Betfair Notes

Findings

Question One

Is s 24(1aa) of the WA Act invalid either: (a) wholly; or (b) to the extent that s 24(1aa) would apply to a person, including the second plaintiff, who makes or accepts offers to bet through the use of the first plaintiff’s betting exchange, by telephone or internet communication between a place in Western Australia and the Tasmanian premises, by reason of s 92 of the Constitution?

Section 24(1aa) of the WA Act is invalid to the extent that it would apply to a person, including the second plaintiff, who makes or accepts offers to bet through the use of the first plaintiff’s betting exchange by telephone or internet communication between a place in Western Australia and the Tasmanian premises of the first plaintiff.

Question Two

Is s 27D(1) of the WA Act invalid either: (a) wholly; or (b) to the extent that s 27D(1) would apply to the conduct of the first plaintiff in publishing or otherwise making available a WA race field: (i) by way of telephone or internet communication between the Tasmanian premises and a place in another state; or (ii) for the purpose of making or receiving offers to bet through the use of the first plaintiff’s betting exchange by telephone or internet communication between the Tasmanian premises and a place in another state, by reason of s 92 of the Constitution?

Section 27D(1) of the WA Act is invalid to the extent that it would apply to conduct of the first plaintiff in publishing or otherwise making available a WA race field: (a) by way of telephone or internet communication between the Tasmanian premises of the first plaintiff and a place in another state; or (b) for the purpose of making or receiving offers to bet through the use of the first plaintiff’s betting exchange by telephone or internet communication between the Tasmanian premises of the first plaintiff and a place in another state.

Section 92

“On the imposition of uniform duties of customs, trade, commerce, and intercourse among the States, whether by means of internal carriage or ocean navigation, shall be absolutely free.

But notwithstanding anything in this Constitution, goods imported before the imposition of uniform duties of customs into any State, or into any Colony which, whilst the goods remain therein, becomes a State, shall, on thence passing into another State within two years after the imposition of such duties, be liable to any duty chargeable on the importation of such goods into the Commonwealth, less any duty paid in respect of the goods on their importation. “

Key aspects being paragraph 1 – primary issues being:

1. Is a betting exchange covered under trade and/or commerce?: A: Yes, easily within the very broad definition
2. If so, did the legislation impose a discriminatory burden?: A: Yes, Betfair were not permitted to compete with WA TAB’s and the like
3. If so, can the legislation be described as ‘protectionist’?: A: Yes, it was designed to protect the WA racing industry from Betting Exchanges
4. If so, can it be justified as necessary and proportionate for achieving a public welfare purpose?: A: No, the purpose could be achieved in a non-discriminatory manner by requiring Betfair return a small percentage of profits.

Notes

Trade and Commerce has been defined in the same manner for s92 as for s51(i) – as such, any rulings applicable to one apply to the other
Initially constrained to physical objects, but wireless telephony had been added to the list prior to 1920 (W & A McArthur Ltd v Queensland (1920) 28 CLR 530)
Coper proposed 3 different theories/types of rulings – the fiscal burden, the free trade, and the individual rights
Fiscal (as advocated by Murphy J) felt that a full reading of the paragraph made it clear that it only applied to freedom from customs (discredited in C v W)
Individual Rights (as advocated by Isaacs J and Dixon J) felt it granted individuals the right to engage in trade and commerce between (and even within) states without government interference (also discredited in C v W)
Free Trade (as ultimately embraced by C v W) prevents discriminatory(?) and/or protectionist policies from interfering with trade. Traditionally may only have required a burden (Bank Nationalisation case)
Free Trade consisted of the discrimination theory (Wheat case (1915), Duncan’s case (1916)), the protectionism approach (Vacuum Oil (1934), James case), and the free-trade between states approach, regardless of discrimination and/or protectionism (Evatt J)
Was basically an inconsistent mess prior to C v W
Even post C & W, left open a lot of questions – particularly as to the nature of the test (did it require prima facie discrimination AND protectionist purpose, or would formal equality and protectionist purpose suffice?)
Castlemaine Tooheys held that a general, equal law in the same manner as C v W that would disadvantage interstate competitors but not local business was still discriminatory and protectionist if it could not be justified as “necessary or appropriate and adapted either to the protection of the community from a real danger or threat to its welfare or to the enhancement of its welfare” [472]
As this requires consideration of policy concerns, the HC was reluctant to get involved – instead only looking at whether the law is proportionate to the means it attempts to achieve.
Betfair essentially takes this one logical step further, requiring that if a non-discriminatory means of achieving the same outcome exists, it be preferred to the discriminatory one. (As evidenced by the 1% payment from Betfair to Victoria)

