Not everything that involves gambling makes for a gambling offence referral to AFSA. There are several factors that determine whether a person with a gambling habit has committed an offence. Section 271 of the Bankruptcy Act 1966 legislates that a person who becomes bankrupt due to gambling or hazardous speculation commits an offence that can be prosecuted.
There are several considerations when deciding if a case is a genuine gambling issue. For a case to be referred as a gambling offence, gambling must have materially contributed to the person’s insolvency. Just because someone has gambled doesn’t mean gambling is the reason for their insolvency.
Check out the stories of John and Jane below; only one is a legitimate gambling offence.
- John owes $1.2 million dollars to a range of creditors. He has a great job and earned $145,000 over the past year. After a few trips to the casino, he gambled $24,000 of his earnings. John didn’t make his debt repayments.
- Jane owes $14,000 as she took out as a misguided personal loan last year. Unfortunately, Jane lost her job and with no other sources of income, ended up selling her house, receiving $400,000 in profit. After a month, Jane’s balance from the sale of her property was $0 – all lost in gambling. She filed for bankruptcy against the $14,000 she owed.
Both John and Jane lost a lot of money gambling but only Jane’s case should be referred as a gambling offence under s271. While John’s gambling didn’t help his situation, it was only a small part of the reason why he didn’t make his debt repayments. In Jane’s case, her gambling was the reason she didn’t make her payments as she had the funds and the ability to pay from the profits of the sale of her house.
Referring a gambling offence for prosecution
AFSA’s Inspector-General Practice Statement 6, which indicated that AFSA would avoid referring a person for prosecution if they were willing to state that they had a gambling problem, was repealed in 2020. One of the reasons for its repeal was that some people were intentionally abusing the personal insolvency system by claiming a gambling problem when they didn’t have one.
As IGPS6 no longer exists, it shouldn’t be used to decide about referring a matter to AFSA for enforcement action.
Public interest factors are important when assessing any offence referral, including gambling. For example, a true gambling addict who can show evidence of their addiction may have mitigating circumstances for their situation. This might mean that it isn’t in the public interest to pursue an investigation.
For more information, please read IGPS14 or email regulation [at] afsa.gov.au