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[2026] NSWCATAD 214
General information, not legal advice.
NCAT Administrative and Equal Opportunity
2026-07-17
EA MacIntyre, Senior Member
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Source: NSW Caselaw (www.caselaw.nsw.gov.au). Converted to plain text by ZoeLaw. Not the official version.
Medium Neutral Citation: WAM Hotels Pty Ltd v Independent Liquor & Gaming Authority [2026] NSWCATAD 214
Hearing dates: 2 June 2026
Date of orders: 17 July 2026
Decision date: 17 July 2026
Jurisdiction: Administrative and Equal Opportunity Division
Before: EA MacIntyre, Senior Member
Decision: The decision under administrative review is affirmed.
Catchwords: ADMINISTRATIVE LAW - administrative review - review by Civil and Administrative Tribunal
GAMING - gaming machines - connectivity to CMS system - cash withdrawal facilities on ATMs - credit card accounts - breaches - penalties - proportionality of penalty
Legislation Cited: Administrative Decisions Review Act 1997 (NSW)
Civil and Administrative Tribunal Act 2013 (NSW)
Gaming Machines Act 2001 (NSW)
Liquor Act 2007 (NSW)
Cases Cited: Australian Building and Construction Commissioner v Pattinson [2022] HCA 13
Tricon Builders Pty Ltd v Secretary of the Department of Customer Service; Nahas v Secretary of the Department of Customer Service [2025] NSWCATOD 128
Texts Cited: Nil
Category: Principal judgment
Parties: WAM Hotels Pty Ltd (Applicant)
Independent Liquor & Gaming Authority (First Respondent)
Secretary, Department of Creative Industries, Tourism, Hospitality and Sport (Second Respondent)
Representation: Counsel:
J Nathan (Applicant)
A Bhasin (Second Respondent)
Solicitors:
Slater Watts Lawyers (Applicant)
Crown Solicitor (Second Respondent)
File Number(s): 2025/00446276
Publication restriction: None
The Applicant became corporate licensee of an establishment known as the Olympic Hotel (“Hotel”) on 10 December 2020. It held a leasehold of the land on which the Hotel was located.
The sole director, secretary and ordinary shareholder of the Applicant was Mr Wayne Arthur Lambert. He was also the approved manager and contact person of the Applicant as licensee.
The Applicant held a licence to operate 13 gaming machines. The machines were to be connected to an approved centralised monitoring service (“CMS”). That service was operated by Maxgaming Pty Limited (“Max Gaming”) through its Data Monitoring Services (“DMS”) branch.
The CMS connects all gaming machines and operates with the purpose of calculating gaming machine tax and also to monitor gaming machine operations for harm minimisation purposes.
In late February and early March 2024, the Applicant received correspondence informing it that certain gaming machines were disconnected from the CMS. An email from Tabcorp to Mr Lambert said that there were disconnected machines, each identified by number. On 7 March 2024, the Applicant says that it arranged for its technician to reconnect the relevant gaming machines.
In April 2024, water damage occurred to the area in which the gaming machines were located. Mr Lambert said that water damage also affected his laptop and rendered it inoperable. He says that he obtained a new laptop on 7 April 2024.
On 3 and 5 April 2024, the Applicant received further correspondence informing it that gaming machines had been disconnected from the CMS.
On 11 April 2024, Mr Lambert responded saying that he will contact his technician to fix the gaming machines “immediately”.
A further email of 17 April 2024 from Tabcorp to Mr Lambert identified four gaming machines disconnected from the CMS. One of the four machines was in storage.
An ATM was located at the Hotel. It had been installed in April 2021. The evidence included an email to the ATM installer in which Mr Lambert said that there was to be no credit card facility available to withdraw cash from the ATM. There was also evidence of a conversation with the installer in which Mr Lambert said that there was to be no credit card cash withdrawal facility.
On 26 April 2024, Liquor & Gaming NSW received a complaint from a representative of DMS. The complaint alleged that three operating gaming machines at the hotel were “being played as far as we know” but had not been connected to the CMS for nearly a month. The complaint also alleged that the storage approval for one gaming machine had expired since 10 February 2024.
A representative of DMS also said that they had made multiple attempts to contact the Hotel in relation to the relevant issues but that the Hotel had not responded.
The complaint from DMS was referred for further investigations. The investigations were carried out by Inspector Tuncay Kazan. On 21 June 2024, Inspector Kazan called Mr Lambert to inform him about the complaint. Mr Lambert told Mr Kazan of certain steps that would be taken in response to the complaint.
