11.08.2012

Gambling on Sponsorship

New Zealand’s size and geographical proximity to Australia has resulted in a number of trans-Tasman sporting events. This trans-Tasman rivalry offers fantastic visibility opportunities for sponsors in two jurisdictions rather than one.
 
The New Zealand Breakers, for example, compete in the Australasian National Basketball League. The recent championship battle between the Breakers and the Perth Wildcats was hotly contested, with the best of three games taking out the championship. With sold out crowds and thousands tuning into the live coverage, all eyes were on the players – including their uniforms.
 
The first game was played in New Zealand, and curiously, each Wildcat player displayed a large piece of sports tape on the back of his singlet. This was not a strange new type of brand marketing, instead, it was there to cover the logo of one of the Wildcats’ sponsors, “Player”. In the second game, played in Perth, the “Player” logo returned. In the final, held in New Zealand, the Wildcats appeared in a new kit that did not depict the “Player” logo at all.
 
You may well speculate on what occurred. Was there some form of rift between the team and its sponsor, were sponsorship fees not paid, or perhaps there was a breach of contract? Actually, the issue was much more straightforward, it was simply our law.
 
“Player” is an online sports and race betting agency in Western Australia. While it is not illegal for New Zealanders to gamble on overseas internet sites, New Zealand’s Gambling Act 2003 prohibits the advertising in New Zealand of overseas gambling. This prohibition includes any form of communication that publicises or promotes gambling, or a gambling operator, when that gambling or operator is outside New Zealand or is reasonably likely to induce people to gamble outside New Zealand.
 
It would seem that the use of sports tape during the first game was a creative, albeit last minute attempt to avoid committing an offence under the Act and being fined up to $10,000.
 
Although $10,000 may seem a fairly insignificant sum, the fine must not be viewed in isolation. There are a number of additional costs that could be factored in, including the sunk advertising cost of initially having become a sponsor, production of new “away kits” without the prohibited sponsor logo, the obligation to report convictions to insurers and auditors, and, of course, legal fees and expenses.
 
The Perth Wildcats are not the first sports club to realise that trans-Tasman events require sports clubs to heed the law. The Department of Internal Affairs (“DIA”), the government agency tasked with enforcing the Act, has investigated several other sports teams where sponsors have included overseas gambling operators. In 2010, the DIA ordered the Wellington Phoenix soccer body to remove a Centrebet billboard from Westpac Stadium, and the Newcastle Jets to remove the Centrebet logo from their playing shirts. That same year, the Warriors’ rugby league club was investigated in relation to three Keno-sponsored NRL games.
 
The Wildcats’ singlets highlight potential conflicts that can arise between sports sponsorship and advertising laws in different jurisdictions. When considering sponsorship as a form of advertising, the basic rules should not be forgotten. Issues to be considered include when and how the brand will be displayed, the costs involved, the consequences if the brand is not displayed for any particular reason or the brand is brought into disrepute; and, if another jurisdiction is to be involved, the implications of its laws.
 
We recommend that sponsors have a programme in place to ensure they are compliant in all jurisdictions in which their brands or products are promoted.
Do you need expert legal advice?
Contact the expert team at Hesketh Henry.
Kerry
Media contact - Kerry Browne
Please contact Kerry with any media enquiries and with any questions related to marketing or sponsorships on +64 9 375 8747 or via email.

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