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RACING AUSTRALIA ANNUAL REPORT 2016
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5. NORFOLK ISLAND GAMING AUTHORITY
Racing Australia also engaged effectively with the
Federal Government on another threat to racing’s
integrity which arose from an unexpected source.
Racing Australia learnt on 22 March, 2015 that the
Norfolk Island Gaming Authority (NIGA) had approved
a white-label agreement between BetHQ and Asia’s
largest illegal bookmaker Citibet. It was a staggering
act of regulatory recklessness which potentially
exposed Australian racing to corrupt influences. Racing
Australia made urgent representations to the Federal
Government calling for NIGA be wound up as it could
never operate as a competent and reliable regulator.
The Minister for Territories acted decisively and issued
a Direction on 7 April, 2015 prohibiting the NIGA from
issuing any further licences until an independent audit
of its functions and operations had been undertaken.
On 5 November, 2016 the Federal Government
announced the winding up of NIGA after receipt of the
audit which found that the internal controls of NIGA
were inadequate and could give rise to fraud and
corruption. The audit further found:
• “The Authority has been operating in a non-
transparent way with little to no reporting or
communication with the Administration.”
• “The Authority has been grossly under-resourced.
Basic control elements are not in place, such
as: governance and reporting structures, a risk
register, contracts with key personnel, segregation
of duties, controls to prevent conflicts of interest,
staff remuneration processes and policies and
procedures.”
• “The Authority and the former Administration have
been more concerned about raising revenue from
gaming licences than having due regard to its
regulatory functions.”
• “We found the Authority in its current form to be
barely viable.”
In its announcement the Government acknowledged
the concerns of Racing Australia, Racing Victoria and
Racing NSW around NIGA’s poor performance and lack
of probity checks on new licence applications.
6. ASIC CLASS ORDER – HORSE RACING
SYNDICATES
The Australian Securities and Investments Commission
(ASIC) announced in November 2014 that it was
undertaking a review into whether the Horse
Syndication Class Order should continue beyond its
sunset date of 1 October, 2016 and, if so, under what
conditions.
Racing Australia engaged in constructive discussions
with ASIC representing all Principal Racing Authorities
which are lead regulators for the approval of
syndications. There were numerous interactions
with ASIC as various options for reforming the Class
Order were considered. Racing Australia made many
submissions to ASIC on the complex policy, legal and
administrative issues under consideration.
On 31 August, 2016 ASIC announced a new legislative
instrument to replace three Class Orders on Horse
racing syndicates and Horse breeding schemes that
were due to expire in 2016.
Racing Australia welcomed ASIC’s announcement as
it incorporated most if not all of Racing Australia’s key
policy objectives.
ASIC’s major changes to Horse racing syndicates will:
1. Raise the investment limit for a horse racing syndicate
from $250,000 to $500,000;
2. Increase the maximum number of members for a
horse racing syndicate from 20 to 50; and
3. Impose additional content requirements for a Product
Disclosure Statement for a horse racing syndicate.
Racing Australia believes ASIC’s reforms will encourage
greater participation in horse ownership with enhanced
transparency.
The increase to 50 members in a syndicate will make
racing a horse a more affordable option with purchasers
able to acquire a smaller percentage share in a horse.
The cost to purchase and race a horse has increased
since the inception of the original Class Order in 2002.
The increase to 50 members will encourage greater
participation by small owners.
Approved syndicators will also benefit from the new
$500,000 cap as they will have greater purchasing
choices and opportunities at the major yearling sales.
This will also allow participants to purchase a more
affordable share in a well-bred horse.