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Sportsbet takes on New South Wales over gambling levy

6/29/10 - Online betting group Sportsbet Party Limited has won an important legal action in the state of News South Wales, where an Australian federal court has ruled that the state may no longer impose fees on interstate gambling providers in order to protect its main wagering taxpayer, TabCorp Holdings Limited.
Darwin-based SportsBet is majority-owned by online and land-based bookmaker Paddy Power, and regulator Racing New South Wales is now required to pay back around A$2 million.
TabCorp's Tab Limited has an exclusive retail licence to provide wagering throughout New South Wales until 2013, giving it a 95 percent market share. It pays various fees as part of this licence, which amounted to A$221 million for the 2006 to 2007 financial year, while its turnover was A$3.3 billion last year.
Racing New South Wales began charging all bookmakers a 1.5 percent fee on all turnover in excess of A$ 5 million, alleging for the right to use race field information. State government spokesmen justified this by saying that it would halt ‘free riding’ by online and telephone bookmakers registered in other states, which it claimed would likely take A$150 million from Tab Limited over the next decade and A$719 million by 2028.
Justice Nye Perram stated that there had been ‘no doubt’ that low-margin interstate corporate bookmakers were a threat to TabCorp but that Racing New South Wales could not portray itself as an independent regulator as it had a commercial share in Tab Limited’s success and a conflict of interest in imposing fees.
“There can be little confidence in the instrumental capabilities of a system that puts the power of taxation in the hands of entities dependent substantially for their funding on the commercial fortunes of one of the taxpayers,” the judge said.
SportsBet said it had paid its fee under protest, amounting to approximately A$229,000 a month, and Justice Perram found that the bookmaker had been discriminated against because the charge collected from Tab Limited and on-course New South Wales bookmakers had been returned through rebates ensuring that they were not out of pocket.
“Each of the state of New South Wales, Racing New South Wales and Harness Racing New South Wales intended to engage in discriminatory protectionism.” said Justice Perram.

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