Following the telephone call, inspector Kazan subsequently emailed Mr Lambert outlining details of the complaint in writing and requesting that Mr Lambert forward information relating to the matter to himself. He received no reply.
On 28 June 2024, Inspector Kazan carried out an inspection of the Hotel to investigate the complaint. He was accompanied by Inspector Ben Busenshut. Inspector Kazan said he observed that the three gaming machines which had been identified by DMS were not connected to the CMS but were in operation. He also says that he observed that they appeared to be in an area affected by water damage. He also said that the hub that connected the machines to the CMS was faulty.
Inspector Kazan says that he asked Mr Lambert why he did not respond to communications. He says that Mr Lambert said that he did not respond to private number calls as he thought they could be scams and that he had not received any communications. Mr Lambert also said that he had not received Inspector Kazan’s email.
Inspector Kazan says that he asked to view the CMS site controller but that the monitor to that computer system was not operational. Inspector Kazan also says that he could not check connectivity of the gaming machine to the CMS in these circumstances. He says he requested viewing of the Hotel’s technician fault register book or any other correspondence pertaining to the machines. He says that Mr Lambert was not able to produce that documentation.
Inspector Kazan then instructed Mr Lambert to attend to various matters including fixing the CMS site controller monitor, fixing any issues with Mr Lambert’s email address, moving the gaming machines and reconnecting them to the CMS and obtaining a technical fault register booklet.
At the same time, Inspector Busenshut tested the ATM at the Hotel to see if it had the capability to issue cash from a credit card. He identified that the ATM could allow cash to be withdrawn from a credit card account during his testing.
When questioned, Mr Lambert said that he was aware of his responsibilities regarding ATMs but was not aware that the ATM allowed cash withdrawals from a credit card account. He said that he would arrange rectification of the issue. He then called the ATM provider on his phone and the ATM provider said that he would be there in the morning to deactivate the credit card facility of the ATM.
Subsequently, that evening and on the following day, Mr Lambert sent Inspector Kazan several emails setting out a description of various rectification actions taken or to be taken. They included making a storage application for the gaming machine in storage, arranging a technician to change the position of three gaming machines that had been in the area affected by water damage and reconnecting them to the CMS and switching off the credit card facility on the ATM.
The Hotel’s gaming technician subsequently verified on 5 July 2024, that he had moved the three gaming machines on 4 July 2024 and reconnected the machines to the CMS at around 5 pm on 5 July 2024.
On 5 July 2024, Inspector Busenshut issued a notice to IF ATM Pty Ltd, the owner of the relevant ATM, requiring production of evidence of withdrawals from credit card accounts.
The information provided by IF ATM Pty Ltd showed that the ATM was originally installed at the Hotel on 15 April 2021 and that IF ATM Pty Ltd assumed ownership of the ATM and the service contract on 1 April 2022.
The information also showed that since this time, IF ATM Pty Ltd had not been notified by the Hotel that the terminal was configured to be capable of providing cash from a credit card account or that this functionality was required to be turned off.
The evidence also was that since 22 May 2021, there had been a total of 91 withdrawals using credit card accounts, totalling $16,450, with over $3,020.00 of those withdrawals occurring in the last two hours of trade between 10 pm and midnight.
The Applicant described various measures it had taken for compliance purposes after the inspection of the Hotel, including daily checks of CMS connectivity and daily checks of harm-minimisation signage and materials.
The Enforcement Panel resolved that the Secretary should make a complaint to the Authority under s 129 of the Act recommending disciplinary action against the Applicant.
On 1 April 2025, the Secretary made a statutory complaint to the Authority under s 129(1) of the Gaming Machines Act 2001 (NSW) (“Act”) and recommended certain disciplinary action.
On 28 July 2025, the Authority issued to the Applicant and Mr Lambert a show cause notice. Section 130 of the Act provides for the issue of show cause notices.
The Authority on 23 October 2025 imposed a monetary penalty of 400 penalty units ($44,000) on the Applicant under s 131(2) of the Act. This was a penalty imposed upon the Applicant consequent upon a finding that the Applicant had contravened s 129(3)(a)(i) and (b) of the Act. Mr Lambert also received a reprimand.
By application made on 18 November 2025, the Applicant sought administrative review of the decision of the Authority of 23 October 2025. This is the application the subject of these proceedings.
The Applicant did not contest the contraventions alleged by the Authority but contested the severity of the penalty imposed. The question for determination in these proceedings is whether the penalty imposed should stand.
Section 131C of the Act permits the making of an application for an administrative review under the Administrative Decisions Review Act 1997 (NSW) (“ADR Act”) of a decision by the Authority in relation to a complaint under Part 8 of the Act. There was no dispute that such a complaint had been made. The application for administrative review may be made to the Civil and Administrative Tribunal (“Tribunal”).