Cole v Whitfield

Dealt with Tasmanian laws regarding Crayfish size as related to imported Crayfish
Looked at tangled state of the law, and even to the intent of the founders (despite the Engineer’s doctrine of ignoring them)
Original wording referred to freedom from customs and restrictions, except such regulations as may be necessary for the conduct of business [387]
Was proposed to be restricted to taxes, charges and imposts only [390]
Held that a regulation that imposed a discriminatory burden would probably be unconstitutional, if it were passed on protectionist grounds [407]
The fact that a discriminatory burden AND protectionist goal are required for s92 to apply [408] (and Bath v Alston) serve to significantly narrow the scope of ‘absolutely free’
Held that since they applied to all crayfish, regardless of state, there was no prima facie discrimination – and that the object of the law was not to give Tasmania a competitive or commercial advantage [409]. As such, the law was upheld.

Bath v Alston Holdings

Dealt with an additional 25% tax on tobacco purchased from outside of Victoria
Majority (Mason, Brennan, Deane, Gaudron) held that the discrimination was obvious, and that it served a protectionist purpose of protecting Victorian wholesalers from cheaper interstate competitors. [425-427]
Minority (Wilson, Dawson, Toohey) felt that tax equalisation is not inherently protectionist, as whether the tax is paid by the out of state wholesaler or the license fee is paid by the Victorian wholesaler, the costs are the same to the retailer/customer. [432]

Castlemaine Tooheys v South Australia

Looked at whether increased cost of beer bottle returns in South Australia was unconstitutional. Held that they were, but it was a question of disproportionate degree rather than anything else, as the energy usage concerns took place out of the state and the litter considerations could be achieved at a far lower rate.
Effectively upheld that regulation that would place an additional burden on interstate trade is justifiable, provided you can demonstrate that the additional cost is justified by and proportionate to the benefits of the regulation, and that no non-discriminatory means of achieving the same objective exists
“In determining what is relevantly discriminatory in the context of s 92, we must take account of the fundamental consideration that, subject to the Constitution, the legislature of a State has power to enact legislation for the well-being of the people of that State. In that context, the freedom from discriminatory burdens of a protectionist kind postulated by s 92 does not deny to the legislature of a State power to enact legislation for the well-being of the people of that State unless the legislation is relevantly discriminatory. Accordingly, interstate trade, as well as intrastate trade, must submit to such regulation as may be necessary or appropriate and adapted either to the protection of the community from a real danger or threat to its welfare or to the enhancement of its welfare.”
“It would extend the immunity conferred by s 92 beyond all reason if the court were to hold that the section invalidated any burden on interstate trade which disadvantaged that trade in competition with intrastate trade, notwithstanding that the imposition of the burden was necessary or appropriate and adapted to the protection of the people of the State from a real danger or threat to its well-being.”
Detailed examples of discrimination given in [478-480]
“Although the American cases cannot be treated as an accurate guide to the interpretation of s 92, they identify in a useful way considerations which may be relevant to the characterization which an Australian court is called upon to undertake” (471)

Barley Marketing Board (NSW) v Norman (1990) 171 CLR 182

Looked at whether a Marketing Board seizing all barley in NSW in exchange for payment rights was against section 92 of the constitution.
Held that “Neither the fact that the marketing scheme protected small producers by giving them the benefit of the Board's increased bargaining power against large purchasers, especially interstate maltsters, nor the fact that New South Wales maltsters were free to buy barley from border growers in Victoria whereas Victorian maltsters were no longer able to buy from border growers in New South Wales, involved discrimination against the interstate trade in barley or interstate traders in that commodity. The Act neither resulted in the exclusion of one group but not the other from any market nor did it lead to any difference in the price of product to maltsters in the two States.”
“That interpretation of the commerce clause gives it a more wide-ranging operation than Cole v Whitfield accords to s 92 with its guarantee of freedom from discriminatory burdens of a protectionist kind. At the same time it could scarcely be denied that a prohibition or restriction upon the export of a commodity from a State with a view to conferring an advantage or benefit on producers within the State over out-of-State producers would amount to discrimination in a protectionist sense. If a State having a scarce resource or the most inexpensive supplies of a raw material needed for a manufacturing operation prohibited the export of material from that resource or those supplies in order to confer a benefit on its domestic manufacturers as against their out-of-State competitors, that prohibition would discriminate against interstate trade and commerce in a protectionist sense.” (page 204, Mason CJ, Brennan, Deane, Dawson, Toohey, Gaudron and McHugh JJ.)

