"TAB REVEALS CLEAR IGNORANCE OF EXCHANGES

23 April 2004:

TAB Limited’s third advert attacking betting exchanges, of which Betfair is the 90% market player, reveals the extent to which the organisation fails completely to understand what exchanges are all about.

TAB wishes to insinuate that by allowing their customers some control and ability to manage their risk, betting exchanges allow ordinary members of the public to act as bookmakers, with all the regulatory risks that would entail.

This is patent nonsense. Punters use betting exchanges in exactly the same way as any other bookmaker: they submit a request for a bet on a particular event to Betfair, hand over their stake to Betfair and if they win, come back to collect their winnings from Betfair. They have no interaction with any other punters, no opportunity for handling other customers’ funds and no opportunity for selecting who is on the other side of their bet.

In short, betting exchange customers are just ordinary punters, and should not be characterised as bookmakers. They do not deal with the public, handle any money other than their own, or have any control over either the takeout or any price other than the one they submit themselves as a request to Betfair. They do not ‘take bets’ as suggested in the TAB press release which was also published today. They simply bet, with Betfair, on outcomes only of events which have a published result, with the opportunity to bet that a given outcome will or will not happen. If they do not like the prices or service offered by Betfair, they can do exactly the same thing, albeit it less efficiently, at the TAB.

TAB’s accompanying press release quotes Tim Ryan, Chief Executive of the Australian Bookmakers Association, as saying that bookmakers do not bet on teams or horses to lose. This is patently false, since they offer prices against horses and teams winning.

He also claims that the risk of money laundering, crime, and race fixing are all increased by betting exchanges, when there is no evidence to support these statements whatsoever. They are just irresponsible scare-mongering driven by a commercial agenda rather than by any genuine concern about these regulatory issues.

Betfair is entirely comfortable, following a meeting with Austrac, Australia’s anti-money laundering regulator, that its systems compare extremely well with wagering operators in Australia in dealing with money-laundering risks. Its audit trail is far more transparent than any existing operation, and therefore makes any improper dealings far easier to recognise than is currently the case with TAB. And high-profile representatives of the Australian racing industry are among the many who believe that allegations regarding race-fixing are unsubstantiated and without merit."

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"TAB’s advert ‘Australia to get a million SP bookmakers thanks to internet betting exchanges’ is the third in a series being run in the Australian and the Australian Financial Review. It is part of a campaign to persuade the Federal Government to ban betting exchanges, which threaten the monopoly status of the TAB."