Inspector-General in Bankruptcy Practice Guideline on Gambling Offences

Purpose
1. This guidance explains what AFSA considers when deciding whether to refer offences under section 271 of the Bankruptcy Act 1966 (Cth) (the Act) to the Commonwealth Director of Public Prosecutions (CDPP) for prosecution. This offence relates to gambling or rash and hazardous speculations (not related to business or trade) where these actions were unreasonable given the individual’s financial situation at the time.
2. While there are various elements of the offence to consider under section 271 the Act, this offence is directed towards behaviour that is rash and hazardous. While there is no legal definition provided for this term, generally it refers to behaviour where a person has recklessly decided to gamble having regard to their financial situation. The gambling behaviour must have materially contributed towards them not being able to pay their debts.
3. AFSA aims to have a regulatory balance between supporting people experiencing vulnerability while taking appropriate action towards those who misuse our systems. To achieve this balance AFSA needs to approach each case on its individual merits. There are no rigid rules that apply to all situations. The ‘scenarios’ included in this document provide examples of considerations that might be applied in different circumstances.
4. As delegates of the Inspector-General in Bankruptcy, AFSA officers may exercise powers under the Act and the Bankruptcy Regulations 2021 (Cth). References in this document to AFSA are generally references to delegates of the Inspector-General unless the context indicates otherwise.
5. AFSA investigates and, where appropriate, refers alleged offences to the Commonwealth Director of Public Prosecution (CDPP) for prosecution. The decision to prosecute is made solely by the CDPP.

Guidelines

What is gambling and what is gambling harm?
Whether particular behaviour constitutes gambling would be assessed on a case-by-case, generally gambling is regarded as ‘staking money or something of value on an event determined wholly or partly by chance, with the intent of winning a prize or something of value’^[1], or ‘wagering money in an event that has an uncertain outcome in hope of winning more money’^[2].
Unaffordable or high-risk gambling is characterised by difficulties in limiting money and/or time spent on gambling which leads to adverse consequences for the gambler, others, or for the community^[3].
Gambling harm is any negative consequence experienced by an individual or members of their social network because of participation in gambling^[4]. Gambling harm often intersects with other vulnerability-related issues, such as mental or physical ill-health, substance misuse, and family and relationship conflict or trauma. AFSA’s vulnerability strategy includes referring those experiencing vulnerability to appropriate support services.
AFSA acknowledges that people experiencing a gambling harm, addiction or disorder may find it difficult to control their gambling. This could include:
- Spending more than a person can afford on gambling and chasing losses.
- Losing track of time and money spent gambling.
- Sudden increase in gambling that does not correlate with increased financial means.
- Gambling spends disproportionate to income and assets.
Referral to the Commonwealth Director of Public Prosecutions (CDPP)
In assessing gambling offence referrals, AFSA considers whether alternative actions to prosecution might be appropriate. For example, AFSA may issue an Official Caution to educate and deter people from engaging in high risk or unaffordable gambling behaviours that may contribute to subsequent bankruptcies and likely referral to CDPP.
When considering referral of a brief of evidence for offence(s) to the CDPP for prosecution, AFSA considers the Prosecution Policy of the Commonwealth. The prosecution policy consists of a two-stage test that must be satisfied before a prosecution is commenced.
- First, there must be sufficient evidence to prosecute the case.
- Second, consideration is given that the prosecution would be in the public interest.
Public interest factors vary. Some public interest factors from the Prosecution Policy which are relevant to this offence may include:
- whether the offence is serious or trivial
- any mitigating or aggravating circumstances
- the youth, age, intelligence, physical health, mental health or special vulnerability of the alleged offender, witness or victim
- the alleged offender’s antecedents and background^[5]
AFSA considers harmful circumstances that individually may point to sufficient public interest in seeking prosecution, including:

Indicators of Criminality	Example: a person, after realising insolvency was inevitable, sold their assets and gambled with the proceeds which prevented creditors being paid.
Other offences	Example: the gambling is accompanied by other offences, such as obtaining money by deception or incurring debts by fraud.
Repeat offending	Example: a person has been bankrupt, there was evidence of a gambling offence, and an Official Caution was issued. If the person becomes bankrupt again and there is evidence of another gambling offence, then it could be referred for prosecution.

It is important to note that the presence of unaffordable or high-risk gambling behaviour does not necessarily mean AFSA will refer that matter for prosecution. Individual gambling behaviours will be considered in the context of the offending, as exampled in the following scenarios.
Scenarios:

Indicators of criminality

Craig is 28 years old, single, and lives with his parents. Craig is a sole trader operating his own carpentry business. Due to rising costs of materials and owing $183,000 to unsecured creditors, Craig sought assistance from a financial counsellor and decided that entering bankruptcy would relieve his significant financial stress.

After receiving financial counselling assistance Craig became aware that once bankrupt, his trustee may be able to sell his work truck to provide a dividend to creditors. Before applying for bankruptcy, Craig sold his unencumbered work truck for $58,000 and gambled all the sale proceeds in one weekend on horse racing. Craig applied for bankruptcy the following week.

Craig gambled with the knowledge that he was entering bankruptcy and sold assets that could have been used to pay creditors. He may be referred for prosecution.

