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The announcement last Friday that betting exchange Betfair had been given permission, along with 163 other TAB’s, inter-state and corporate bookmakers, to use and publish Victorian race fields by Racing Victoria Ltd (RVL) released a predictable outburst at the decision.
All the usual industry suspects let go at the seemingly sole ability of Betfair to engender strife and havoc on Victorian, and presumably by extension, Australian racing.
However, one aspect of the week that shone through in the other direction was the calm explanations of RVL acting chief executive Stephen Allanson as he outlined the exact position, not only with regard to the betting exchange, but also the law in Victoria that RVL must work to, how that applies to all wagering entities and the realities of the wagering market place.
Essentially RVL must apply the same criteria to all licensed wagering applicants, and since Betfair is licensed in Tasmania they are treated in the same manner as a corporate bookmaker licensed to operate in the NT.
With Betfair satisfying RVL that they have passed the standards required, integrity and otherwise, RVL approved that business just as it did Tabcorp Holdings Ltd and all the other 162 given approval.
Part of that approval was that the wagering businesses such as bookmakers and betting exchanges must pay a product fee of 1% of turnover, not gross profit which is the preferred option internationally, to RVL. This only applies if the product/license fee the wagering businesses pay the states they are domiciled in is less that 1%.
For example if the product fee for a bookmaker/betting exchange in their home state is 0.75% of turnover, then that business must pay 0.25% to RVL as well, being their part of the product fee for Victorian race fields.
Betfair pays the Tasmanian state government 1% so that effectively means that RVL, and Victorian racing, will not receive further funds from that source. Corporate bookmakers who have being paying nothing, and have not offered any form of reabte from the past use of fields, are now paying the difference from their present license fee to RVL for the first time.
Allanson, on Sport 927 on Tuesday, explained the policy.
“The straight answer in the short term, in the twelve month pilot period that approval’s been given…..there won’t be any funds coming back directly to Victorian racing. Outside of the funds that did come through from the period under which Betfair UK wagered on, or had the exchange up and running, prior to November, when the race fields legislation was introduced,” said Allanson.
Betfair have paid RVL $1.1m for the use of Victorian race fields prior to November, but because Tasmania, and not Victoria, granted an operating license to Betfair there are no further funds to flow to Victoria under the present legislation.
Allanson then explained that the present approvals are for a 12 month trial period.
“Everybody knows this is watershed legislation…….. to assess just how the legislation is applied and how our policies are measured over the twelve month period. And, therefore, we have told all applicants who have been granted approval that this is, in fact, a twelve month pilot period,” said Allanson.
“……… this race fields legislation development, it’s a critical step for the Australian racing industry, because it has set the benchmark for the racing industry to take proactive steps to monitor and protect the integrity of our racing. And, most importantly as well, to prevent free riding in relation to cross-border betting.
“……all applicants are treated equally in terms of the process, and that RVL does not discriminate between different types of applicants, unless there is a clear and lawful justification for the difference in their treatment,” he said.
Allanson then outlined the market share of wagering in Australia with the TAB’s having 93% of the market, bookmakers about 7% and Betfair about 0.5%.
“So, at this stage, they are a very small player. You know, the corporates out there with their seven per cent are certainly what people should be focusing on, that we now have a level playing field. The corporates are, in fact, across Australia, if they are approved under the race fields legislation to publish Victorian race fields, they will be contributing equally, they will be contributing the one per cent,” said Allanson
“We’ve come a long way in actually getting a level playing field throughout Australia,” he said.
The chairman of the Australian Racing Board Andrew Ramsden acknowledged this in a statement on Wednesday.
“Betting operators that use racing’s intellectual property without making a fair contribution back to the sport has been the bane of the racing industry for many years now. The legislative protection of race fields that has just been invoked in Victoria is a truly watershed development. The Government and Racing Victoria Limited have confronted the problem head on and shown that there is a workable solution,” said Ramsden
“For more then a decade now Australian racing has been grappling with the problem of free riding – wagering operators betting on Australian racing without making the appropriate contribution back to the industry.
“Accordingly, July 2006 marks an enormously important turning point. Using the race fields legislation enacted by the Victorian Parliament, RVL has been able to say to corporate bookmakers for example that if they use racing’s intellectual property then the industry must be properly compensated,” he said.
On Tuesday Allanson went to the essential aspect of what betting exchanges are about.
With Australian TAB’s protected and driven by monopoly thinking they have railed against the evils of exchanges since they first appeared on the Australian wagering horizon. All that has done is to allow the brand name Betfair become a generic name for betting exchanges, something any business would normally pay extravagantly for.
In the meantime younger punters turned to the technology for their sports betting, and in smaller numbers racing wagering.
“…..we all know that the Australian wagering marketplace is changing. You know, the Internet was not around when Tabcorp and the TAB was privatised back in ’94,” said Allanson.
“…. the younger players that are coming into the industry, well, they’re interested in wagering over the Internet or via their phone and they’re certainly interested in wagering on sports betting. So, I mean, there’s another interesting conundrum…..where we have sports betting, which is ten per cent right now, of the total wagering marketplace in Australia.
“Now, is that a bigger threat to us than Betfair? You know, we don’t get any product fees from wagering on sports betting and all these new entrants that are coming into the market – these younger customers – you know, have seen the World Cup and they may head off towards sports betting.
“There’s certainly a bigger picture here that we need to focus on…
“….. it all gets down to customer demand. “We have to assess which way our customers are moving, what sort of products our customers are looking for, and we have to adapt our offer to match what the customers want,” he said.
The realism of the RVL executive was refreshing, and comments from Betfair’s International Director Edward Wray backed up the RVL approach when he said that the Victorian body had been good to deal with over the race fields application.
Wray, and his Australian based colleague Andrew Twaits, also laid out the way forward for the racing industry to receive more income from this low-cost wagering business model.
Wray said that the current advertising restrictions on Betfair and others needed to be lifted.
“The advertising inter-state restrictions need to be lifted as they are depriving racing of revenue,” he said.
“The restrictions are designed to protect the local TAB operations,” said Twaits.
“It means that racing is losing millions in sponsorship which is a direct cash injection into racing.
“If the competition was opened up then it would mean that TAB’s, bookmakers and us would all be competing with our sponsorship dollars.
“The restrictions are protective by their very nature and racing is missing out,” he added.
In the UK Betfair are a major sponsor of both the flat and jumping racing seasons and they are certainly interested in becoming so in Australia.
It might be expected now that the rational of preventing that will be explored, and, perhaps once again, RVL will be leading the way as it works to increase income for the Victorian racing industry.
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