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BETFAIR AND SPORTSBET APPEALS DISMISSED

Shortly after 10am on Friday morning the sword of Damocles that had been hovering over racing and breeding in New South Wales was effectively removed with the High Court decision to dismiss the appeals of Sportsbet and Betfair against Racing NSW's right to charge a turnover based fee on race fields, writes Darryl Sherer.

The decision, made by seven High Court Judges, was announced by High Court Justice French that Racing NSW defeated both Sportsbet and Betfair’s appeals seven votes to nil, allowing Racing NSW to charge corporate bookmakers and betting exchanges a 1.5% turnover based fee on the NSW thoroughbred racing product.

The case effectively began more than two years ago when the two wagering operators commenced legal action and in June 2010 Justice Perram ruled that the NSW legislation was valid, and that a fee that the industry decided on could be levied. Betfair and Sportsbet then jointly appealed to the Federal Court and in November 2010, the Chief Justice Keane dismissed the appeals by Betfair and Sportsbet. Betfair and Sportsbet then jointly applied in December 2010 to seek special leave to appeal to the High Court of Australia in relation to the Federal Court ruling.

Up to $200 million had been collected but was being held in reserve depending on the outcome of the court ruling and $100 million is now available to racing in NSW for the use in infrastructure and stakes. Racing NSW estimates that $50 million per year will be collected from race fields’ fees for Racing NSW to place into the industry.

What The Industry Players Said

Racing NSW

John Messara, Chairman “This is an important day for the Racing Industry in NSW, today is only the beginning for New South Wales as we set our sights on becoming a leading jurisdiction in world racing. “The High Court decision establishes that our sport is entitled to set and be paid a fee by those who use its product – a decision that will reverberate well beyond New South Wales. “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 – those that put on the show. “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. “We recognise the need to improve our race programmes and the way in which we present racing and we are working on this. “Next week we’ll announce the first stage of prize money increases and other details of race fields funding and later there will be other initiatives to announce. “I wish to thank previous Racing NSW boards and our Chief Executive Peter V’landys and his executives for their far sighted and tenacious prosecution of the industry’s case. In racing terms, they stayed the course from start to finish.”

NSW Minister for Racing

** George Souris** “The High Court’s decision confirms the validity of those laws and represents a significant contribution to the future viability of the racing industry. “The decision underpins the principle in the legislation that all wagering operators that use race fields information as a wagering platform should pay an appropriate fee to the NSW racing industry for the use of those race fields. The Liberals and Nationals have supported this principle from the outset. “Now that the High Court has resolved this issue it will become the legislative national template to ensure that the racing industry receives its fair share of fees from wagering operators who use racing industry product. “The stakeholders involved in this area should take this opportunity to engage in mutually productive discussions to ensure an economically sustainable future. “The NSW racing industry is a significant employer providing approximately 50,000 full and part-time employment opportunities across the State, and an economic contribution of $1 billion annually to the State’s economy. “I would like to congratulate Racing NSW Chairman, John Messara, Racing NSW CEO Peter V’landys, his staff and current and past board members, who have carried the case for almost a decade. The racing industry and the general community will be the beneficiary of the leadership shown by New South Wales.”

Racing NSW

Peter V’Landys, CEO “The result today 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. Racing NSW can now utilise the fees collected for the benefit of all of those participants. “Further, it is a nonsense to say that this will impact adversely upon the punters. The majority of bets placed with corporate bookmakers are on best tote-odds, which results in a significant margin for the corporate bookmakers. The punters will continue to receive the same dividends. The judgments delivered today will not affect that position. The corporate bookmakers have been paying these fees for 31⁄2 years and have still been making massive profits during that time. The punters, like all other racing participants, will benefit from improved infrastructure and racing.”

TROA (Thoroughbred Racehorse Owners’ Association)

Jonathan Munz, Chairman “This decision allows the Racing Industry to charge a commercial fee for its product. Corporate Bookmakers now clearly have to pay their fair share. “It is now imperative that Racing Victoria (RVL) resolves on a timely basis to switch from charging product fees on a Gross Profit basis to a percentage of Turnover basis, as is the case in NSW. TROA has always maintained that RVL’s existing Gross Profit model is fundamentally flawed as it effectively subsidises Corporate Bookmakers at the expense of totes and therefore in the bigger picture operates to migrate betting turnover away from the totes, which are the Industry’s main revenue source. “The elasticity arguments employed by Corporate Bookmakers are simply wrong and now need to be finally rejected by RVL. Similarly, the Western Australian model whereby the bookmakers and totes have a choice of a Gross Profit Fee or a Turnover Fee must also be rejected, as each betting operator will choose the lowest fee, allowing corporate bookmakers to continue to pay an uncommercial low fee. “The decision to switch to a Product fee based on turnover cannot be delayed and must be made well in advance of the new Racing Year commencing 1st August 2012. We don’t need any more expensive and pointless reports. A final decision needs to be made by the end of April. Let’s just get it done.”

Australian Turf Club

Darren Pearce “This is a great day for racing - not just for Racing NSW or the Australian Turf Club (ATC) - but for all of the 50,000 hardworking men and women of the Racing Industry in NSW. The racing industry did indeed fight the good fight and I would like to thank Racing NSW Chief Executive Peter V’landys and the board for their unwavering commitment and drive. “From day one we have been united and steadfast in our belief that those who profit a great deal out of racing, out of the hard work of those 50,000 participants should pay a reasonable fee to do so. “That’s what race fields was always about - that if you are profiting from our sport and product, it is only just you make a fair and reasonable contribution on the way through.”“We are now beginning to see the benefits of the ATC, a single club with high ambitions, construction that will transform Royal Randwick is now underway and Rosehill Gardens and Warwick Farm will soon follow suit. “We are in the midst of the best Sydney Carnival in a very long time and the level of optimism surrounding Sydney Racing at the moment is so encouraging. “The ATC looks forward to working in partnership with Racing NSW to ensure the benefits of the NSW Race Fields Legislation are used to secure the future of one of our State’s greatest industries.”

Tabcorp

David Attenborough, CEO “Australia’s thoroughbred, greyhound and harness racing industries are significant employers and part of Australian culture. It is important that racing is able to charge a fee for its product that allows it to continue to be successful. “The overwhelming view of the Australian racing industry and those interested in its long-term future is that the NSW Race Fields regime should be maintained.”

Courtesy of ANZ Bloodstock News