Aussie Court Rules Against Sportodds

19 September 2003

The Australian Federal Court on Friday handed down its decision in the Sportodds System Pty Ltd v State of New South Wales case in which the bookmaker was hoping to extend its business in other Australian territories.

Justice Gyles ultimately ruled in favor of the NSW government, but the decision is expected to be appealed and will go before the High Court to be settled.

Currently operating from the Australian Capital Territory, SportOdds sought to have all publishing odds and advertising restrictions in NSW legislation declared invalid. A ruling in their favor would have granted the operation unprecedented access to a territory outside of its licensing territory.

Though Judge Gyles ruled the restrictions were not unconstitutional, he only found a small section of the code unconstitutional. Gyles struck out a section in the licensing act that restricts NSW bookmakers that hold corporate licenses from holding licenses in other Australian jurisdictions.

The Kafataris family, which owns and operates SportOdds, is now able to hold a corporate license in both the ACT and NSW, but that is only a small victory in their bigger battle.

A potential appeal will have the interest of other Australian states. Constitutional law in Australia requires all states to become interveners of cases dealing with constitutional issues when they come before the Full Court or the High Court. The Sportodds case was only heard before Gyles so other states weren't part of the process.

The Gyles decision in the short term reinforces jurisdictional integrity issues for Australian states.

Gaming regulators in NSW had feared the judge would strike down the NSW corporate licensing regime, which calls for all bookmakers to be operated by family companies. Had the court struck down this section, operators like Sportingbet Australia and IASbet could have set up shop in NSW. Instead the current code remains in place and corporate bookmakers based in the Northern Territory still remain locked out from setting up shop in NSW.

The issue of the applicability of Dow Jones v Gutnick to the publishing restrictions in the NSW Racing Administration Act was raised during oral argument, but Gyles said it was not necessary for him to determine the applicability of that precedent.

"Issues such as this should be considered in relation to particular conduct in a particular setting, certainly where, as here, the underlying constitutional principles have not been settled by authority," he said in the decision.

The decision isn't all doom and glom for Sportodds and the Kafataris family. A primary goal of the Kafataris' is to take advantage of their Rugby World Cup exclusivity deal in Australia. Sportodds is the official provider of odds in the ACT, and the company will now be able to expand their relationship with the event in NSW. Sportodds will have to reestablish operations in NSW, although that task should be relatively easy as Sportodds still has a staff and facilities in NSW that currently support their Canberra based operation that can be deployed to the requisite offices that they still have at a NSW racecourse.

The appeal of the Gyles decision before the Full Federal Court won't be heard until sometime in 2004.

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