Thinking of Challenging a Regulator’s Infringement Notice? Think Twice
You have just received an infringement notice from the ACMA or other regulator
The penalty amount is significant, but your compliance team believes the regulator has misunderstood the facts or not taken all relevant factors into account. The natural reaction may be to challenge the notice.
Before challenging an infringement notice, recipients should understand a potentially significant consequence that exists under a number of Australian regulatory regimes. In some circumstances, successfully having an infringement notice withdrawn may expose the recipient to court proceedings, substantially larger penalties and public findings that a contravention occurred. For wagering and other gambling operators, the decision is therefore often a strategic risk-management question rather than simply a legal dispute.
Key Takeaways
• Paying an ACMA or other regulatory infringement notice does not typically involve an admission of guilt.
• Payment generally prevents further proceedings for the same alleged contravention.
• The withdrawal request may be assessed by the same officer who issued the infringement notice.
• Under some Commonwealth and State regulatory regimes, seeking withdrawal of an infringement notice may expose the recipient to court action.
• In some cases, courts can impose substantially larger penalties than the infringement notice amount.
• A successful enforcement proceeding may result in public findings of non-compliance and reputational damage.
• Legal advice should be obtained before deciding whether to challenge an infringement notice.
What Is an Infringement Notice?
An infringement notice is a formal notice issued by a regulator, such as the ACMA, for an alleged contravention of certain laws. The notice offers the recipient an opportunity to pay a monetary penalty to resolve the matter administratively, without admitting liability or guilt. For example, if the ACMA believes a wagering operator has breached the BetStop obligations in Part 7B of the Interactive Gambling Act 2001 (Cth) (IGA), it may issue an infringement notice as an alternative to commencing court proceedings. A regulator is not obliged to commence proceedings merely because an infringement notice is withdrawn, but withdrawal restores the regulator's ability to commence proceedings.
Why This Matters for Gambling Operators
Particularly for wagering operators regulated under the IGA, infringement notices are increasingly being used as part of the ACMA's enforcement toolkit. Recent enforcement activity demonstrates that the ACMA is prepared to use infringement notices, enforceable undertakings and public investigation reports to address non-compliance.
Understanding the consequences of accepting or challenging an infringement notice is therefore becoming an increasingly important governance and compliance issue.
The Benefits of Paying an Infringement Notice
The law gives recipients a significant benefit if they choose to pay an infringement notice. Payment generally:
• resolves the matter without court proceedings;
• is not treated as an admission of guilt;
• provides certainty and finality; and
• prevents further proceedings for the same alleged contravention.
In relation to an infringement notice from the ACMA, these benefits set out in s 107(1) of the Regulatory Powers (Standard Provisions) Act 2014 (Cth) (Regulatory Powers Act), create a strong incentive to pay the fine and “move on”, particularly for those seeking certainty and finality.
The Risks of Challenging an Infringement Notice
If a recipient disagrees with the infringement notice, section 106 of the Regulatory Powers Act allows them to make submissions to the issuing authority seeking withdrawal of the notice. However, this process is fraught with risk.
Section 107(2) of the Act is key: if the regulator agrees to withdraw the infringement notice, the protections under section 107(1) (set out above) fall away. The authority is then free to commence court proceedings for the alleged contravention. This means that, rather than resolving the matter by paying the infringement notice, the recipient could find themselves defending court proceedings in the Federal Court or another relevant tribunal. The regulator may seek a court-imposed financial penalty. If the court finds that the breach occurred, the recipient could be found in contravention and ordered to pay a much larger penalty than the original infringement notice as well as their own and the ACMA’s legal fees.
Similar Risks Exist Under Some State Regulatory Regimes
The risk associated with challenging an infringement notice is not unique to the Commonwealth regulatory framework.
Similar risks arise under some state infringement notice regimes. For example, under both the Fines Act 1996 (NSW) and the Infringements Act 2006 (Vic), withdrawal of a penalty or infringement notice does not necessarily bring the matter to an end and may result in court proceedings being commenced in relation to the alleged offence.
For wagering operators and other regulated businesses, this highlights an important point: before seeking withdrawal of any infringement notice, careful consideration should be given not only to the prospects of successfully challenging the alleged contravention, but also to the consequences that may follow if the regulator or enforcement authority decides to pursue the matter through the courts.
Who Decides Whether an Infringement Notice Should Be Withdrawn?
A further consideration that is often overlooked is who will assess any request to withdraw an infringement notice.
Under section 106 of the Regulatory Powers Act, a person who receives an infringement notice may make submissions to the relevant chief executive seeking withdrawal of the notice. On its face, this may suggest that the withdrawal request will be considered by the chief executive of the regulator.
However, the ACMA's published Regulatory Guide No. 5 – Infringement Notices states that the person who issued the infringement notice will, in most cases, be best placed to consider the withdrawal request because they are familiar with the factual issues and can assess any new information provided. The ACMA therefore guides recipients to submit withdrawal requests to the officer identified in the infringement notice in the first instance.
This means that the request may be assessed by the same officer who formed the original view that a contravention occurred and who decided to issue the notice. While the officer must consider any additional information or submissions provided, recipients should be aware that the withdrawal process is not necessarily an independent merits review conducted by a separate decision-maker.
This position contrasts with some state infringement review regimes. For example, section 24(2) of the Infringements Act 2006 (Vic) requires an enforcement agency to ensure that a review is conducted by a person who was not involved in the decision to serve the infringement notice. The Victorian regime therefore incorporates a degree of separation between the original decision-maker and the reviewer.
Questions to Ask Before Seeking Withdrawal
• Is the alleged contravention factually wrong?
• What is the maximum penalty a court could impose?
• What legal costs would be incurred if proceedings were commenced?
• Could a public judgment have licensing or reputational consequences?
• Does the alleged contravention raise issues that could affect licensing, suitability or regulatory relationships?
• Is there a realistic prospect the regulator would commence proceedings?
• Are there alternative engagement strategies with the regulator?
Conclusion
An infringement notice is often viewed as a penalty. In reality, it is also an offer: an opportunity to resolve an alleged contravention without litigation and without admitting liability.
For some recipients, challenging the notice may be entirely justified. However, the decision should never be made on principle alone. The relevant question is not simply whether the regulator may be wrong. It is whether the potential benefits of challenging the notice outweigh the very real risks of litigation, increased penalties and public findings of non-compliance.
Although this article examines ACMA infringement notices under the IGA in particular, the underlying principle is much broader. Across a range of Commonwealth and state regulatory regimes, seeking to overturn an infringement notice can have unintended consequences. Before deciding to challenge an infringement notice, recipients should ensure they fully understand both the prospects of success and the risks that may arise.
About Senet
Senet is a multidisciplinary Australian firm specialising in gambling and gaming law, regulatory compliance, and business advisory services. We are the largest specialist team in Australia and based in Victoria. Recognised globally as experts in our field, we understand Australia’s complex gaming legal and regulatory landscape, enabling us to guide clients through their compliance requirements across each state and territory. Our clients range from start-ups to publicly listed global operators, both nationally and internationally. Our team is deeply immersed in the industry, often sharing insights at public speaking events, and our principals have held executive roles in a global ASX-listed entity and a 'Big Four' advisory firm, giving us a unique perspective on the challenges our clients face.
If you have any questions or would like to discuss the topics covered in this article, please contact the team at Senet.