Such an application may be made by the licensee or person against whom any disciplinary action is taken by the Authority in relation to the complaint. There was no dispute that the Applicant, as the person against whom disciplinary action had been taken by the Authority, could apply to the Tribunal for review of the decision the Authority had made in relation to the relevant complaint.
Under the ADR Act, the Tribunal on review has certain powers set out in s 63(3). That subsection says:
“In determining an application for the administrative review of an administratively reviewable decision, the Tribunal may decide:
(a) to affirm the administratively reviewable decision, or
(b) to vary the administratively reviewable decision, or
(c) to set aside the administratively reviewable decision and make a decision in substitution for the administratively reviewable decision it set aside, or
(d) to set aside the administratively reviewable decision and remit the matter for reconsideration by the administrator in accordance with any directions or recommendations of the Tribunal”.
The hearing of these proceedings took place on 2 June 2026. Mr Lambert gave oral evidence at the hearing. He had previously given evidence in the form of an affidavit sworn on 2 April 2026. He had also sworn an earlier affidavit on 15 December 2025. Both were in evidence.
At the conclusion of the hearing, the Applicant tendered to the Tribunal closing submissions in writing. The Tribunal, on application by the Respondents, made orders allowing their reply to be filed and for a further reply from the Applicant. Both parties filed further submissions in accordance with the orders made.
“Objects of Act
(1) The objects of this Act are as follows—
(a) to minimise harm associated with the misuse and abuse of gambling activities,
(b) to foster responsible conduct in relation to gambling,
(c) to facilitate the balanced development, in the public interest, of the gaming industry,
(d) to ensure the integrity of the gaming industry,
(e) to provide for an on-going reduction in the number of gaming machines in the State by means of the tradeable gaming machine entitlement scheme.
(2) The Authority, the Minister, the Secretary, the Commissioner of Police and all other persons having functions under this Act are required to have due regard to the need for gambling harm minimisation and the fostering of responsible conduct in relation to gambling when exercising functions under this Act.
(3) In particular, due regard is to be had to the need for gambling harm minimisation when considering for the purposes of this Act what is or is not in the public interest”.
“Prohibition on certain cash dispensing facilities
(1) A hotelier or club must not permit a cash dispensing facility to be used or to be installed or located in any part of the hotel or club premises if the facility is capable of providing cash from a credit card account.
Maximum penalty—100 penalty units.
(2) In this section, cash dispensing facility means a facility (such as an ATM or EFTPOS terminal) for the withdrawal of cash from a bank or authorised deposit-taking institution”.
*“*hotel and hotelier have the same meanings as in the Liquor Act 2007, and hotel licence means a hotel licence (other than a general bar licence) under that Act”.
In the Liquor Act 2007 (NSW), a “hotelier” is defined to mean “the holder of a hotel licence” under that Act. There was no dispute that the Applicant, as the holder of such a licence, was a “hotelier” so defined and that s 47C had application to it.
Part 9 of the Act sets out provisions dealing with the connection of machines to an “authorised CMS”. Section 133 sets out obligations of a hotelier to ensure that “approved gaming machines” be connected to an authorised CMS. It requires as follows:
“Hoteliers and clubs required to connect gaming machines to authorised CMS
(1) A hotelier or club must ensure that each approved gaming machine that is kept in the hotel or on the premises of the club is connected to an authorised CMS.
Maximum penalty—100 penalty units.
(2) A hotelier or club must, to the extent necessary to enable approved gaming machines kept in the hotel or on the premises of the club to be connected to an authorised CMS—
(a) permit the employees and agents of the CMS licensee to have access to those gaming machines, and
(b) give assistance to the employees and agents of the CMS licensee.
Maximum penalty—100 penalty units.
(3) The CMS licensee may, if satisfied that an approved gaming machine kept in a hotel or on the premises of a club is not connected to an authorised CMS, request the hotelier or club to take action to ensure that the gaming machine is connected to the CMS.
(4) The hotelier or club must, within 2 working days of receiving any such request by the CMS licensee, take appropriate action to comply with the request.
Maximum penalty—100 penalty units”.
“centralised monitoring system (or CMS) means a system that—
(a) monitors the operation and performance of approved gaming machines, and
(b) facilitates the calculation and collection of tax under the Gaming Machine Tax Act 2001 that is payable in respect of approved gaming machines, and
(c) is capable of performing other related functions”.
An “authorised CMS” in turn is defined in s 4 to mean “a CMS that is operated under the authority of a CMS licence”.
