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Australia gambling: Another territorial government approves a racing fee

11/23/09 - Betfair, already litigating against Racing New South Wales over the imposition of a 1.5 percent levy on turnover, could find itself contemplating further levy problems following the passage last week of more legislation - this time in Western Australia.
 
Perth Now reports that the WA state parliament has passed legislation requiring wagering operators across Australia and overseas to pay a fee for betting on WA racing.

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Racing and gaming minister Terry Waldron said the Legislative Council had passed the legislation without amendment and the horse racing industry would soon benefit from the revenue flow.
 
"The Western Australian TAB is currently paying fees to interstate racing industries for the right to bet on their racing product and these fees amount to about $18-million per year,” Waldron said.
 
"This legislation will allow the Western Australian racing industry to charge similar fees on WA racing and thereby claw back up to $15-million of lost revenue.” He added that the levy would be applicable retrospectively from September 1 2008, will be based on a betting operator’s turnover or gross revenue, and will be directed to the WA racing industry.
 
The Minister said regulations to set the fee and enable the process were currently being drafted and it was hoped that the in-flow of fees would start in the new year.
 
"Securing the financial benefit of our racing product for the local industry is crucial. Had we not acted, the industry faced the prospect of losing nearly $18-million per year from the stakes base for metropolitan and country racing,” he said.
 
The legislation allowed all authorised Australian betting operators to use WA race fields, provided they continued paying the levy and complied with information requirements in relation to matters concerning the integrity and reputation of the racing industry.
 
Offshore betting operators would be required to apply to the Gaming and Wagering Commission for approval to use the race fields, and will also be subject to the same conditions as those operators licensed in Australia.
 
Waldron said domestic operators could pay the levy based on a percentage of either turnover or gross revenue.
 
“Wagering betting operators will pay either 1.5 percent of turnover, or the greater of 20 percent of gross revenue or 0.2 percent of turnover,” he said.
 
Betfair is currently in the middle of a court action against Racing New South Wales over a similar levy. The head of Betfair's Australian operations, Andrew Twaits, has argued that the NSW racing authority is colluding with Betfair's local rival Tabcorp in trying to force his company out of the state.
 
Betfair initiated the litigation against Racing New South Wales following the imposition of a 1.5 percent levy on turnover, describing the action by the racing authority as anti-competitive and discriminatory between different businesses. 

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Another corporate bookmaker, Sportsbet, is challenging the constitutionality of the legislation that was used to introduce the levy, reports the Australian newspaper "The Age".
 
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.
 
The 1.5 percent levy constitutes 60 percent of Betfair's gross revenue, the company complains, contrasting this with the fact that Tabcorp pays only 9.75 percent of its gross revenue due to a different business model.
 
The disparity comes about because the TAB has far thicker margins than the corporate bookmakers. The TAB takes 16 cents out of every dollar in the betting pool, while corporates like Betfair take out between 1 percent and 3 percent, giving the punter a better deal.



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