BetFair Clash with Aussie Racing Imminent – Nov 19th, 2009

Wednesday this week will see the Australian branch of online gambling giant Betfair in court again, this time fighting a 1.5 percent levy on it’s turnover attempted by Racing New South Wales.

The head of Betfair’s operations Downunder, Andrew Twaits, is expected to give evidence to the court that the NSW racing authority is colluding with Betfair’s local rival Tabcorp in trying to force his company out of the state.

Betfair initiated the litigation against Racing New South Wales following the imposition of the 1.5 percent levy on turnover, decribing the action by the racing authority as anti-competitive and discriminatory between different businesses.

Another corporate bookmaker, Sportsbet, is challenging the constitutionality of the legislation that was used to introduce the levy, reports the Australian newspaper “The Age”.

Betfair and other low-margin corporate bookmakers say the levy should be calculated on gross revenue, as it is in Victoria, South Australia and Tasmania, because the NSW model heavily favours the incumbent TAB operator, Tabcorp.

The 1.5 percent levy constitutes 60 percent of Betfair’s gross revenue, the company complains, contrasting this with the fact that Tabcorp pays only 9.75 percent of its gross revenue due to a different business model. The disparity comes about because the TAB has far thicker margins than the corporate bookmakers.

The TAB takes 16 cents out of every dollar in the betting pool, while corporates like Betfair take out between 1 percent and 3 percent, giving the punter a better deal. Sources in the industry have alleged that Racing NSW consulted extensively with Tabcorp before introducing the levy, and that legislation was drawn up specifically to protect Tabcorp’s position as the dominant bookmaker in NSW.

This accusation has been emphatically denied by Racing NSW’s chief executive, Peter V’Landys. ”There was consultation with all wagering operators,” V’Landys told reporters.

“Before we determined the fee, we consulted with all the corporates. We had more meetings with Betfair than we did with Tabcorp, and at all times we have treated everyone equally.”