'The Re-Interpretation of Section 92: The decline of Free Enterprise and the Rise of Free Trade', Gerard Carney, 1991, 3 Bond Law Review 149

The first decision on s92, Fox v Robbins [(1909) 9 CLR 115] held invalid Western Australian legislation which imposed a 2 pound licence fee to sell liquor produced from fruit grown in Western Australia but a 50 pound licence fee to sell other liquor. (page 150)

Cole v Whitfield establishes that s92 prohibits the Commonwealth and the States from imposing burdens on interstate trade or commerce which (i) discriminate against that trade or commerce by conferring a competitive or market advantage on intrastate trade or commerce of the same kind and (ii) are protectionist in character. (page 153)

The new test of s92 which may be inadequately stated as prohibiting discriminatory burdens of a protectionist kind, fundamentally changes the guarantee of interstate trade from a personal right enjoyed by every individual interstate trader to a legally enforceable maxim of economic behaviour, that of free trade. (page 155)

But what Cole v Whitfield makes clear is that even if the legislation has a protectionist effect, this on its own, is not conclusive of its character [317]. The legislation must still be characterised as protectionist. (page 156)

Indeed, the actual decision in Cole v Whitfield itself has been criticised principally in relation to the ready acceptance by the Court that there was no method by which undersized Tasmanian crayfish could be distinguished from imported crayfish. (see Richard Cullen, ‘Section 92: QUO VADIS?’(1989) 19 WAL Review 90 at 127) (page 157)

Scope is therefore given to State and Commonwealth laws which may appear protectionist, to be characterised as not protectionist if they serve to protect some legitimate local interest. This process of characterisation, while being a neat solution to the difficulty of reconciling the public interest in regulating certain aspects of interstate trade and commerce with the freedom from protectionism guaranteed by s92, nonetheless injects considerable flexibility and uncertainty into the situation. (page 159)

The Castlemaine Tooheys formula may be described as follows: (page 162)
(1) Is there a legitimate local interest in need of protection?
(2) Are the measures necessary or appropriate and adapted to protecting the local interest?
(3) Is the impact on interstate trade and commerce incidental and not disproportionate to the achievement of the objective of protecting the public interest?

The scope of the guarantee of free trade in s92 is limited. It is not a general guarantee against protectionism as such. Only protectionism arising from measures which discriminate against interstate trade and commerce and which confer a competitive or market advantage on intrastate trade and commerce of the same kind, is prohibited by s92. Marketing Board (NSW) v Norman// (1990) 171 CLR 182 (page 165)

Michael Coper, 'Freedom of Interstate Trade under the Australian Constitution' (1983)

“In the interpretation of s92, lack of clarity has been a prominent feature both of individual judgments and the supposed doctrine resulting from their combination; this in turn has been responsible, along with other factors, such as an endemic diversity of opinion, for a lack of certainty.” (285-286)

“[T]he bare words of s92 are elliptical, … the section stops short of saying expressly what it is from which interstate trade is to be absolutely free.” (297)

“I have thus far ignored, however, the argument from precedent. It cannot be too strongly emphasised that this argument loses much of its force when the adherence to precedent fails to produce the certainty and consistency which supply the justification for the doctrine. It is arguable that there has been relatively more certainty in the application of s92 since the individual rights theory was firmly established in 1949 in the Bank case than there was before 1949, but I doubt it. More likely the appearance of certainty has been greater…” (306)

Gonzalo Villalta Puig, ‘A European Saving Test for Section 92 of the Australian Constitution’ (2008) 13 Deakin Law Review 99.

