Tabcorp of Australia was recently chastised and fined after colluding with gambling regulators in New South Wales. In September, the Australian online sports betting titan was convicted and penalized for marketing malpractice. The incident occurred less than a month after the casino operator was substantially fined in Victoria, prompting an investigation into the company’s inner workings.
The Consecutive Fines
The gaming industry in Australia is not new to legal scrutiny, as numerous large fines have been levied against guilty operators in recent years. This time, the axe fell twice on Tabcorp, the well-known wagering behemoth. A judicial verdict at the Downing Centre Local Court on September 22nd ruled that Tabcorp was guilty of illegal gambling enticement. The gaming operator had been charged for posting an advertisement on its website with a message encouraging non-account holders to bet. In its defense, the betting company blamed the error on an internal mishap that exposed the marketing message to everyone who visited the website.
Although allegedly unintentional, the error broke New South Wales legislation, which bans sending marketing messages to anyone other than those holding betting accounts. On behalf of Liquor & Gaming NSW, the Magistrate imposed an AU$15,000 (US$9,717) punishment on the gaming company. The betting corporation had hardly recovered from a new AU$1 million penalty levied by the Victorian Gambling and Casino Control Commission (VGCCC). The VGCCC fined Tabcorp for a serious system outage during the 2020 Spring Racing Carnival. The laws oblige active gaming companies to provide continuous access. Despite the fine, Tabcorp is not yet out of the woods. The Victorian gaming authority could fine the corporation another AU$698,998 (US$450,644) for permitting an underage individual to gamble multiple times.
Liquor & Gaming NSW’s Take
Tabcorp’s failure to toe the line rubbed Liquor & Gaming NSW incorrectly. According to Jane Lin, the authority’s Executive Director of Regulatory Operations, Tabcorp was supposed to uphold ethical practices in its online operations.
Lin expressed that Tabcorp, being a sizable corporation, should have robust internal controls and be extra vigilant in preventing public exposure to gambling inducements. While gambling promotions are legally offered to betting account holders who have willingly opened accounts and consented, operators cannot entice people to open accounts or gamble against their will with offers like increased odds or bonus bets.
Liquor & Gaming NSW maintains a strong stance against non-compliant gambling promotions by gaming companies. All forms of communication aimed at enticing consumers to open or maintain accounts or receive gambling ads are banned by New South Wales authorities. Violating these regulations can result in a $100,000 penalty for gaming operators and up to an $11,000 penalty for those responsible for the communication.
Executive Compensation Debates
The recent AU$ 15,000 fine appears insignificant compared to the prior AU$ 1 million penalty. However, it has far-reaching consequences for the corporation and the broader Australian gaming industry. Being the second incident in a short period of time, it raised questions about the motivations of those in charge of marketing communication and associated phenomena. It put Tabcorp CEO Adam Rytenskild on the scope, raising concerns that he makes ridiculous amounts of money, some of which are suspected to be from illegitimate operations.
Tabcorp’s corporate governance is also a source of contention for the Australian Shareholders’ Association (ASA). It has generated fears that the company’s executives are paid uncharacteristically high. ASA now advises shareholders to exercise their voting power to reject the proposed CEO compensation package, citing its disproportionate character. The advice to shareholders issued by ASA is an attempt to influence how the wagering firm is governed and to enhance the balance between the company’s executives and its shareholders. A balanced power structure can help strengthen accountability and improve the quality of decisions made in the organization. During the current controversies, Tabcorp’s stock price dropped significantly due to negative publicity. To preserve their future, shareholders will most likely follow ASA’s recommendations.
Recap
Tabcorp has taken significant hits in a short period of time as a result of the strict rules in place in Australia’s gambling industry. The company’s problems go beyond fines, hurting corporate governance and public image. Although pitiful, Tabcorp’s recent misfortunes are a cautionary tale for other operators in the country’s gaming market. It is only natural to realize that the regulatory landscape has shifted, and stakeholders must adapt accordingly.