There was no dispute that the gaming machines in issue were each “approved gaming machines” kept in a hotel and required to be connected to an authorised CMS.
Section 132(2) describes when an “approved gaming machine” is connected to an “authorised CMS”. It says:
“Meaning of “connected” to an authorised CMS
(1) For the purposes of this Part, an approved gaming machine is connected to an authorised CMS if information in respect of the gaming machine is provided to the authorised CMS in accordance with arrangements approved by the Minister.
(2) The arrangements that the Minister approves for the purposes of this section can involve the provision of information by any means, such as, and without limiting the generality of subsection (1), by means of any of the following—
(a) the direct provision of information by electronic data transfer,
(b) the provision of information by means of the lodgement of reports or returns (whether or not electronically),
(c) the provision of information by persons acting as information collectors and processors for hoteliers and clubs.
(3) Such arrangements may make provision for or with respect to the time within which, and the person to whom, information is to be furnished.
(4) Different arrangements can be approved under this section in respect of different premises or classes of premises or different approved gaming machines or classes of approved gaming machines”.
There was no dispute that there were times when the Applicant had not ensured that the relevant approved gaming machines at the Hotel were not connected to an authorised CMS.
Part 8 of the Act deals with disciplinary matters. Section 129 provides:
“129 Grounds for making complaint
(1) A complaint in relation to a licensee or close associate may be made to the Authority by any of the following (referred to in this Part as the complainant)—
(a) the Secretary,
(b) the Commissioner of Police,
(c) a person authorised by the regulations to make a complaint under this Part.
(2) A complaint must be in writing and specify the grounds on which it is made.
(3) The grounds on which a complaint in relation to a licensee or close associate may be made are as follows—
(a) that the licensee—
(i) has contravened a provision of this Act or the regulations, or
(ii) has failed to comply with any requirement under this Act or the regulations that relates to the licensee, or
(iii) has been convicted of an offence under this Act or the regulations or of an offence prescribed by the regulations for the purposes of this section,
(b) that the hotelier or club has engaged in conduct that has encouraged, or is likely to encourage, the misuse and abuse of gambling activities in the hotel or on the premises of the club concerned,
…..”
“Disciplinary powers of Authority
(1) The Authority may deal with and determine a complaint that is made to it under this Part.
(2) If the Authority is satisfied that any of the grounds on which the complaint was made apply in relation to the licensee or close associate, the Authority may decide not to take any action or may decide to do any one or more of the following—
(a) order the hotelier or gaming-related licensee to pay, within such time as is specified in the order—
(i) a monetary penalty not exceeding 500 penalty units (in the case of a corporation) or 200 penalty units (in any other case), or
(ii) if circumstances of aggravation exist in relation to the complaint—a monetary penalty not exceeding 1,000 penalty units (in the case of a corporation) or 400 penalty units (in any other case),
(b) order the club to pay, within such time as is specified in the order, a monetary penalty not exceeding 2,500 penalty units or, if circumstances of aggravation exist in relation to the complaint, not exceeding 5,000 penalty units,
(c) if the ground that applies is any of the grounds referred to in section 129 (3) (a), (b), (c), (d) or (f)—
(i) cancel the hotelier’s or club’s licence under the Liquor Act 2007 or the gaming-related licence, or
(ii) suspend the hotelier’s or club’s licence under the Liquor Act 2007 or the gaming-related licence for such period as the Authority thinks fit, or
(iii) cancel, suspend or modify any authorisation or approval under this Act for the hotelier or club to keep approved gaming machines, or
(iv) disqualify the hotelier or club from keeping approved gaming machines for such period as the Authority thinks fit,
(d) cancel the gaming-related licensee’s licence or suspend the licence for such period as the Authority thinks fit,
(e) impose or vary a condition to which the gaming-related licence is subject,
(f) disqualify the gaming-related licensee from holding a gaming-related licence for such period as the Authority thinks fit,
(g) disqualify the close associate from being a close associate of a licensee for such period as the Authority thinks fit,
(h) disqualify the close associate from holding a gaming-related licence for such period as the Authority thinks fit,
(i) order the licensee to pay the amount of any costs incurred—
(i) by the Secretary in carrying out any investigation or inquiry under section 128 in relation to the licensee or close associate, or
(ii) by the Authority in connection with the taking of disciplinary action against the licensee or close associate under this section,
(j) reprimand the licensee or close associate.
(2A) Any monetary penalty or costs ordered to be paid under subsection (2) are payable to the Secretary.
