Betfair Eyes Expansion on High Court Victory

27 March 2008

Betfair is mulling expansion of their Australian business thanks to a High Court decision today that invalidated a Western Australian statute banning betting exchanges from offering bets to punters in the state.

The law, passed in 2006, also prevented WA punters from placing bets with a betting exchange, threatening fines as high as A$10,000.

But Betfair, which has been operating out of Tasmania since 2006 and in the same year won the right to publish Victorian race fields, challenged the WA government's criminalization of betting exchanges.

Betfair counsel argued that WA was in breach of Section 92 of the constitution, which preserves freedom of trade between the states. Today the High Court agreed with Betfair and ruled the law unconstitutional

Betfair Director of Corporate Communications Mark Davies told IGN this ruling makes clear that the law was protectionist in nature.

"The law was clearly designed to do one thing, and that was to protect an existing operator," he said.

Australian operator Tabcorp, by contrast, released a written statement condemning the ruling.

"The High Court decision creates further risk to the future funding of the racing industry," it said. "The TABs generate the vast majority of funding for the industry, allowing us to create some of the best racing in the world."

Davies said negative reactions today from some of the Australian betting industry were expected.

"When they (the government) put [the law] in place they said it was there to protect integrity and to protect Western Australia punters and Western Australian racing," he said. "And now that it's been repealed, their (existing operators') financial viability is under threat."

Betfair said it has no intention of undermining profits from the WA racing industry.

"It opens up the chance for us to work with them as we did in Tasmania, for example," Davies said.

The ruling also paves the way for other Australian states to open their markets to Betfair and other betting exchanges. In overturning the law, Betfair is now able to take bets from punters across the country.

Jamie Nettleton, a partner with Addisons Lawyers in Sydney, told IGN that under what's traditionally been known as the "Gentleman's Agreement," there is a general acceptance under Australian law that "if you've got a license in any state you can provide betting services to people wherever they live in Australia."

But WA's legislation put up a brick wall preventing Betfair from operating in the state.

"So, essentially by removing this brick wall, it went back to what it was beforehand, so any operator could offer wagering services to anyone else in Australia," he said.

While Davies revealed no firm plans for expansion, he was hopeful the ruling would open the way for Betfair to work with other states.

"I suspect the other states are looking at this and thinking, 'If it's upheld we'll introduce similar legislation,'" he said.

View the ruling.

Emily Swoboda is the senior staff writer at IGamingNews. She lives in St. Louis, Mo.