Betfair Ready to Move forward Following Approval in Tasmania

29 November 2005

Tasmania's Legislative Council voted unanimously on Nov. 24 to pass the Gaming Control Amendment (Betting Exchange) Bill, effectively making Tasmania Australia's first state to adopt a regulatory framework for betting exchanges. The passage of the law represents the final hurdle for British betting exchange Betfair, which has been lobbying for months to pass the legislation. The company will soon apply for a license to operate its betting exchange from Tasmania, where it hopes to be operational by the start of 2006.

Following Premiere Paul Lennon's announcement on Nov. 3 that his Cabinet was to introduce betting exchange regulations to the legislature after seven months of debating the issue, the Gaming Control Amendment (Betting Exchange) Bill very swiftly passed through the Lower House on Nov. 10. The bill then appeared before the Upper House, also known as the Legislative Council, on Nov. 23, where it received a seven-hour briefing before obtaining unanimous approval by the council the following day.

Representatives from various racing bodies attended the hearing to provide testimony in opposition to the bill. Among them was the Australian Racing Board (ARB), which submitted the legal opinion of two lawyers--former Victorian Solicitor General Douglas Graham, QC and barrister Dr. Matt Collins--who claimed the bill had more than 25 faults.

"The various deficiencies in the bill suggest to us that betting exchanges, if licensed in Tasmania under the proposed scheme, could become magnets for criminal and other undesirable activity, much of which would for practical purposes be undetectable and un-punishable," Graham said.

Robert Nason, CEO of Racing Victoria and director of the ARB, was also on hand to express his doubt that Betfair could bring between AU$35 million and $40 million to the Tasmanian racing industry by 2010. Such a result, he said, would require a five-fold increase in the gambling market.

At the end of the sixth hour of testimony, the leader of the government in the Upper House, Michael Aird, announced that the government had agreed to a request by an independent member for a social and economic impact study to be conducted every three years. A motion by the Greens to conduct a similar study before Betfair is licensed was voted down.

Lennon had helped Betfair's case earlier in the week by obtaining assurance from the Australian Competition and Consumer Commission that it would not allow some of Betfair's opponents to unfairly sanction Tasmania if it were to license betting exchanges. (SuperTAB and Sky Channel had threatened months ago to exclude Tasmanian racing from their services in an effort to dissuade policymakers from legitimizing betting exchanges.)

"This is a triumph for Tasmania," Lennon said. "Betfair brings with it unprecedented improvements in probity and integrity to racing, huge funding increases to the local racing industry and at least 150 new jobs for Tasmania. The Legislative Council listened to the facts and reached the only logical conclusion."

Betfair's director, Andrew Twaits, proclaimed it "a great day for Australian punters." He added, "Punters fund the racing industry. A lot of people tend to forget that. What this does is provide competition with existing wagering operators, which can only give punters a better deal at the end of the day. And importantly, that will result in a better deal for Australian racing as well."

Problems Remain?

Betfair's application to operate a betting exchange in conjunction with joint venture partner Publishing and Broadcasting Ltd. is likely to be approved in a matter of weeks rather than months, and Twaits says his company hopes to begin advertising and matching bets on Jan. 1. The company will reportedly bring up to 20 employees to help set up a global hub in the capital city of Hobart.

Betfair may still face a few obstacles in taking bets on races in other Australian states, however. An amendment to Victoria's Racing and Gambling Acts that seems to have been created specifically to ban betting exchanges will take affect in Victoria Wednesday. The law requires all betting firms to receive permission from Racing Victoria and the Harness Racing Board before using race fields from Victorian racing.

Twaits has confirmed that Betfair has applied for permission and that the company will not match wagering on Victorian wagering until the application process is complete. Although the new law contains language citing "integrity" as an important consideration in the approval process, Twaits appears confident that his company's application will be treated fairly. "We expect that our applications for approval to publish Victorian thoroughbred and harness race fields will be treated in exactly the same way as the applications submitted by other interstate and overseas wagering operators," he told The Virtual FormGuide. "In exercising public powers, we expect that RVL and HRV will comply with the rules of procedural fairness in making their decisions and, as a result, we are confident that approval will be forthcoming in the very near future."

Despite the intentions of the new Victorian law, it may prove difficult to deny Betfair's application. For example, Racing Victoria and the Harness Racing Board would have difficulty justifying a ban on Betfair's use of racing forms if it refuses to provide the names of punters to stewards under the Privacy Act because New South Wales-based Tab Limited also keeps its punters' names undisclosed. If Betfair's application is rejected, the company will be able to ask the Victorian Supreme Court to review the decision.

Meanwhile, The Virtual FormGuide reports that Racing Victoria has not yet received formal applications from the 45 firms that offer wagering on its races. As of Wednesday, those firms that have not yet submitted an application will be violating the law if they continue to operate on Victorian racing.

In South Australia, Racing Minister Michael Wright has reportedly drafted a similar bill that would prohibit wagering providers based outside the state from publishing race field information without permission from the relevant racing authorities. Wright has circulated the bill to the Australian Racing Board as well as the SA Bookmakers' League, SATAB and the Independent Gambling Authority.

Click here to view a copy of the Gaming Control Amendment (Betting Exchange) Bill (prior to amendments).

Bradley Vallerius

Articles by Bradley P. Vallerius, JD manages For the Bettor Good, a comprehensive resource for information related to Internet gaming policy in the U.S. federal and state governments. For the Bettor Good provides official government documents, jurisdiction updates, policy analysis, and many other helpful research materials. Bradley has been researching and writing about the business and law of internet gaming since 2003. His work has covered all aspects of the industry, including technology, finance, advertising, taxation, poker, betting exchanges, and laws and regulations around the world.

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