……”
“Under the civil penalty regime provided by the Act, the purpose of a civil penalty is primarily, if not solely, the promotion of the public interest in compliance with the provisions of the Act by the deterrence of further contraventions of the Act. In that context, the penalties fixed by the primary judge were appropriate because they were no more than might be considered to be reasonably necessary to deter further contraventions of a like kind by Mr Pattinson, the CFMMEU or others. They represented a reasonable assessment of what was necessary to make the continuation of the CFMMEU’s non‑compliance with the law, amply demonstrated by the history of its contraventions, too expensive to maintain.
The Full Court’s critical error was that it was distracted by a concern, drawn from the criminal law, that a penalty must be proportionate to the seriousness of the conduct that constituted the contravention. The power conferred by s 546 of the Act is not subject to constraints drawn from the criminal law and there is no place for a “notion of proportionality”, in the sense in which the Full Court used that term, in a civil penalty regime. Further, and relatedly, their Honours were misled by the view that the Act required that the maximum penalty be reserved for only the most serious examples of the offending comprehended by s 349(1), and that this principle could prevent the court from imposing the maximum penalty even though a penalty in that amount might reasonably be considered to be necessary to deter future contraventions of a like kind. Nothing in the text, context or purpose of s 546 requires that the maximum penalty be reserved for the most serious examples of misconduct within s 349(1). What is required is that there be “some reasonable relationship between the theoretical maximum and the final penalty imposed”. That relationship is established where the maximum penalty does not exceed what is reasonably necessary to achieve the purpose of s 546: the deterrence of future contraventions of a like kind by the contravenor and by others”.
“In CSR, French J listed several factors which informed the assessment under the Trade Practices Act 1974 (Cth) of a penalty of appropriate deterrent value:
“The assessment of a penalty of appropriate deterrent value will have regard to a number of factors which have been canvassed in the cases. These include the following: 1. The nature and extent of the contravening conduct. 2. The amount of loss or damage caused. 3. The circumstances in which the conduct took place. 4. The size of the contravening company. 5. The degree of power it has, as evidenced by its market share and ease of entry into the market. 6. The deliberateness of the contravention and the period over which it extended. 7. Whether the contravention arose out of the conduct of senior management or at a lower level. 8. Whether the company has a corporate culture conducive to compliance with the Act, as evidenced by educational programs and disciplinary or other corrective measures in response to an acknowledged contravention. 9. Whether the company has shown a disposition to co‑operate with the authorities responsible for the enforcement of the Act in relation to the contravention.”
“It may readily be seen that this list of factors includes matters pertaining both to the character of the contravening conduct (such as factors 1 to 3) and to the character of the contravenor (such as factors 4, 5, 8 and 9). It is important, however, not to regard the list of possible relevant considerations as a “rigid catalogue of matters for attention” as if it were a legal checklist. The court’s task remains to determine what is an “appropriate” penalty in the circumstances of the particular case”.
The observations of French J involved a context of penalties under the former Trade Practices Act 1974 (Cth) where there had been a misuse of market power. The present case arises under a different statutory scheme addressing particular purposes that include harm minimisation and fostering responsible conduct. The purposes also include an object of facilitating the balanced development, in the public interest, of the gaming industry.
These particular purposes bear relevance to the determination of what penalties are to be imposed for contraventions of the Act. In other words, I accept that the penalties imposed under the Act must work to deter conduct that is inconsistent with the purposes of the Act. That is, the purpose of penalties is not punitive.
The Tribunal has accepted that the primary purpose of disciplinary action by means of a civil penalty was protective and not punitive (Tricon Builders Pty Ltd v Secretary of the Department of Customer Service; Nahas v Secretary of the Department of Customer Service [2025] NSWCATOD 128, at [204]-[206]). Notions of proportionality relevant to criminal penalties should not, equally have application in the present case. However, there should be some reasonable relationship between the theoretical maximum and the final penalty imposed.
The Authority submitted that the penalty imposed was appropriate. This was because in the Authority’s submission, the Applicant had contravened two provisions of the Act that demonstrated a failure on the part of the Applicant as a corporate licensee to ensure compliance with critical integrity and harm minimisation measures relating to gaming use. They said that the relevant breaches involved non-compliance over an extended period which was only detected and corrected as a result of a third-party complaint and subsequent inspection by Liquor & Gaming NSW.
On 11 April 2024, Mr Lambert responded to an email of the DMS stating that he would arrange to have the connectivity issue fixed immediately. However, this was not done. The breach continued even after the issue was brought to Mr Lambert’s attention by Inspector Kazan on 21 June 2024 and rectified after a full week had passed following the inspection on 28 June 2024. The Respondent said that this degree of non-compliance supported the imposition of a significant penalty.