“The first test is discriminatory protectionism. It is an invalidity test. The test declares a law or measure invalid if it imposes a burden on interstate trade and commerce that is discriminatory in a protectionist sense. The second test is abridged proportionality. It is a saving test. The test declares a law or measure valid if it has a purpose that is not protectionist and any burden that it imposes on interstate trade and commerce is appropriate and adapted to the achievement of that purpose.” (page 100)

“[I]n Australia the proportionality doctrine has taken root and, indeed, extended its reach into the heartland of federal constitutional law.” (Gummow J wrote in Minister for Resources v Dover Fisheries Pty Ltd)

“Robust proportionality involves a cumulative sequence of analysis that tests the validity of the law or measure under challenge at three levels of assessment. These levels involve an inquiry into the ‘suitability’, ‘necessity’ and ‘balancing’ of that law or measure. This analysis seeks to establish whether a law or measure that a court has held to restrict some ‘protected interest’ should be declared valid notwithstanding its restriction.” (page 108)

Gonzalo Villalta Puig, ‘Free Movement of Goods: The European Experience in the Australian Context’ 75 Australian Law Journal 639

“Up to 32 distinct phrases have been identified in the judicial reading of s 92 in the period spanning 1909 to 1980” (page 639)
[Cole] “cannot be relied upon to produce a clear result from its automatic application to any fact situation” (Staker, ‘Section 92 of the Constitution and the European Court of Justice’ (1990) 19 FL Rev 322.
“Generally, the expression ‘absolutely free’ has been interpreted by the High Court to refer to an absolute freedom from unreasonable burdens. In the context of trade and commerce, “discriminatory protectionism” is the forbidden act.” (pages 644-645)

Betfair Pty Ltd v Western Australia, SIMPSON, Amelia, PUBLIC LAW REVIEW; 19 (3) September 2008: 191-196

“The High Court remains non-committal about one key element of its modern s 92 doctrine, being whether or not that doctrine is purpose-focused or effects-focused. A law’s protectionist effect, or lack thereof, has clearly been relevant to the determination of s 92 cases. However the court has not clarified whether the s 92 prohibition is triggered by the mere presence of protectionist effects or whether, instead, those effects enable the court to infer a protectionist purpose, with that being the true touchstone.” (194)

less deferent tone than Castlemaine Tooheys when assessing reasonable necessity, insisting that “[i]f a criterion of validity of legislation is possession of a particular attribute, then Ch III of the Constitution commits to the federal judicial power the determination of that issue” (paragraph 99) (195)
Pre-Cole cases can still provide guidance on “the place of s 92 in the scheme of the Constitution” [11] and US cases can assist the High Court persuasively. (196)

Grounding the High Court's Modern Section 92 Jurisprudence: The Case for Improper Purpose as the Touchstone [article] Federal Law Review, Vol. 33, Issue 3 (2005), pp. 445-484 Simpson, Amelia 33 Fed. L. Rev. 445 (2005)

“The first of these alternatives assumes a touchstone of improper legislative purpose, whereby section 92 would only operate to defeat laws motivated by a purpose of protectionist discrimination. The second is best understood, I think, as an effects-focused principle kept in check by a proviso of defeasibility. If this were on foot, it would mean that the section 92 norm would extend, in principle, to prohibit unintended protectionist discrimination. However, crucially, the price of this extended scope would be to render the norm defeasible, that is, subject to override where competing social interests seemed to trump it. Both alternatives represent ways of confining the reach of section 92 within acceptable limits and one or the other is evidently at work within the modern section 92 jurisprudence. The remaining Sections are devoted to a closer examination of these alternatives - their plausibility, on a descriptive level, and their appeal, on a prescriptive level” (451)

“Qn 1: Does the impugned law discriminate, in form or effect, against interstate trade? If yes;
Qn 2: Does it have a protectionist purpose or effect? If yes;
Qn 3: Is the law nevertheless permissible as a regulatory measure, in that it is appropriate and adapted to the pursuit of a legitimate (non-protectionist) policy goal?” (452)

“Sonter assumes that the Court's modern section 92 jurisprudence treats discrimination and protectionism as distinct elements, to be proved separately. 47 While he concedes that the identification of discrimination turns on a law's form or effects only, he contends that the element of protectionism turns instead on a showing of improper purpose.” (453)

“… do not demonstrate that a showing of protectionist purpose is a necessary element of protectionist discrimination. They merely demonstrate that it may be sufficient to ground such a finding.” (455)

