In ordinary language a bookmaker is one who quotes odds and accepts bets on (usually) sporting or similar contingencies. He fixes and quotes the odds at which he is prepared to bet against a particular competitor in an event being the winner. Such odds are fixed so as to ensure, as far as possible, that over all bets held the bookmaker will be financially advantaged no matter which contender wins. This is "making a book". The extent of the bookmaker's financial advantage (and whether it is positive or negative) depend upon the amount wagered and the odds at which bets on the winner are held by him as against the amount wagered with him on all non-winners. It may be difficult to bring the plaintiffs within such a description of a bookmaker although they doubtless fix the index movements which they quote and upon which they bet with their clients on similar principles and with a view to a similar result as that sought by a conventional bookmaker at an ordinary race meeting.
12 Application of the extended definition of bookmaker provided by the Act would require the plaintiffs to ". . . gain or endeavour to gain a livelihood from betting or making wagers". Again, such a definition could only extend to the plaintiffs if the word livelihood could legitimately be extended beyond its ordinary meaning of the "deriving of sustenance" or "earning one's living" to include the pursuit of profit generally. It is difficult to see how a company could ever derive sustenance or earn a living in anything other than a notional sense.
13 Similarly, the agreed facts do not suggest that the plaintiffs' clients are bookmakers although some might be, and some might fit the extended definition in the Act. In any event it is not even faintly suggested that the plaintiffs carry on their business on licensed racecourses.
14 The defendant argued that s 8 (1)(a) prohibited all forms of betting other than those specifically authorised by the Unlawful Gambling Act (or perhaps other legislation) unless both parties to the bet are present at a licensed racecourse and one of them is a bookmaker. The plaintiffs submitted that, having regard to the objects of the Act and the context in which s 8 (1)(a) is found, it must be restricted to betting on sporting contingencies, perhaps only on horse races, harness races or greyhound races.
15 The width of the defendant's contention suggests that it might not be correct. If it was correct it would mean that, subject to the question of the operative invalidity of s 8 (1)(a) in the plaintiffs' case, their business would be rendered totally illegal by a provision contained in one sub-section of a long series of provisions, every other part of which is concerned only with betting on sporting contingencies, principally (but not solely) horse, harness and dog racing. It is strange that a sub-section which is itself concerned with bookmakers and racecourses could have the far reaching effect contended for by the defendant.
16 Having regard to the Court's conclusion as to the effect of the Federal legislation under which the plaintiffs conduct their business it is unnecessary to reach anything other than a tentative conclusion that spread betting as conducted by them might constitute unlawful betting under s 8 (1)(a) of the Unlawful Gambling Act. Criminal liability would be a distinct possibility if this section was operatively valid in respect of the plaintiffs' business.
17 Section 9 (1) of the Unlawful Gambling Act renders bookmaking illegal other than by a licensed bookmaker. The licensing of bookmakers in New South Wales is effected pursuant to the Racing Administration Act 1998 (NSW). That Act has as its objects the ensuring of the integrity of racing in the public interest, the ensuring that certain betting activities by licensed bookmakers are conducted properly, the minimisation of the adverse social effects of lawful gambling and the protection of public revenue derived from lawful gambling. It employs the same inclusive extensions to the meaning of the word "bookmaker" as the Unlawful Gambling Act.
18 In order to obtain a licence as a bookmaker a person must be authorised by a "controlling body" as defined in the Act. The only controlling bodies in existence at the time relevant to this proceeding were the New South Wales Thoroughbred Racing Board, Harness Racing New South Wales and the Greyhound Racing Authority (NSW).[6] Each of those authorities was permitted to grant an application for a bookmaker's licence only to "a natural person over the age of 18 years" or a proprietary company which is "an eligible company" within the meaning of s 9AA of the Greyhound Racing Authority Act 1985 (NSW) or similar provisions in the Harness Racing New South Wales Act 1977 (NSW) and the Thoroughbred Racing Board Act 1996 (NSW). The plaintiffs concede that neither of them could qualify as eligible companies as none of their directors is a registered bookmaker under any of the relevant pieces of legislation. Thus, the New South Wales provisions, if they apply to the plaintiffs, seriously affect their capacity to exercise the rights conferred upon them by the ASIC licence issued pursuant to the Corporations Act to the first plaintiff. If either of them is a bookmaker in the terms discussed above, then by engaging in spread betting they would breach s 9(1) of the Unlawful Gambling Act unless their contention that this part of that Act is concerned only with gambling which relates to sporting contests is accepted. That contention is supported by the fact that s 9(2) would appear to render the plaintiffs' business unlawful even if they were to obtain a bookmakers licence unless they only conducted their business at a licensed racecourse when it was lawful to bet there. The emphasis on bookmakers who bet on sporting contingencies in this part of the Act tends to support the plaintiffs' argument although, again, it is sufficient, for present purposes, to conclude that s 9(1) may well render the plaintiffs' business illegal if it is operatively valid in their case.
