Betfair vs Racing NSW verdict

The dust is now beginning to settle on the Racing NSW victory in the Federal Court case against Sportsbet and Betfair over racefields fees. The betting firms won the original case, claiming collusion between Racing NSW and TABCorp in the type of rights fees paid and how it was determined. Racing NSW head honcho Peter V'Landys, amid plenty of criticism and abuse for frivolously wasting money on legal costs, including from yours truly, refused to take the decision lying down and appealed. Many moons later, Racing NSW won that appeal, prompting the betting firms to take the case to another level with a further appeal. Forgive me for not getting the exact details of which court is which etc, but it really doesn't matter now.

That Racing NSW won the final appeal decision doesn't surprise me. After all, they had won a previous verdict so it wasn't a shock. What did leave me just a little perplexed was the unanimous judgment from a panel of seven.

Despite my background working for firstly IASBet, now a subsidiary of Sportsbet/Paddy Power, and more recently Betfair, I do wholeheartedly believe that betting companies should fund racing. And properly. Otherwise you get a situation like UK racing, where any decent horse which isn't owned by the huge breeding conglomerates will target races abroad to earn proper prizemoney. British meetings, equivalent in standard to good Melbourne or Sydney meetings, are being run for Adelaide or Hobart-level prizemoney. Step down to the lower rungs and they are racing for similar amounts to Aussie pacers and greyhounds.

Betfair and Sportsbet never shirked their responsibilities re funding racing in Australia, despite the PR spin from their opponents. They just wanted it to be based on another model which inspired competition amongst wagering operators and encouraged innovation. Hark back to the 80s and 90s where the number of new products launched by the TAB (NSW or Victoria) could probably be counted on one hand, with a couple of fingers left over. Racing lost a generation of punters because it was as bland as a Julia Gillard policy speech, with the TABs sat firmly on their laurels and watching the money roll in. The introduction of sports betting and corporate bookies plus privatisation made the TABs get off their arse and compete. Dead wood got pushed out the door and the totes modernised. Racing hasn't been the only game in town for a long, long time in Australia. Casinos, pokies and sports betting are here to stay, not to mention rival sports taking market share and general entertainment. Closing off racing to totes only would kill the game. There is no comparison with the likes of France, Japan, NZ or the US. All of those are completely different cases - the genie never goes back into the bottle.

While a turnover fee is what the TAB supporters wanted, it's worth remembering that TAB payments also equate to a figure on their (guaranteed) profits. That's all the corporates wanted. Had the governments and TABs wanted to hurt the corporates, they could have pulled their finger out and merged the main TAB pools of NSW and Victoria, taking the sting out of Best Tote products. But sometimes it seems world peace is easier to accomplish... Don't for a moment think this is only relevant to NSW and other states will stick to their own arrangements. The others will change as soon as they possibly can. Betfair's only hope of holding back the tide is convincing Racing Victoria that their fees charged on gross profits works at least as well.

So where to from here? Matt Tripp, CEO of Sportsbet, has stated in interviews that the difference is only about $1m per year anyway. Considering a fair chunk of their business is via tote derivative products and that on-course bookies used to pay 2.25% turnover tax in some states, it seems about right. So for corporate bookmakers, it appears to be a burden they can deal with without passing too much onto punters.

It's an entirely different story though for Betfair. Racing Victoria have just sent out a press release in the last hour stating they will switch to a turnover model of 1.5% for 10 months of the year, and 2% for October and November, the peak of their season. Betfair might have been able to survive on Australian racing if they were able to lobby Victoria into maintaining their status quo of a fee based on gross profits. Now they are in serious trouble re Australian racing and the Australian business in general. Huge potential ramifications, and not just in the southern hemisphere.

More details on the Racing Victoria news in my next post later this morning...


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