Betfair Takes Australian Policymakers to Task

16 July 2003

The gloves are off in the betting exchange debate in Australia.

Last week Australia's Betting Exchange Task Force released its much anticipated report, and in it recommended the banning of person-to-person betting exchanges.

Not surprisingly,, the world's largest P2P betting service, was more than dissatisfied with the report. Ed Wray, the group's director, responded to the recommendations with an open letter to Australia's racing ministers.

In the eight-page letter, Wray criticizes the task force for not consulting more with Betfair and challenges numerous assertions made in the report about the way Betfair is set up and how the integrity of racing could be called into question because punters can easily lay horses on an exchange.

Tim Ryan, the executive director of the Australian Bookmakers' Association and an outspoken opponent of betting exchanges, quickly responded to the Betfair letter with a scathing open letter of his own.

It's not the first time Ryan and Betfair have debated the validity of betting exchanges in Australia, but this recent round of public jabs has brought the battle to a new level of intensity.

Wray set the tone for his letter in the first sentence, saying that Betfair was dismayed with the "deficient and prejudicial findings" of the task force.

At the heart of Betfair's argument is that the task force did little to truly examine the future of betting exchanges in Australia and merely published a report that looked out for the interests of the country's totalisators.

Ryan doesn't dispute this.

"This was never intended to be an 'independent' report," Ryan said in his letter. "It was a Government Task Force."

Betfair's biggest complaint is the assertion from the task force that racing's integrity can be questioned because punters can lay horses to lose with such ease.

Wray contends punters have always had this opportunity with traditional bookmakers--and with even greater anonymity--by backing the field in a race.

Ryan acknowledges in his letter that skullduggery, or betting on a horse to lose with inside knowledge that it has little chance to win, preceded the advent of betting exchanges, but argues that a betting exchange offers a venue through which a punter "can easily profit from the knowledge that a horse cannot win without having to identify and back the winner."

Not only does Wray feel the possibility of skullduggery exists in traditional bookmaking means, but he contends it is often easier when using those means.

"It is patently untrue that such an opportunity is not open to anyone at the sort of margins offered by the TABs, but the suggestion that it only works at betting exchange prices alone demonstrates a breathtaking disregard for punters' rights to get a competitive price," he writes. "This suggests further that the report sets out recommendations which merely protect and maintain the monopoly rights of the industry incumbents."

Ryan also says in his letter that Mark Davies, the communications director for Betfair, told him that Betfair wouldn't enter the Australian market if it had to pay 1.25 percent of turnover as a product fee. He adds that Davies "scoffed at suggestions of paying 60 percent of commission revenue" (as the TABs do).

Davies denied the claim, stressing that he hasn't discussed those figures with anyone outside Betfair or the Australian Racing Board.

Betfair began targeting the Australian market last year during soccer's World Cup tournament and quickly gained a huge following via word of mouth. The Betfair train picked up steam this year in Australia when betting action reached peaked with the Cricket World Cup.

Betfair, which continues to accept wagers from Australian punters, has actively sought a betting exchange license there. Company officials have stated they are willing to pay taxes and repatriate funds back into the racing industry.

But racing remains the centerpiece of the exchange, and Australia represents a huge market. The licensed totalisators see $1.5 billion in wagering revenue every year and have good reason to protect their interests.

In the United Kingdom, the Tote has faced unprecedented competition from Betfair, which automatically links (via the Internet) the odds offered by a bookmaker with a punter willing to take those odds.

Betfair does not pay any racing industry fees or wagering taxes. It instead takes a commission on the amount won.

TAB officials argue that a similar system in Australia would tear apart the industry. TABs now charge a 16 percent commission, which is used primarily to fund Australian racing clubs and provide taxes to state governments.

Click here to view Wray's open letter.

Click here to view Ryan's response.

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