On Castlemaine: “One thing that appears to distinguish Gaudron and McHugh JJ's judgment is its position on unintentional protectionist discrimination. They rejected the leading judgment's test as incomplete, in that it would not necessarily catch all laws for which the 'practical effect is protectionist'. Justices Gaudron and McHugh evidently thought section 92 ought to catch all such laws. 102 In other words, section 92 must be presumed to extend beyond intentional burdens and also to target burdens that are inadvertent yet unjustified.” (1990) 169 CLR 436, 480. (461)

“[A]s in other fields of law where actual mental states are pivotal, the subjective motives or intentions of legislators typically must be inferred from surrounding facts and circumstances, including the law's operation and effect.” (466)

“[A] determination of objective purpose represents a conclusion about what a statute seems, from a reader's perspective, to have as its purpose.” (467)

“The classic statement of the Court's position is that of Dixon J in Stenhouse v Coleman. In explaining the sense in which 'purpose' is relevant to the characterisation of laws made under purposive heads of power, Dixon J reaffirmed 'the practice that excludes from investigation the actual extrinsic motives and intentions of legislative authorities.' Rather, he said, the relevant purpose is an imputed one, to be 'collected from the instrument in question, the facts to which it applies and the circumstances which called it forth.'” (467)

“Where an absence of protectionism is valued principally for its contribution to the economic wellbeing of citizens, it stands to reason that an anti-protectionism norm would concern itself, ideally, with the actual effects of impugned laws rather than just the purpose for which they were made. When viewed from this perspective it is, principally, the actuality of harm that is objectionable, and the damage thus done is not lessened by the revelation that it was inadvertent.” (470)

“In particular, some critics charge that the modern section 92 jurisprudence involves the High Court in assessments of complex economic matters for which it is ill-equipped, both procedurally and in terms of expertise.” (479)

David Sonter, 'Intention or Effect? Commonwealth and State Legislation after Cole v Vhitfield' (1995) 69 Australian Law Journal 332

Discrimination

On the face or on the facts
evidenced by a “competitive or market advantage” (Cole)
not “appropriate or adapted” (Castlemaine)
treats equal things unequally without sufficient justification, or treats unequal things equally when there is a basis for differentiation. (Castlemaine)

Protectionism

Merely discovering discrimination that confers an advantage on intrastate over interstate traders is sufficient to be considered ‘protectionist’ (336)
Does it look at the purpose, or just the effects? (336)
Two tests combined into a single test of characterization (Castlemaine) (338)

Section92, Factual Discrimination and the High Court [comments] Federal Law Review, Vol. 20, Issue 2 (1991), pp. 240-251 Bell, Andrew S.20 Fed. L. Rev. 240 (1991)

“Protectionism is, par excellence, a practice which is born of political motivation towards an economic or social end.” (240)

“Two types of evidence will be particularly germane to a s 92 problem. First, as emerges from the preceding discussion, evidence which illustrates the factual context and practical operation of legislation will be especially important. Secondly, expert evidence of both academic and practising economists will also be important where concepts such as protectionism and competitive market advantage are in issue. Given that the identification of a market is logically antecedent to any examination of market advantage, then, as experience in relation to Part IV of the Trade Practices Act 1974 (Cth) illustrates, the importance of the role of economic expertise in assisting the Court cannot be gainsaid.” (246)

