to Continue Taking Bets in Australia

30 April 2003, the world's largest person-to-person betting exchange, is ready and willing to fight for its commercial right to do business in Australia, despite some harsh words and heavy threats from regulators and industry insiders Down Under.

Facing Australian regulators' threats to levy daily fines of AU$1 million for doing business there, the group announced last week that it would continue to trade with its Australian customers.

The announcement was the latest salvo in what has become I-gaming's most heated and public controversy this year.

The 'Visit'

Last month officials with Betfair visited Australia to clear the air with racing and betting officials there. Betfair's director of communications, Mark Davies, had face-to-face meetings with the heads of the Racing Victoria board and the Australian Racing Board. He also met with several members of the Australian press in an effort to diffuse what he called erroneous reports about the company and its policies.

Initially Davies was pleased with his visit and felt progress had been made in reaching an agreement on how the company should be taxed in Australia.

Just days after Davies' return to the United Kingdom, however, the issue flared up again. Tim Ryan, a member of the Australian Bookmakers' Association Internet betting committee, had harsh criticism for the company.

"Any idiot who has read [Australia's Interactive Gambling Act] knows that betting exchanges can't do what they are doing in Australia," he said in reference to Betfair's "in-game" betting service. "They are flagrantly flouting one of the most globally well publicized pieces of legislation."

Many in the betting industry allege that exchanges are operating illegally, but Racing Victoria's Peta Credlin, who worked on the Interactive Gambling Act, has a different view.

"Racing needs to be realistic about what we can do because as the law stands, off-shore betting exchanges are allowed in Australia," he said. "Only where betting 'on the run' takes place is it illegal."

The only state with legislation prohibiting punters from betting with offshore operators is New South Wales.

Andrew Harding, chairman of the Australian Racing Board, questioned whether the federal government should legislate against betting exchanges and whether such legislation would be enforceable.

Harding, while acknowledging integrity concerns, pointed out that the British Jockey Club had to deal with similar issues two years ago when the popularity of Betfair and other exchanges increased.

"It cannot be said with any credibility that integrity issues mean betting exchanges are anathema," he said. "If we may not be able to prohibit exchanges, we have to seriously consider a pricing structure that would see an acceptable return to racing."

'Scare Mongering'

Davies said the tactics being used in Australia are the same the company faced during its early growth in Europe and the United Kingdom.

"Our turnover on racing in Australia is now about AU$5 million a week and we do not have any legal concerns," he said. "What we are seeing is scare mongering on behalf of people who are defending their commercial positions, much as we have seen in the U.K."

Davies said Ryan's claims that Betfair is operating illegally are baseless and that Betfair has gone out of its way to ensure that Australian punters aren't allowed to participate in in-game betting on the site.

"Under the 2001 Act, we are allowed to accept bets... except on sporting events that have started," Davies said. "There was a feeling that we weren't doing enough to stop Australians placing bets in play so we have introduced a technical solution. If anyone in Australia attempts to bet in play, a message comes up explaining that the bet cannot be accepted."

The bottom line, said Davies, is that Betfair is trying to operate on the up-and-up and not from some offshore jurisdiction where they would make it hard for regulators to contact them. And as the global popularity of P2P betting continues to increase, he added, it only makes sense for Betfair to have a presence in Australia.

"We now have a 24-hour operation and we want to get licensed in Australia and set up an office there," he said. "We will pay for the right to use data and are in negotiations."