The ACCC have announced an investigation into possible Trade Practice breaches by the racing industry in attempting to prevent Betfair getting a licence. This is separate to the recent bun fight over broadcasting rights, but the investigation could conceivably lead to that as well.

And apparently Betfair has begun or is considering defamation action against Racing Victoria's CEO Robert Nason over comments made.

The competition regulator is formally investigating the racing industry
over alleged anti-competitive behaviour in seeking to prevent the Kerry
Packer-backed Betfair from securing a betting licence from state
governments.

It is understood the Australian Competition and Consumer Commission has
put three investigators on the case to consider whether senior
executives of the nation's three key racing bodies, plus those from
gaming and wagering group Tabcorp, have breached the Trade Practices
Act.

The ACCC investigation comes as a separate and bitter fight between
Tabcorp, the Sydney and Victorian racing clubs, and the NSW racing
industry over media rights remains unresolved. It, too, could trigger
possible trade practices breaches.

"[The regulator] thinks this whole area is looking really murky in terms
of anti-competitive behaviour," one source said.

ACCC chairman Graeme Samuel declined to comment. However, he said last
month he was "well aware" of the Betfair issue and allegations of
anti-competitive behaviour by the racing industry.

Racing Victoria, Racing NSW and the Australian Racing Board, as well as
Tabcorp, have waged a fierce campaign against the entry of UK-based
Betfair to Australia's wagering market, worried it will cut their
profits and allow corruption to flourish because the service permits
punters to back losers as well as winners.

In particular, the industry is threatening strong sanctions against
Tasmanian racing if the state breaks ranks by granting Betfair a
licence.

It is believed the Tasmanian government plans to introduce legislation
into parliament within weeks to grant Betfair a licence to operate in
the state.

It will be separate from the licence held by TOTE Tasmania.

A Tasmanian licence would allow punters in other states to bet legally
with Betfair by telephone or via the internet and allow Betfair to
advertise nationally.

But one source said such a move by the government, if approved by state
parliament, would also mean the alleged actions of the racing clubs in
seeking to stop Tasmanian racing from granting a licence could become
"very consequential".

There is believed to be a significant paper trail of correspondence
between the racing bodies, the state TABs and government departments in
relation to Betfair, which the ACCC is investigating.

Also believed to be of key concern to the ACCC in its investigation are
recent comments by the chief executive of Racing Victoria, Robert Nason,
when he warned that granting a licence to Betfair could lead to
Tasmania's racing industries being thrown out of mainland betting pools
and Sky Channel's TV coverage.

"It would be devastating," Mr Nason said. "Who wants to invest in an
industry that allows organised crime to flourish?"

It is believed Betfair has launched defamation action against Mr Nason
over the comments.

Last month, Betfair directly targeted every board member and the senior
executives of Tabcorp and Racing Victoria, Racing NSW and the Australian
Racing Board with letters of protest after their public criticisms of
Betfair.

Attached to the letters were transcripts of interviews given by Michael
Piggott, head of Tabcorp's wagering division, Mr Nason and Peter
V'Landys, the Racing NSW chief.

While the correspondence could be significant in any legal case
involving alleged breaches of the Trade Practices Act, it is believed
that the ACCC is not relying on documentation from Betfair for evidence.

While the ACCC has yet to make a decision on whether it will launch
legal action against the racing industry, any case is likely to involve
a breach of section 45D of the Trade Practices Act, which prohibits
secondary boycotts where two people come together to prevent a third
party from supplying goods.

The Packers' Publishing & Broadcasting last year announced a 50-50 joint
venture to develop Betfair's business in Australia and New Zealand, but
noted the deal was conditional on the partners securing licences from
state governments.

Betting exchanges allow punters to bet against each other over the
internet, with Betfair taking a commission on winnings.

Last year, the federal government refused to extend to betting exchanges
a ban on online casinos, saying it did not consider they increased
problem gambling.

That decision sparked strong objections from the NSW, South Australian
and Queensland governments, which have been adamant they will not
license Betfair.