Betfair Winning Over Friends Down Under

8 August 2003

Although still not free and clear of opposition in Australia officials with the world's leading betting exchange,, are finding more and more allies in their battle to operate Down Under.

While many of Australia's TAB companies have been outspoken about Betfair's launch in the country the site's communications director, Mark Davies, said there are a host of companies and individuals in the racing sector that have accepted Betfair with open arms.

Racing accounts for nearly 80 percent of Betfair's business, much of that coming from commercial bookmakers who have an easy place to level their books by offering to lay horses through Betfair.

Having commercial bookmakers use a site designed for individual punters has many in the traditional bookmaking world in Australia unsettled claiming that bookmakers are avoiding paying taxes that should be going to help racing.

Tabcorp and New South Wales TAB both have publicly criticized Betfair and said they will vigorously fight to save Australian racing.

The Betfair phenomena hit Australia through no corporate marketing on the exchange's behalf. Momentum for the site quickly built as events like the Cricket World Cup, which is popular in Australia, garnered more and more betting action from Australian punters.

Australian regulators are reviewing laws to determine if betting exchanges are legal. The current Internet Gambling Act prohibits gambling on the Internet but has a carve out for horseracing and sports betting. Betfair has been able to continue to operate using that loophole but also pays no taxes. Davies and other top executives from the company have openly discussed the issue with regulators and have stated they are willing to pay taxes and even pay the Australian Racing Board backdated fees from revenue the exchange has brought in since it started taking wagers from Australians.

That sort of open dialogue has endeared the company to many in the industry, according to Davies.

"There are plenty of people in Racing Victoria who do not see us as a source of revenue, and (yet believe) that we are not out to cannibalize their business but increase it for them," he said.

Betfair has approached all states and territories in seeking an official license in Australia. The company does not want to pre-empt any decision but sees obvious synergies in Victoria, given that approval in NSW is unlikely.

Davies said this year Betfair stood to achieve turnover of $10 million on the state's largest racing event, the Melbourne Cup.

"But because there is no contract, the local racing industry or the state government doesn't see a penny of that," he said.

Tabcorp, which currently receives just 21 percent of total revenues from its wagering division, disputed any assumption that the Victorian market was ripe for the picking.

Tabcorp executive general manager of wagering, Michael Piggott, said wagering was still a growth business for the group.

He said Tabcorp would continue to lobby against online exchanges not so much on economic grounds but because the integrity of the racing industry was at stake.

He said Tabcorp objects to the fact exchanges could match bets for a horse to lose from parties with inside knowledge.

"This just invites corruption and if racing is seen to be rigged our customers will decide not to bet and we'd lose revenue," he said.

Betfair of course has heard all these arguments before, when it first started and when it was in the process of getting licensed in the UK.

Officials with the Australian Racing Board have indicated that some of their concerns over the integrity of racing could be solved if the right steps and procedures are in place.

Any decisions on Betfair's fate in Australia is unlikely to be made until after the end of October when the review of the Interactive Gaming Act is presented to federal Communications Minister Richard Alston.