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Be fair with Betfair.

The following letter to the Sydney Morning Herald was never published, possibly for exceeding the permitted word count. The author then sent it to us.


Be fair with Betfair.

Letter to the Editor, Sydney Morning Herald

Sent: 2003-04-02 22:51

I write in relation to the Craig Young article titled, “Betfair faces millions in fines after content ruled illegal”, dated 02-Apr-2003.

The article title is extraordinary, “ruled illegal”.

This is misleading as it implies a court ruling relating to legality! This is not the case. The article is ill-informed and raises questions in relation to the impartiality of Craig Young. Is Craig Young a journalist? If so, is he paid? If so, by whom?

Where to start? At the top.

The multibillion-dollar betting exchange Betfair faces fines of $1million a day after the Australian Broadcasting Authority found the UK-based company's content was prohibited. The Herald has obtained a document which also states the ABA believes "there was sufficient evidence of possible breaches of sections 15 and 61EA of the IGA [Interactive Gambling Act] to warrant the referral of the matter to a law enforcement agency".

Well it would appear commendable investigative journalism by Mr Young. The document is not available to respondents such as myself from the ABA web site. Nevertheless, here goes.

In relation to an offence against s15 of the Interactive Gambling Act 2001 (Cth) it would astound me that Betfair was not offering “a service to the extent which it relates to betting on a contingency”, and a reading of s5 and s8A might suggest it is excluded from the definition of interactive gambling service” for the purpose of s15.

And then s61EA “Interactive gambling service advertisements not to be published in Australia”… It seems substantial legal opinion would be needed to determine this matter. Tim Ryan’s legal opinion cites the Gutnick Case, which I had previously understood related to publishing for the purpose of defamation law and no reference was made (one way or the other in relation to publishing for the purpose of advertising). But I am not a lawyer, just a lay person reading the written word.

"Any idiot who has read the legislation knows that betting exchanges can't do what they are doing in Australia," Ryan said.

I have read the legislation, and it seems I am clearly not an idiot since, I do not know betting exchanges can’t do what they are doing – perhaps it is only the idiots who know this!

"The legislation is clear - do not target Australians, do not provide prohibited gambling services, do not pass go. Betfair have a customised menu for Australian users - how stupid is that?"

In relation to gambling, which is not exempt by s8A, Australians may not target Australians. The exemptions, to my mind, have the practical effect of stopping Australians offering gaming product to Australians. However, as stated, betting is exempt from this restriction. Why not target Australians? The Commonwealth Act has restricted Australian betting providers from offering in-the-run betting to their great detriment while their international competitors (including but certainly not restricted to Betfair) cash-in on Australian betting.

"The High Court of Australia decision in the Dow Jones v Gutnick decision is simple - something is published where it is read."

Do you know I have read that decision and the Victorian Supreme Court decision, which it upheld and I (a layperson) understand your article should append the words “… for the purpose of defamation law” if it seeks to be investigative and report the news rather than mouth an interested individuals perspective.

The amount on offer is causing ructions within racing's ruling bodies, the various state governments and TABs, which fear income streams will be eroded.

The last time I looked the three underlying TABs were public companies, big boys who should stand in their market place and compete.

Betfair's business is 70 per cent on horseracing and 30 per cent on sports betting. It began operating on Australian meetings during the 2002 Melbourne Cup carnival and now offers its service on every Australian capital city meeting and some provincial races.

I missed the part where Craig Young spoke about the capacity that now exists for bookmakers to bet-back through Betfair which has seen a resurgence in the UK bookmaking industry, with record revenues paid to the racing industry since it commenced operations. Or was this research too fundamental to undertake?

Using true probability mathematics, a punter having 100 $50 bets on a $5 chance generates turnover of $5,000 and will break square. The NSW TAB's return to the racing industry from the $5,000 is $224; bookmakers return $50, while Betfair nets $80 and from that is looking to pay the industry a dividend. At 20 per cent it would hand over $16.

I’d like to be in the SMH punters club where everybody’s a winner – punters break square, TAB takes a profit, and the racing industry gets paid.

Go figure: $5000 bet and won (punter breaks even), TAB takes its profit, racing industry takes a cut!

Using truth: a punter having 100 $50 bets on a $5 chance… will, on average, not break square. The punter, on average, will lose.

And some more truth: based on the SMH figures and a gross profit assumption of 15% turnover by TABs: For every $1.00 lost by a punter with TABs, they pay approximately 30¢ to the racing industry. For every $1.00 lost by a punter with Betfair, it pays: 20¢ (per the SMH figures).

When punters are getting a better run for their money and turnover through more transactions – it becomes more fun, greater entertainment and something they might choose to divert additional discretionary expenditure towards!

I can only concur with the attitude attributed to Victorians. The contrast in their attitude and that of Tim Ryan might reflect the relative success of the racing industries in New South Wales and Victoria. Victoria is moving from success to success.

Yours faithfully,

Alan Pedley.


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