From the Editor's Chair - v12

22 March 2004

It was last week that I emerged from Down Under with amazing tales to tell about the Second Annual Pacific Congress on I-Gaming. The recovery process is just about complete and it's time to share some thoughts, so without further delay, let's throw another "Editor's Chair" on the barbie.

Let me just say that we love having Australians on the program because they never mince words, and PCIG 2 was no exception.

The overlying theme throughout the three-day event was Australian policy as it pertains to competition. The TABs and regulators are fed up with offshore and cross-border gambling, the corporate bookmakers are fed up with restrictions on their businesses and everyone's fed up with Betfair.

A General Observation

Hats off to those who are willing to express unpopular opinions before marginally hostile crowds. Corporate bookmakers don't like what Peter Baldwin from the NSW Department of Gaming & Racing has to say, but give him credit for his willingness to maintain a dialog with them. The same goes for Betfair's Mark Davies. No company in the gambling business stirs the pot Down Under as much as Betfair, yet they have always been willing to stand up and face the heat.

Racing and the P2P Debate

Speaking of Peter Baldwin, Mark Davies and unpopular opinions, both were featured on the conference's most well attended session, a debate on betting exchanges. The two engaged in such a spirited discussion that the program had to be rearranged so that they could resume arguing at the end of conference.

The hottest moment came when a conference delegate challenged Baldwin's claim that he witnessed a colleague sign up for a Betfair account from phone booth in New South Wales (despite Betfair's claim that they don't accept business from customers located in the state). Baldwin stood by the claim and took exception to being called a liar. "It is the absolute truth," Balwind said. " I was there and watched it with my own eyes." Davies, however, said he "would be shocked if this was the case."

Davies addressed the two common arguments against betting exchanges in Australia: that the ability to lay horses leads to cheating and that the P2P model sucks money out of Australian racing pools. These are the same arguments we've heard again and again, but there were a couple of interesting points. First, Davies shared that not only is Betfair willing to pay taxes, but that they have a seven-figure reserve to pay back taxes dating to the beginning of Australian race betting on the exchange. "The minute a (taxation) deal is reached," he said, "the payments will be back-dated to day one."

Davies also suggested that Australian racing might have designs on getting its own slice of the P2P pie. "One year ago TAB register the domain names 'Tabfair' and 'TabExchange,'" he pointed out. "Why would they do that if they weren't considering a betting exchange?"

TAB's Peter Fletcher, who also spoke on the program, acknowledged that TAB has a betting exchange strategy only out of necessity and stressed that the group is against exchanges and doesn't want to be in the business. TAB, Fletcher said, is not in favor of legalizing betting exchanges, but recognizes the need to compete should P2P be legalized and licensed. "We would be an extremely unwilling party to get in the queue for a license," Fletcher explained. He also reminded the audience that Australia's Betting Exchange Task Force in July 2003 recommended against regulating exchanges.

Prior to the P2P debate, Fletcher compared the arrival of British competition to the first arrival of British outcasts in Australia in the late 1700s. Nevertheless, betting exchanges and foreign operators aside, he said, the TABs are doing well. "The future is bright," he said, and he attributed TAB stability to "a very high level of community acceptance in the last four decades." Wagering, he added, was up 4.7 percent in Australia in 2003, marking the first time wagering grew more than any other gambling sector (including poker machines).

The Apparently Insignificant Factor

Amid, hours upon hours of debate on the state of gambling in Australia, we unfortunately heard very little discussion on what's best for the punter. The focus was instead what's best for the bookmakers vs. what's best for the TABs vs. what's best for the betting exchanges, etc. Sadly, the consumer factor was rarely injected into the arguments. Continuing in this manner would be a huge mistake. I hope they fix this.

A Humble Opinion

I'm having a hard time understanding why Australian racing and betting exchanges can't find any middle ground. Betfair wants to operate in Australia, and TAB Ltd. is prepared to launch an exchange if forced to do so. I'm picturing a scenario in which exchanges can get licensed as technology providers while only state-licensed operators have exclusive rights as service providers. Everyone gets what they want. Betfair gets licensed in Australia, the TABs no longer have to deal with exchanges as predators and consumers get better prices. Yes, there is a strong argument for why the betting exchange model is not good for racing pools, but it's quite apparent to me that the TABs will have to contend with the P2P "problem" either way. And I wonder if the Betting Exchange Task Force would see things in a different light if racing wanted to regulate P2P.

Hacking Down Under

While many in the online gambling industry advocate the enforcement of cyber borders, the DDOS business apparently has no problem with globalization. We recently learned that the hackers are hitting the U.K. sites hard. A handful of PCIG attendees said Aussie sites are getting hit as well. So, at least one aspect of online gambling is alive and well Down Under.

Mark Balestra

Mark Balestra is the Managing Director at BolaVerde Media Group. He previously worked at Clarion Gaming and the River City Group where he was the publisher of iGamingNews. He lives in St. Louis, Missouri.