racing Federation conference that of $930bn wagered globally on horseracing in 2015, $650bn was bet with illegal operators, of which CitiBet is the biggest.

It is believed the HKJC submission last year told the federal government inquiry into illegal offshore wagering that CitiBet alone had an 8 per cent share of turnover on Australian racing.

In reality, CitiBet is not the problem, merely an example of it. CitiBet is one of many large and vibrant Asian betting operators — licensed in The Philippines — but acting illegally and with immunity on Australian race fields and sport.

As well as the billion dollar financial drain on the racing and sporting industries the exposure to corruption is high because the Australian sports have no power to look at the overseas operators betting patterns or customer base.

All betting operators licensed with racing and other sporting authorities in Australia work with their sports to detect any hint of illegal patterns. It is in the interests of the betting operators to expose fraud.