Betfair Arguments

Betfair
primary argument was s 92 – other issues raised included s 118 (A WA law overriding a Tasmanian one) and extent of interstate ‘trade’
Proffered the idea of an Australian wide wagering market, with Betfair a supplier and Erceg a consumer (423)
Proffered that the dominant purpose of the Act was to protect the WA Racing Industry and State Revenue (424)
Argued that it had not been shown that a betting exchange jeopardised integrity of the racing industry any more than traditional gambling, and that licensing was a better way to accomplish integrity anyway (424-425)
Argued that the relevant section did not actually accomplish EITHER goal – “The prohibition in s 24(1aa) is too broad because it prohibits betting on racing and sporting events occurring outside Western Australia and too narrow because it does not prohibit betting by persons in Western Australia on betting exchanges operated by RWWA or a Western Australian bookmaker.” (425)
“The protection of State revenue is not an object that is legitimate in the sense of being able to be employed to justify a differential burden” (426)
Tasmania (supporting Betfair)
“Where both interstate trade and commerce and interstate intercourse are involved in the one transaction, the test is that for trade and commerce” (427)
“The clear purpose of s 24(1aa) of the Betting Control Act was to protect, and it operates to protect, the established gambling industry in Western Australia from the competition which Betfair might otherwise present whilst at the same time leaving open to RWWA the opportunity to establish a betting exchange.” (427-428)
“There is no evidence to suggest Western Australia could not have negotiated a reasonable financial return for local racing upon bets brokered through Betfair on local races.” (428)
“The idea that there is an integrity concern because someone with inside information might bet does not withstand much analysis because inside information is permitted for other forms of betting; owners and trainers normally have better information than the average punter and the licensing and regulatory regime in Western Australia permits them to bet possessing inside information.” (429)
Western Australia
“Discrimination against interstate trade or commerce is necessary, but not sufficient, to characterise a law as protectionist. In considering the question here two subsidiary questions must be addressed: (a) whether the impugned law, on its face or in its factual operation, imposes a discriminatory burden on interstate trade or commerce not imposed on intrastate trade and commerce of the same kind and which gives the domestic product or intrastate trade in that product a competitive or market advantage over the imported product or interstate trade in that product (29); and (b) if so, is the impugned law reasonably appropriate and adapted to a non-protectionist object, with any burden imposed on interstate trade being incidental and not disproportionate to the achievement of that object” (430)
“[I]t prevents a person in Western Australia from betting through the use of a betting exchange whether that exchange operates from Western Australia or elsewhere and is not facially discriminatory.” (431)
“that object is to promote the integrity of racing and sporting events which are the subject of betting by preventing persons, other than wagering operators licensed or authorised by law, from placing bets that participants in those events will not be successful. It is more difficult to influence improperly the outcome of a race so that a particular participant is successful than it is to influence improperly the outcome of a race so that a particular participant is not successful.” (433)
“To the extent that the object of s 24(1aa) was to protect government and racing industry revenues from the consequences of the use of betting exchanges, wherever located, the object is non-protectionist.” (433)
“So long as the object is not protectionist, it is open to Australian legislatures to regulate the relevant industry, including to prohibit certain kinds of trade which are regarded as against the public interest” (435)
New South Wales
“The fact that one jurisdiction in Australia has decided to authorise a particular form of conduct does not establish that the contrary view is unreasonable or protectionist, even though the effect of other jurisdictions holding that view will necessarily be to keep interstate operators out.” (437)
“Guidance is to be found in assessing the existence, or not, of reasonable non-discriminatory alternative means of securing that legitimate object” (438)
South Australia
“A law which on its face is apt to secure a legitimate object but which imposes a discriminatory burden on interstate trade is not protectionist unless the burden is shown to be disproportionate to the attainment of that object.” (440)
“The economic concept of a market, examining demand-side and supply-side substitution possibilities, is a useful analytical tool in the application of s 92 to impugned legislation. There is no required geographic market; rather, the market analysis should be undertaken in the ordinary way.” (440)
Queensland
“The concept of substitutability is likely to provide assistance in analysing whether the interstate trade and commerce which is burdened is of the same kind as the intrastate trade and commerce which is protected.” (444)
Betfair (Response)
“The whole point of s 92 is to deny the ability to make political choices which are protectionist in purpose or effect.” (448)