Other offences

Jane is 52 years old, has no dependants, rents her apartment and is employed as an accountant earning $75,000 per annum. Jane’s sister was experiencing financial stress after losing her job, so Jane started playing online poker with her to build disposable income.

Within 10 months, Jane was gambling up to $5,000 per day, owed $45,000 to unsecured creditors, and had been convicted of fraudulently transferring money from her clients’ trust accounts to her own bank, which she used to aid her gambling.

Jane’s high-risk gambling behaviour materially contributed to her insolvency and was accompanied by deception offences. She may be referred for prosecution.

Repeat offending

Ben is 38 years old, employed, and lives in rental accommodation with his dependent wife and two children. Ben consistently uses a large part of his wage to engage in high-risk gambling behaviour and is regularly in arrears for his rent and other bills.

Ben is entering bankruptcy for the second time in 5 years. During his first bankruptcy, Ben’s gambling behaviour had materially contributed to his insolvency, and his registered trustee had referred the matter to AFSA.

In accordance with Commonwealth Director of Public Prosecution Policy, AFSA issued Ben an Official Caution under section 271 of the Bankruptcy Act. Ben had not engaged a medical practitioner or counsellor for his gambling behaviour.

Ben had previously received an Official Caution for the gambling offence, had not sought treatment for his unaffordable gambling, and gambling materially contributed to his second bankruptcy, Ben may be referred for prosecution.

Evidence of high-risk gambling
1. AFSA may refer any case for prosecution. Evidence of treatment for high-risk gambling behaviour will be considered by AFSA but may not necessarily stop AFSA from referring offences under section 271 of the Bankruptcy Act to the CDPP for consideration of prosecution. The decision to prosecute is at the discretion of the CDPP with consideration of all evidential factors relating to the offence(s).
2. As per Section 4 of this document, practitioners must refer any breach of the Bankruptcy Act to AFSA Enforcement for consideration of prosecution and include available evidence to support the referral.
3. If a person self-reports that they are seeking treatment for unaffordable or high-risk gambling behaviour gambling to their trustee or registered debt agreement administrator (RDAA), AFSA will consider this on the merits of the individual matter but may still refer an offence of gambling or hazardous speculations to the CDPP, where proportionate to the offending.
4. People are expected to seek help for unaffordable or high-risk gambling behaviour. AFSA expects to see evidence that the person has sought treatment and evidence of changed behaviour.
5. A non-exhaustive list of possible evidence includes:
  - psychological assessments, treatment history, and medical records
  - witness statements/affidavits
  - exclusion from gambling venues
  - legal proceedings related to or resulting from the gambling behaviour.
6. Evidence of unaffordable or high-risk gambling must be provided at the following times:
  - when applying for bankruptcy
  - when requested by the practitioner or financial counsellor
  - when requested by the AFSA Enforcement team.
Practitioner referrals to AFSA
1. Practitioners have a statutory and professional duty to refer any evidence of an offence to the Inspector-General in Bankruptcy (or to relevant law enforcement authorities). Practitioners can submit a referral using the webform on the AFSA website.
2. Practitioners are expected to request evidence relating to the person’s gambling, and treatment, if available, and include it in the referral.
3. There is no sufficiency of evidence test for practitioners; practitioners are legally obliged to refer any evidence of an offence.
4. Practitioners can seek further guidance on discharging their legal obligations to refer offences by contacting AFSA Enforcement enforcement@afsa.gov.au or via 1300 364 785.
5. Scenario:
  
  Gambling materially contributes to insolvency.
  
  Chu is 45 years old, employed as a salesperson, earns $55,000 per annum, has a dependant partner, and three dependent children. She owes $30,000 to unsecured creditors.
  
  Chu gambles most days. She has multiple online betting accounts and plays poker machines on weekends. Last year Chu lost $22,000 in total, and the year prior she lost $15,000.
  
  Chu’s gambling was significant, given her circumstances, with many indicators of high-risk gambling. Her losses for the prior two years represent over 33% of her gross income. By her own admission, gambling was the main cause of Chu’s insolvency.
  
  There is evidence to suggest that Chu’s gambling behaviour materially contributed to her insolvency, so the trustee is legally obliged to provide that evidence to the Inspector-General, which is completed by a referral of Chu to AFSA for investigation.
  
  If Chu seeks professional counselling or help for her unaffordable or high-risk ambling behaviour, this may be a relevant factor for AFSA to consider in whether or not to refer a brief to the CDPP.
Support services
1. If you (or your client) require support with responding to unaffordable or high-risk gambling, you can seek help through:
  - Gambling Help Online | Gambling Help Online
  - Betstop
  - Or by calling the National Gambling Helpline on 1800 858 858.
2. The Problem Gambling Severity Index (PGSI) is a reliable and standard measure of at-risk behaviours of unaffordable or high-risk gambling. The PGSI provides an online self-assessment tool and links to gambling support options.
3. People impacted by gambling harm can access general support information at the AFSA wellbeing support services web page.
Further information
1. Any questions about how this practice guide is applied in a particular case can be directed to AFSA Enforcement at enforcement@afsa.gov.au or via 1300 364 785.