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G+T considers High Court odds

G+T considers High Court odds

Gilbert + Tobin is acting for the gambling company Betfair as it contemplates whether to challenge a Federal Court ruling in the High Court.Last week (17 November) a full-bench of the Federal…

Gilbert + Tobin is acting for the gambling company Betfair as it contemplates whether to challenge a Federal Court ruling in the High Court.

Last week (17 November) a full-bench of the Federal Court dismissed an appeal by Betfair against a previous Federal Court ruling that a fee imposed on gambling syndicates by Racing NSW might be discriminatory, but it does not necessarily breach the Australian Constitution.

Speaking with Lawyers Weekly, Betfair chief executive Andrew Twaits said that his company would make a decision about a possible High Court challenge "within the next week or so" with regards to the application of the Race Field Fee, which was passed by the NSW Parliament in 2006. It gives Racing NSW the right to impose a 1.5 per cent fee on the "wagering turnover" of betting companies, as a condition of approval for the use of race field information.

"We support the right of racing to charge a fair and equitable fee for their product, we have no problem with that," Twaits said. "Our problem was that Racing NSW constructed a new method of charging wagering operators, and the effect of that change is that we were required to pay 60 per cent of our gross revenue to racing NSW, but the TAB is only required to pay 9 per cent of their revenue."

The Tasmanian based Betfair initiated Federal Court action against Racing NSW and Harness Racing NSW, on the basis that the fee unfairly protected the TAB from competition from an interstate operator, and that it discriminated against Betfair on the basis that it was a low margin operator, relative to the TAB, which takes a higher profit margin from its turnover.

Betfair, the world's largest betting exchange, allows its customers to set their own odds and bet against each other, with the company acting as the counter-party to each transaction.

In a Federal Court ruling in June, Justice Nye Perram found that while the fee did discriminate against Betfair, in that it paid a greater percentage of its commission as compared to the TAB, the company had not shown that it was a "protectionist burden" on interstate trade.

Betfair then appealed against this decision to a full-bench of the Federal Court.

Gilbert + Tobin acted for Betfair in both Federal Court cases, with litigation partner Rani John leading the firm's legal team.

Tony Meagher SC and Alan Robertson SC also provided counsel to Betfair in both cases.

Racing NSW engaged Yeldham Price O'Brien Lusk and a team of barristers that included Bret Walker SC for the appeal case.

The full-bench of the Federal Court unanimously dismissed the appeal.

It found that s92 operates to protect interstate trade, not individual traders.

The full-bench found that Betfair's argument did not move beyond the "evident arithmetical truth" that the lower a wagering operator's margin, the greater the percentage of the wagering operator's price and revenue will be taken by the fee.

Therefore, according to the full-bench, the primary judge was right to conclude that Betfair had not made out a case that the fee condition had deprived it of any competitive advantage in trade that it would otherwise have enjoyed.

Despite the appeal being dismissed, with Betfair having to pay costs, Twaits said his company might also look at whether it could initiate action with the Australian Competition and Consumer Commission (ACCC).

"No dialogue has been entered into yet," [with the ACCC], Twaits said. "That is one of the things we would consider in the wash-up of the Federal Court decision and whatever else we might do in relation to the High Court."

In 2008 Betfair was successful with a High Court challenge to laws in Western Australia that stopped punters from using betting exchanges. Rani John from Gilbert + Tobin also played a leading role in that case.

"This is all part of a scheme cooked up by a number of people in the racing industry nationally to target Betfair and put us out of business," Twaits said.

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G+T considers High Court odds
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