Judgments

Joint Majority
[1-2] Identities
[3] Original Jurisdiction – NOT AN APPEAL
[4] Market analogy for Plaintiffs (Betfair Supply, Erceg Demand)
[5] The Act in Question
[6-7] Act licensing Betfair in Tasmania pursuant to a Report made to the Australasian Racing Ministers’ Conference by a body styled the Betting Exchange Task Force (the Report). The Task Force comprised officers from the governments of the eight Australian States and internal Territories.
[8] What a betting exchange is – an exchange where participants stake money on opposing outcomes, betting on losers as well as winners
[9] Plaintiff’s case: 1. Act precludes competition within the wagering market from out of state betting exchange ‘suppliers’ from interacting with WA ‘demand’ and 2. Denies out of state suppliers access to the race field.
[10] Current doctrine in effect is the Cole v Whitfield one
[11] However Cole did not completely negate all that came before – old cases can still be relevant/persuasive
[12-13] Looked briefly at Ha v NSW
[14] New Economy (Posner) – businesses operating without geographic boundaries
[15] Conflict between eliminating protection (s 92) and preserving state economic centres
[16] Council of Australian Governments, National Competition Policy (1995) (with grants tied to it) makes s 92 less likely to be an issue
[17] Cole quote – always going to be new challenges to identifying discriminatory protectionism
[18] Castlemaine idea of ‘people of the state’ and ‘its wellbeing’ less relevant to ‘new economy’
[19-20] O’Connor quote – broad constitution designed to apply to various conditions and development of the community. Cole returned things to a more originalist perspective – so factoring in ‘new economy’ considerations requires bearing this is mind.
[21] s 92 = “[T]rade, commerce, and intercourse among the States, whether by means of internal carriage or ocean navigation, shall be absolutely free.”
[22] Quote from Ha looks at it in context of abolishing customs within Australia, and points out that ‘trade and commerce’ is wider than ‘goods’
[23] Palgrave quote – Australia is as much about commercial federation as political
[24] Cole quote – s 92 (historical) focus was/is on abolition of protectionism
[25] Federation saw protectionism interwoven with nationalism
[26] Reminder that ‘individual rights’ approach was rejected in Cole, and is still considered so.
[27] Palgrave quote that free trade requires only remove of protectionism, not removal of all customs. Recognition that Aus Constitution required more than that.
[28] Palgrave quote - Protectionism arose out of patriotic/nationalist sentiment
[29] During colonial formation, British customs were minimising/removing protectionist elements, and colonies were bound to adhere to any trade treaties made by Britain.
[30] Wasn’t until post-federation that colonies/federations of Britain could negotiate on their own, independently
[31] Combined with 51, 92 enabled Australia to become a single trading entity behind its own protectionist walls in the global stage
[32] Looks at global free trade organisations and their opposition to protectionism
[33-35] Looks at US “negative Commerce Clause”
[36] US decisions not directly relevant, but still have utility
[37-38] Norman quote, idea that the commerce clause (post 1900 decisions) are less relevant to the intent of Australia’s founders and s 92
[39] Castlemaine specifies group of US Authorities that are more relevant, have to look at supply AND demand side.
[40] Barton J quote from Fox v Robbins – US Congress has exclusive right to regulation, but in Australia states still control their own regulation excepting constitutional limitations
[41-47] Looks at old US cases from pre-1900, and their influence on Australian founders as far as ideas of free trade between the states go
[48] Cth submission that merely having 1 valid non-protectionist goal prevents a law from being characterised as protectionist is rejected.
[49-52] Wagering in Tasmania/Australia before the arrival of betting exchanges
[53] ALL states allow licensed bookmakers and TAB’s, and allow telephone bets to them.
[54] 70% of 2005-2006 gambling revenue was internet/telephone
[55] WA receives licensing fees from TAB/bookies based on total turnover
[56] WA bookies already take online bets
[57] Differences between bookies and Betfair: Betfair can’t ‘lose’, they don’t bet themselves, just co-ordinate. Betfair also let people bet on the loser as well as the winner
[58] How Betfair works – profits by keeping 2-5% of money it goes through
[59-60] Looks at appeal of betting exchanges, and potential for it people gambling via bookies/TAB to switch to them as substitutes
[61-65] Betfair licensed in Tasmania on 10 January 2006, under Gaming Control Act 1993 (Tas) amended by Gaming Control Amendment (Betting Exchange) Act 2005 (Tas). Looks at requirement that all Betting exchange users be “registered” first, and requirements that they underwrite/compensate the Tasmanian racing association.
[66-68] Prior to 29 January 2007 it was legal for Erceg to bet with a person/company licensed by another state, but Betting and Racing Legislation Amendment Act 2006 (WA) (the 2006 WA Act) that took effect then served to change that
[69] Now bookmaker/totaliser organisations remain legal interstate, but not betting exchanges – the no betting exchanges limitation is a WA only one
[70-73] Looks at extent of WA law prohibiting it, and how it targets both exchanges that are out of WA by prohibiting them access to WA race field listings and anyone in WA who uses betting exchanges that are outside WA.