19 Section 11(1) of the Unlawful Gambling Act creates an offence of having a financial interest in a bookmaking business conducted in contravention of the Act. If the Act applies to the plaintiffs such that they are in breach of s 8(1)(a) and s 9(1) it follows that anyone who is entitled to receive any of the income from their business is in breach of s 11(1). Such persons (which would include the plaintiffs themselves) are subject to a criminal sanction.
20 The final New South Wales statutory provision alleged to have been breached by the plaintiffs' is s 30(1) of the Racing Administration Act. This provision prohibits the publication of any advertisement that relates to any "gambling operations or services" carried on by a person who is not a licensed bookmaker. The plaintiffs concede that on 31 July 2002 they published an advertisement for spread betting in the Australian Financial Review. The advertisement asserted that profits from spread betting are "tax free" because it is betting. It invited participation in spread betting from readers of the newspaper. Unless the Act generally does not apply to the plaintiffs and their activities it would appear that publication of that advertisement breached s 30 (1)(d) of the Act.
21 The plaintiffs contend that, read in its proper context and having regard to its objects, its subject matter and the fact that it is primarily concerned with the regulation of betting on racing of various kinds and, by extension, other sporting contests, the Racing Administration Act has nothing to do with activities conducted in financial markets even if those activities can be properly described as "betting". They argue that the legislation does not apply to them.
22 The Act is called the Racing Administration Act. It is concerned with a large number of matters relating to betting on various types of racing, sports betting, the regulation of bookmakers, the licensing of racecourses and similar matters. It is only in Part 4 that it is arguable that it has an application that is somewhat wider. Part 4 is entitled "Betting Information and Advertising". But even here it is still principally concerned with the activities of bookmakers (licensed by one of the controlling bodies of animal racing) and with "races". None of the Act's objects is concerned with restricting the advertising of gambling. Despite these arguments the plain words of the section are certainly wide enough to prohibit the advertisement which was placed in the Financial Review by the plaintiffs. There must be a significant chance that the section applies to them and that they are, accordingly, liable to a criminal sanction if it is valid in their case.
Section 109 inconsistency
23 Isaacs J in Clyde Engineering v Cowburn[7] accepted that if a competent legislature evinced an intention to "cover the whole ground" with respect to a particular subject of legislation then legislation of another legislature on the same subject would produce inconsistency, even if it was possible to obey both statutes. He considered the "covering the field" test to be conclusive with respect to the inconsistency referred to in s 109 of the Australian Constitution. That inconsistency is demonstrated by the mere existence of two sets of provisions on the same subject. Express words are not necessary. The intention to cover the field may be deduced as a matter of common sense; it need not be expressed in the Federal legislation.
24 In Ex parte McLean[8], Isaacs CJ and Starke J expressed the same conclusion: when the very same conduct by the same persons is dealt with in conflicting terms by both State and Commonwealth legislation a court has no authority to inquire further into the scope of the State Act. Section 109 of the Commonwealth Constitution applies to render it, pro tanto, invalid. In the same case Dixon J held that inconsistency would exist even where the rule of conduct prescribed by each legislature was the same. However, his Honour excepted the case where Federal law was intended to be supplementary to or cumulative upon State law. The application of s 109 to render a State statutory provision inoperative on the basis that the Federal Parliament has legislated so as to cover the field depends upon its being the intention of the Federal Parliament to express the law exhaustively with respect to the matter being regulated.
