Australian High Court denies challenge by Betfair, Sportsbet

Australian High Court denies challenge by Betfair,

Sportsbet

The High Court in the Australian capital of Canberra ruled Friday that there

is no constitutional conflict in Racing New South Wales's collecting a 1.5

percent tax on turnover from bookmakers Sportsbet and the betting exchange

Betfair in exchange for their use of raceday information.

The ruling means that the more than A$120 million that Racing NSW collected

in fees from the companies since July 2008 will be released, with an increase in

prize money the immediate objective. In the works is a A$150 million

redevelopment of Randwick Racecourse and A$24 million worth of upgrades at

Rosehill.

"The result is not just a victory for Racing NSW, but a victory for the

50,000 participants in Thoroughbred racing in New South Wales whose hard work

puts on the fantastic show which is Thoroughbred racing," said Peter V'landys,

chief executive of Racing NSW. "Racing NSW can now utilize the fees collected

for the benefit of all those participants."

Added John Messara, chairman of Racing NSW, "After four years of uncertainty,

the High Court's dismissal of the appeals by Sportsbet and Betfair unlocks

immediate and future funding that will flow directly to the people who work and

invest in NSW racing. But today is only the beginning for New South Wales, as we

set our sights on becoming a leading jurisdiction in world racing. There is much

to be done to improve the viability of our participants and to assist race clubs

with track and infrastructure improvements, especially in country areas."

The betting operators argued that the 1.5 percent charge was in violation of

the constitution and instead advocated for a 10 percent share of gross profits,

similar to the model which exists in the states of Victoria and Queensland.

"We're obviously disappointed with the decision," Betfair Australasia CEO

Giles Thompson stated. "We maintain our belief that a gross-revenue model is the

fairest basis on which to tax wagering operators. However the High Court has

made its decision, and when the dust settles, we hope to sit down with the NSW

racing bodies and endeavor to reach a commercially viable arrangement for the

future. This finding essentially means that it is six-times more expensive for

Betfair to offer New South Wales racing to customers compared to offering racing

from any other state in Australia. A turnover fee will place extreme pressure on

our ability to continue to offer our customers what we believe is the best

product in the market."

Racing Victoria Chief Executive Rob Hines also lauded the decision, and

indicated that the body would pursue a similar course as Racing NSW when current

agreements expire this coming August.

"A report will now be provided to the Racing Victoria Board that will

determine the structure and timing of any changes to our product fee regime,"

Hines commented.

Under the current gross-revenue structure in the state, RV expects to bring

in A$53 million in race field fees. Under the 1.5 percent of turnover model,

that number would be A$54 million.