Not Gaming or Wagering
Spread betting can be distinguished from gaming and wagering that might take place on a race course or at a casino because, unlike those activities, it is not governed by the various State Gaming and Wagering statutes but by Commonwealth legislation dealing with the conduct of commercial activities.
The validity of spread betting contracts - being found in the Corporations Act 2001 , as opposed to gaming legislation - indicates Parliament's intention that they, as a branch of human activity, belong to an order entirely different from gaming or gambling, that is, they are true commercial activities.
In addition, transacting with financial spread betting is closer to the skill end of the chance-to-skill spectrum and the commercial end of the private/recreation-to-commercial spectrum than a bet on a horse racing (see Taxation Ruling TR 2005/15: 'Income tax: tax consequences of financial contracts for difference'). Transacting with financial spread betting is essentially a commercial activity of investing in a cash-settled derivative, albeit in the legal form of a contract of gaming and wagering, in relation to an underlying financial risk.
The degree of control is also another factor that distinguishes financial spread betting from recreational gambling. The winnings tend to be the rewards for skill and judgement rather than purely betting on chance (See Brajkovich v. Federal Commissioner of Taxation 20 ATR 1570; 89 ATC 5227).