25 In The Kakariki,[9] the High Court was concerned with competing claims between the State of Victoria and the Commonwealth as to the right of each to remove a ship which had sunk in Port Phillip Bay. The Marine Act 1928 and the Navigation Act 1912-35 (Cth) permitted officials of the Victorian Government and the Commonwealth Government respectively to remove ships sunk in waters in or near the State at their owners' expense. The Court held that there was no inconsistency between the State and Federal legislation because all that each did was to confer power on the respective public officials to perform the act of removing the relevant wrecks. Dixon J again explained the principle which brings s 109 of the Constitution into effect. His Honour said that where a State law would, if valid, "alter, impair or detract from" the operation of a Commonwealth law then to that extent it is invalid.[10] In any event, if it appeared that the Commonwealth Parliament intended its enactment to cover the field with respect to the law on a particular matter then that fact alone would lead to the conclusion that for the State law to purport to regulate the same activity would amount to a "detraction" from the full operation of the Commonwealth law. Thus it would be inconsistent and, to the extent of that inconsistency, inoperative.
26 In Wenn v Commonwealth[11] Latham CJ acknowledged that there may sometimes be difficulty in determining what the field is as well as whether there was an intention to cover it. In that case the subject matter of each piece of legislation being examined was a scheme for conferring preferences in employment on ex-servicemen. The relevant Commonwealth legislation actually expressed an intention to cover the field. His Honour referred to those cases in which the question of whether it was intended that the Commonwealth legislation would cover the field was determined only by inference from the nature and scope of the statute and concluded that if that was a legitimate forensic exercise then there was no reason why the same result could not be achieved by the Commonwealth Parliament expressly providing that its legislation covered the field.
27 Dixon J distinguished the concept of covering the field from an attempt to exclude State concurrent power from a subject the Federal legislature had not effectively dealt with by regulation, control or otherwise. He also acknowledged the difficulty of defining the limits of the power to legislate upon a subject exhaustively so that s 109 would make inoperative State legislation which affected the same subject matter.
28 The plaintiffs in this case argued that, as the Commonwealth has legislated exhaustively on a full range of activities concerning the provision of financial services and financial markets, some of which may consist of gambling, what is permitted under the Commonwealth regime is lawful regardless of any provision in State legislation. Put another way, they say that the imposition of regulatory requirements by the New South Wales statutes "alter, impair or detract" from the operation of Chapter 7 of the Corporations Act 2001, which regulates the provision of financial services and financial markets in Australia and enables the plaintiffs to be licensed to provide financial services etc in respect of derivatives.
29 It is common ground that spread betting involves dealing in "derivatives" as that term is defined in s 761D of the Corporations Act. For the plaintiffs to engage in it would be illegal under Federal law (the Corporations Act) without an Australian Financial Services Licence issued by ASIC. The plaintiffs argue that that licence brings the plaintiffs' activities within the protection of the field of operation of the Commonwealth legislative scheme. Any attempt by the State to impose a further requirement to render those activities lawful, such as the obtaining of a bookmakers licence or operating their business in a particular place would detract from the operation of the Commonwealth regulatory scheme. A fortiori with respect to the prohibition on the advertising of "gambling operations or services" by s 30(1)(d) of the Racing Administration Act. They say that the prohibition by the State of activities permitted by the ASIC licence would create a direct inconsistency resolved in favour of the plaintiffs by s 109 of the Commonwealth Constitution.
30 The defendant argued that the provisions of the Racing Administration Act and the Unlawful Gambling Act are capable of operating concurrently with the provisions of the Corporations Act so that no inconsistency arises. In particular it submitted that the licensing scheme for bookmakers imposed by the New South Wales Act (or by various New South Wales Acts) is capable of simultaneous obedience with the provisions of that part of the Corporations Act which regulates the provision of financial services with respect to derivatives. Thus, it says, no inconsistency arises. Further, no inconsistency arises, says the defendant, between the Unlawful Gambling Act (save perhaps for an irrelevant clash between s 56 and s 1101I of the Corporations