The evidence, in other words, establishes that the absence of a connection to the CMS had run for over a month after the Applicant received notice of the lack of connectivity. It was only after the Applicant had been again contacted and an inspection having taken place, that the matter had been rectified. The total period over which the lack of connectivity subsisted was nearly three months (early April to late June).
The Applicant, however, gave evidence that the gaming room at the Hotel suffered water ingress which damaged the area around three gaming machines and affected the equipment connecting those machines to the CMS. Mr Lambert said that this occurred in about April 2024.
Mr Lambert also said that the gaming machines in the Hotel intermittently came on and offline for reasons that were not discovered until 5 July 2024. I understood him to say that the reason for intermittent connection was a defective hub damaged by water ingress.
Mr Lambert said that at the time he was notified on 19 June 2024 that three gaming machines were disconnected, he thought the issue had already been rectified.
There was also evidence that one gaming machine was kept in storage and was disconnected when in storage. The Applicant had failed to complete a storage form in relation to the machine in storage. This, however, was not a matter that resulted in a penalty. I understood the Applicant to say that because the relevant machine was in storage and not in use, this was a proper explanation for why it had not been connected.
Mr Lambert also said that during this period, he was experiencing significant financial stress and health difficulties. He says he attended his doctor in about April 2024 and was diagnosed with certain conditions. He said that he was advised that he lacked the capacity to work for a period but continued working because of staffing and financial constraints. He explained that the CMS connection issue not being followed up occurred against this background.
The purposes of the Act generally include harm minimisation and fostering responsible conduct. These purposes are relevant to the determination of what penalties should be imposed. That is, the penalties imposed must be set at levels that deter conduct that is contrary to these purposes.
The breaches in evidence include contravention of an obligation to ensure connectivity of the relevant gaming machines with the CMS. The DMS said on 5 April 2024 that three machines had not been connected to the CMS. Inspector Kazan on 28 June 2024 found that three machines were not connected to the CMS system. Three machines were subsequently moved and reconnected. I find in these circumstances that three gaming machines had lost connectivity in early April 2024 and were not reconnected until early July 2024.
Mr Darren Duke, a member of the Enforcement Panel gave evidence as to the function of CMS connectivity. He said that the CMS is a critical integrity and harm minimisation measure under the statutory scheme. It can detect when a gaming machine is operated outside its authorised hours, identifies when a gaming machine has been tampered with and ensures that the machine is running only on approved software. That software regulates the maximum amount of money that can be inserted for play and the maximum amount of money that is permitted to be used per spin. Mr Duke said that the CMS connection also protects consumers by recording jackpots won. It could also identify activity that could represent money laundering. I accept Mr Duke’s evidence.
I do not accept the Applicant’s submission that it took prompt action to rectify the lack of connectivity of the relevant gaming machines to the CMS. After DMS notified the Applicant of non-connectivity in early April 2024, there is no evidence of action until nearly three months had passed, to reconnect the gaming machines. Connectivity was not restored until early July 2024.
These delays took place in circumstances where Mr Lambert was aware of the issue of non-connectivity in April 2024. In an email of 11 April 2024, he said that relevant action would be taken “immediately”. Connectivity was, however, not restored until 5 July 2024.
The Applicant says that the problems with connectivity with the CMS arose as a result of water damage to the location in the Hotel where the relevant gaming machines were kept. He also says that these circumstances resulted in damage to his laptop impacting on his ability to receive emails and respond to emails.
I accept Mr Lambert’s evidence as to water damage occurring. The Applicant, however, has obligations under the Act to ensure the relevant CMS connectivity. Where circumstances of the kind in evidence arise including water damage, these are not matters that relieve a licensee of their statutory obligations. A licensee remains responsible for ensuring connectivity whether in ordinary circumstances or when situations out of the ordinary arise to disrupt connectivity. Where a period of several weeks ran between the time Mr Lambert was notified of non-connectivity and the time the issue was addressed, I do not think that the circumstances arising out of the water damage in question relieve the Applicant of its statutory obligations or allow for a reduction in penalties.
**********
I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales. Registrar
Representation of Second Respondent amended on coversheet.
WAM Hotels Pty Ltd
Independent Liquor & Gaming Authority
Mr Lambert also said that his laptop had been damaged and replaced, affecting his ability to communicate by email. I understood him to explain his non responsiveness to emails on the basis of these circumstances.