[74] Looks at Ministerial approval to operate around these restrictions, and the decision to refuse such approval to Betfair
[75-77] RWWA immunity from Act does not permit them to start a betting exchange – but they were still competing with Betfair before recent amendments
[78-81] Looks at RWWA tax status and responsibilities to the WA racing community
[82-83] Betfair + Tasmania submit that the new provisions violate s 92 and s 118 and seek declaratory relief.
[84] Declaratory relief granted on the grounds of s 92
[85-87] Submission that Castlemaine upheld the “fundamental consideration” “to enact legislation for the well-being of the people of that State” was rejected due to the caveat that it must be “subject to the Constitution”
[88] As such, s 92 applies in full, and legislation must justify itself with regards to it, rather than the reverse.
[89] Mentions ‘people of the state’ rather than ‘people *in* the state’
[90] As such, the fundamental consideration is greatly weakened in the ‘new economy’
[91-92] Looks at the circular nature of the ‘fundamental consideration’, and how it could justify laws restricting deceptive/fraudulent trade as not violating the ‘absolute freedom’.
[93] No arguments made that gambling is not trade/commerce – probably due to government dependency on gambling income
[94] Same rationale that upholds quarantine and inspection laws as not limiting the ‘absolute freedom’ could work against gambling – as they are in the public interest, while gambling is not
[95-97] US upheld that even ‘local’ regulation could not discriminate based on state of origin (effectively s 95) – rejected in Australia based on Commonwealth sovereignty post Engineers.
[98] Castlemaine quote – desire of the court to not second-guess legislative intent or desirability
[99] Clarification/rejection of that, identification of Ch III jurisdiction, justified by finding that they ruled in favour of Castlemaine and against the State legislation in that case (recon?)
[100] Fundamental consideration upheld
[101] “appropriate and adapted” effectively (re?)interpreted as “proportionality” of burden imposed and objective achieved
[102] Idea of regulation necessitating justification that it be for the public good to avoid infringing s 92 revisited as proportionality.
[103] Proportionality related back to Cole, used to justify its ruling
[104] Castlemaine ruling also justified as dis-proportional to objective, with alternate measures that would have achieved them identified
[105] Castlemaine quote emphasises ‘acceptable explanation or justification’
[106] Looks at reasons given for outlawing betting exchanges by Western Australia (integrity concerns, lack of contribution to racing industry)
[107] Absence of contribution rejected based on evidence of agreement with Victorian regulator
[108] Rejected idea that protecting state revenue is NOT inherently protectionist
[109-111] Looks at argument against corruption – and Tasmanian approach to regulation without discriminating
[112-113] Rejected idea that law was proportionate to preventing corruption
[114] The market for telephone and the internet of wagering services on racing and sporting events is Australia wide AND international – geographic separation is effectively eliminated by the internet.
[115] Cross elasticity of demand indicates that betting exchanges and bookies/TAB gambling are substitutes and part of the same market
[116] WA Act interferes with a national market by limiting it within state borders – this triggers s 92
[118] 27D(1)’s application to Betfair imposes a discriminatory burden of a protectionist kind – both directly (denying Betfair) and indirectly (denying Betfair’s users) *RATIO FOR ISSUE 1*
[119] Authorisation is not a defence in this instance, as it would never be granted to Betfair
[120-121] 24(1aa) is a discriminatory burden of the protectionist kind on the facts, as it did not affect any local betting exchanges, but improved the position of local bookies/RWWA * RATIO FOR ISSUE 2 *
[122] Castlemaine analogy
[123] Not necessary to rule on issue 3
[124-125] Betfair wins, and is granted declaratory relief – Court is reluctant to attempt to read down the provisions, and leaves it to WA to reconstruct them in a manner that does not violate s 92
[126] Costs paid by WA
[127-129] Sections are invalid to the extent they applied to Betfair
Heydon
[130] Facts are set out in the other judgement
[131-132] Plaintiffs win, burden imposed does not achieve any effect compatible with s 92
[133] 24(1aa) is protectionist, as it protects WA gambling services operators from inter-state competition
[134] 24(1aa) is FAR too wide to achieve the means set out (protection of integrity for WA races) – as such the only purpose it can serve must be protectionist
[135-142] looks at plaintiffs arguments about 27D(1), including the fact that they needed approval, and were the ONLY applicant denied it – due to supposed ‘integrity grounds’
[143] Looks at time limited nature of WA bookies immunity
[144] Concludes that it did impose a significant burden on Betfair, and that without 24(1aa) the Minister’s discretion is unjustified in this instance
[145-146] 27D(1) is also too broad to achieve an integrity means, and the requirement to bargain with the RWWA (a competitor) as opposed to paying a neutral, specified fee disadvantages out of state operators
[147] Orders of the Court

Law Studies

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