Betfair to accuse race authority of collusionDAN OAKES
November 16, 2009

More hurdles ahead Photo: Mark Dadswell
BETFAIR chief executive Andrew Twaits will accuse the NSW horse-racing authority of colluding with Tabcorp to try to force his company out of business in the state.

Mr Twaits is expected to level the accusation as part of his evidence in a Federal Court case, expected to start on Wednesday, brought by Betfair against Racing NSW.

The internet betting company is arguing that the levy of 1.5 per cent of its turnover imposed by Racing NSW is anti-competitive and discriminates between different businesses. Another corporate bookmaker, Sportsbet, is challenging the constitutionality of the legislation that introduced the levy.

Betfair and other low-margin corporate bookmakers say the levy should be calculated on gross revenue, as it is in Victoria, South Australia and Tasmania, because the NSW model heavily favours the incumbent TAB operator, Tabcorp.

Although Tabcorp and Tatts Group, who between them run TABs in all states and territories except Tasmania, Western Australia and the ACT, are not parties in the legal action, the outcome has huge ramifications for them as they battle low-margin corporate bookmakers, mostly based in the Northern Territory.

Betfair claims that because of its business model, the 1.5 per cent product fee equates to 60 per cent of its gross revenue, whereas the TAB pays only 9.75 per cent of its gross revenue. The disparity comes about because the TAB has far thicker margins than the corporate bookmakers. The TAB takes 16¢ out of every dollar in the betting pool, while the corporates take out between 1 per cent and 3 per cent.

It is believed that Mr Twaits will allege Racing NSW introduced the 1.5 per cent fee only after extensive consultation with Tabcorp. He will also claim that the legislation was drawn up specifically to protect Tabcorp's position as the dominant bookmaker in NSW.

However, Racing NSW chief executive Peter V'Landys has angrily denied that Tabcorp had undue influence on the legislation.

''That's ridiculous, absurd and a load of rubbish,'' Mr V'Landys told businessday.

''There was consultation with all wagering operators. Before we determined the fee, we consulted with all the corporates. We had more meetings with Betfair than we did with Tabcorp, and at all times we have treated everyone equally.''

Mr V'Landys also scoffed at Betfair's claims that it is being discriminated against as a result of its business model.

''It's like a truck driver that hasn't allowed for diesel in his business model. Then he goes to the petrol station and says to the owner 'Mate, I didn't allow for the $1.50 a litre diesel, so will you take a share of my profit?' No one's going to do that, and that's what Betfair has asked us to do,'' he said.

''They can spin as much as they want, but at the end of the day, they've got their business model wrong … they want racing to subsidise them.''