The Applicant relied on the above circumstances surrounding the CMS issue including accidental damage to explain CMS non-compliance. It also relied on the rectification of non-connectivity “promptly” and the Applicant’s previous compliance history. The Applicant also relied on how it addressed an earlier issue concerning CMS connectivity in March 2024, which the Applicant caused to be addressed through its technician. The Applicant said that these were circumstances that warranted no penalty or a lesser penalty.
The penalty imposed also involved the Applicant’s breach in permitting a cash dispensing facility to be used or to be installed where the facility was capable of providing cash from a credit card account. The Authority said that this breach was “particularly serious”. This was because it posed direct harm to consumers, particularly those experiencing gambling harm, by enabling them to gamble outside their means. The Authority said that despite Mr Lambert’s knowledge of the requirement that ATMs not permit credit card cash withdrawals from the time the ATM was installed, credit card withdrawals occurred after installation of the ATM in 2021.
Mr Lambert, on the other hand, gave evidence that at the time of the installation of the ATM in 2021, he expressly instructed the ATM provider in writing that there was to be no credit card cash withdrawal facility allowed. The Applicant also submits that it was not incumbent upon the Applicant to verify that the ATM did not dispense cash.
The Applicant relied on its lack of knowledge that the ATM was in fact permitting withdrawals from credit card accounts, as well as the prior instruction given to the ATM provider that no such functionality be enabled. The Applicant also relied on what it said was the relatively “modest” total of the credit card withdrawals identified to support its argument that the penalty imposed was excessive.
The Applicant sought an order varying the decision under administrative review so that in substitution of the penalty imposed, the Applicant would receive a reprimand or alternatively, a materially reduced monetary penalty. It said that the penalty imposed by the Authority was excessive and disproportionate to the seriousness of the relevant conduct.
Evidence included two other decisions imposing penalties. The first involved a situation where the Authority imposed a penalty of $11,000. That penalty was imposed in circumstances where the licensee was found to have knowledge that an ATM permitted credit card withdrawals. The issue had persisted over approximately 7 years and about $750,000 had been withdrawn from credit card accounts. $45,000 of those withdrawals occurred between midnight and 3 am.
The second decision involved the imposition of a penalty of $22,000. In this matter, the licensee was found to have clear knowledge of the issue surrounding an ATM. There was also a gaming room compliance issue. Additionally, $221,000 had been withdrawn from the ATM in only seven months, including over $80,000 between midnight and 6 am.
The Applicant relies on what it says were failures in its communication system due to the damage to Mr Lambert’s laptop, to explain why it did not act earlier on correspondence informing it of problems with connectivity to the CMS.
Where the communications system of a business fails including an email facility on a laptop, it is reasonable to expect that steps will be taken to rectify the failure without delay, so that the business is able to continue operating in a normal way. Mr Lambert appears to have done so, at least to the extent that Mr Lambert replaced the damaged laptop.
Mr Lambert describes difficulties with his spam/junk folder and receiving emails. The evidence, however, was that he did receive the email correspondence sent to him in early April 2024 concerning the absence of connectivity, having replied to it on 11 April 2024. In these circumstances, I am unable to find that communications failures can explain the Applicant not taking action to restore connectivity to the CMS until several weeks had passed.
Mr Lambert also says that he believed that the matter had been rectified at the time the inspection of the Applicant’s premises occurred. However, what the Applicant’s personnel subjectively believed, does not in my opinion, allow the Applicant the relief from penalties that it seeks. What the Applicant’s personnel believed or did not believe does not have a material bearing on its obligations and the penalty imposed, in circumstances where, as a matter of fact, there was no connectivity for nearly three months and no relevant evidence of anything done to restore connectivity until early July 2024.
The evidence is that one of the machines identified as not being connected was in fact in storage. Nevertheless, there were other machines that were being played without connectivity to the CMS. I do not think in these circumstances that the placing of one of the machines in storage carries significant weight in determination of what penalties should be imposed.
The Applicant said that during the period in question there was “intermittent” connection between the gaming machines in question and the CMS system. However, I am unable to find sufficient evidence to establish that there was intermittent connection. There is nothing in the evidence provided by DMS to say that connectivity of this kind subsisted during the period in question from early April 2024. The submissions of the Applicant asserting intermittent connectivity deal with the use of particular machines before April 2024.
Additionally, I do not think that intermittent connectivity would satisfy the Applicant’s obligations under s 133 to “ensure” relevant connectivity. This is an obligation to ensure that each “approved gaming machine that is kept in the hotel or on the premises of the club is connected to an authorised CMS”. Any connectivity that is not continuous would defeat the purpose of connectivity, namely to monitor gaming machines in the manner described by Mr Duke at [77] on an on-going basis.
The Applicant also relies on Mr Lambert’s personal circumstances including financial stress and health difficulties. However, the Applicant in the present case is not Mr Lambert personally but the corporation of which he was a director. In circumstances where a particular office holder is unable to discharge their functions at a particular time, it is not unreasonable to expect that the relevant corporation has in place other arrangements to ensure that it continues to operate in accordance with its legal obligations. To the extent that the Applicant itself was suffering from financial stress, there was no evidence provided as to how that stress prevented timely compliance in April 2024.
The penalty imposed also attaches to the breach of s 47C of the Act. This was a breach that occurred by reason of the facility on the relevant ATM at the Hotel that allowed withdrawals of cash from a credit card account. In seeking relief from the penalty, the Applicant relies on evidence that it informed the installer that the ATM should not have a facility for the withdrawal of funds from a credit card account. The Applicant says that having so informed the installer at the time of installation, it was not responsible for checking their systems to ensure compliance.
I cannot accept this submission in circumstances where the relevant breach subsisted for a number of years. What systems a licensee puts into place to ensure compliance of its systems with its statutory obligations, is a matter for the licensee. It is not for the Tribunal to prescribe the technical parameters of such a system. If, however, the systems are non-compliant for a period of years as in the present case, I infer that the Applicant did not have adequate systems to ensure compliance. I do not think that in these circumstances, simply relying on an instruction given to the ATM installer is sufficient to either excuse the Applicant from its statutory obligations or allow for a reduction in the penalty imposed.
To the extent that the Applicant relies on evidence that he gave the required instruction to the installer, any failure by the installer to follow that instruction is a matter arising between the Applicant and the installer. For the reasons set out above, I do not think that circumstances such as this arising between the Applicant and the installer bear upon the determination of the proper penalty.
To the extent that the two decisions in evidence bear relevance, both can be distinguished from the facts of the present case. Each involved a contravention of the prohibition against ATM facilities for the withdrawal of cash from credit card accounts. The circumstances at hand have arisen out of a contravention of this prohibition but also breaches of the requirement to ensure connection of gaming machines to the CMS system. Further, the two decisions in evidence involved individual licensees. They do not involve a corporate licensee as in the present case, a higher range of penalties applying to corporations. I do not in these circumstances obtain assistance from consideration of the two earlier decisions in determination of what the proper penalty should be.
A contravention of s 47C attracts a maximum penalty of 100 penalty units. A maximum penalty of 100 penalty units also attaches to a contravention of s 133(1). A maximum penalty of 500 penalty units, however, may be imposed under s 131(2)(a)(i) for breaches to which that provision applies. While ss 47C and 133 address particular breaches falling within each provision, s 131(2) has a wider ambit, capturing as it does any relevant complaint including, in the present case, both the relevant contraventions of s 47C and 133(1) as well as conduct that has encouraged, or is likely to encourage, the misuse and abuse of relevant gambling activities.
The penalty imposed in the present case was 400 penalty units under s 131(2) of the Act. If there needs to be “some reasonable relationship between the theoretical maximum and the final penalty imposed”, I find that such a relationship can be found in the circumstances of the case.
The breach of s 47C is serious. Providing a facility for gambling funded by credit card accounts created circumstances where consumers could gamble beyond their means.
Failing to ensure connectivity of gaming machines for a period of nearly three months is also serious. This was a failure that prevented monitoring of the relevant machines during the period of disconnection, including the software that regulated the maximum amount of money that can be inserted for play and the maximum amount of money that is permitted to be used per spin. The inability to monitor the relevant software took away the protections that consumers would otherwise have had, if that monitoring had been possible. This was a failure that occurred in circumstances where the Applicant knew of the disconnection of the machines in early April 2024 but reconnection did not occur for nearly three months.
I do not think that any of the circumstances relied upon by the Applicant to seek relief from the penalties imposed can allow for a reduction of the penalty for the reasons set out above at [81], [84]-[89] and [91]. I do not think that Mr Lambert’s previous compliance history assists him, having regard in particular to the breach of s 47C that subsisted over a period of years. Even if the Applicant took various measures to improve compliance after the events described above, it did not act to restore the connectivity of the relevant gaming machines for nearly three months after being informed of disconnection.
I do not think the size of the Applicant’s business allows it to claim relief from the penalties imposed, having regard to the seriousness of the relevant breaches.
The statutory purposes described above, would not be served by penalties that do not sufficiently deter contraventions of the provisions of the Act under consideration by the Tribunal in these proceedings. Those purposes include harm minimisation and fostering responsible conduct. I find, taking account of these purposes, that the level of penalty imposed in the present matter is sufficient and not excessive for the reasons set out above.