In response to the decision of Racing Victoria to move from a funding model based on gross revenue to one based on turnover, Betfair Australasia’s CEO Giles Thompson stated: “We are extremely disappointed that Racing Victoria has ignored the economic analysis and evidence which clearly demonstrates that a fee based on gross revenue is in the best long term interests of Victorian racing.

“Racing Victoria engaged Peter Yates and PWC to conduct a widespread review to find the optimum funding model for racing and it was found that a fee based on gross revenue ensured the greater returns to racing in the long term whilst continuing to foster competition. This was the same conclusion reached by the Productivity Commission.

“Betfair has always paid race fields fees to the Victorian racing industry. A fee based on gross revenue ensured all types of wagering operators could compete and offer their services to punters to bet on Victorian racing.

“A gross revenue model has been in place in Victoria for over 3 years and in that time the racing industry has continued to flourish with competition driving sponsorships and increased services to punters. Betfair has been at the forefront of that competition. With over 4 million customers worldwide, Betfair provides the Victorian racing industry with the opportunity to tap into a global market place that local operators can’t provide.

“A fee of 1.5% of turnover equates to 60% of Betfair’s revenue generated on Victorian racing and this will increase to 80% of revenue during October and November. No business can sustain costs at that level and clearly we will need to consider our response.

“By offering punters the experience of a betting exchange, we are providing a unique platform for them to engage with Victorian racing. A betting exchange relies on liquidity and is therefore a high turnover operator by definition. The fee being proposed by Racing Victoria seriously hampers the ability to offer such a product on commercially viable terms.

“The racing industry is dependent on funding it receives from punters and racing bodies should be doing everything in their power to ensure they are provided with choice, customer service and competitive prices. A fee based on turnover seriously limits competition and will only hurt racing in the long term”.

I concur.

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lomaca, this was an appeal by Betfair and Sportsbet & as part of the appeal they would have needed to demonstrate how the introduction of a turnover tax would negatively impact their businesses.

"Betfair argued that the payment of a fee calculated on the basis of turnover was unconstitutional because it imposed a greater burden on its profit than it did on the New South Wales totalisator operator, TAB Ltd (TAB). This was viewed by the Full Court as being the case because its business model is based, in part, on smaller margins and requires higher turnover to achieve equivalent revenues when compared with other models (i.e. bookmakers or totalisators). The primary judge dismissed this claim on the basis that, while Betfair had demonstrated that the use of a turnover benchmark was discriminatory, it had not demonstrated that it was of a protectionist kind."

In this case I was wrong, sorry.

Well, I guess on the basis of the objection (discrimination) he could not rule in their favour, but clearly on the basis of percentage of profits it is unfair.

It's how I went out of business selling computer parts.
The impact of GST was discriminatory for me because anyone who sold parts bought from Australia and ended up paying GST on profit only because they could claim the GST paid on the purchase.
As I purchased my parts overseas which were GST free, I had to bear the cost of GST on the entire transaction.

__________________
RaceCensus - powerful system testing software.
Now with over 399,000 Metropolitan, Provincial and Country races!
http://www.propun.com.au/horse_raci...ng_systems.html
*RaceCensus now updated to 31/03/2024
Video overview of RaceCensus here:
http://www.youtube.com/watch?v=W821YP_b0Pg

I find it hard to believe that Betfairs legal representatives went for the discrimination angle.

I also cant believe the Betfair managers allowed that angle to be played

That's plain crazy & totally without foundation.

It just wasted every ones time not to mention the massive expense in legal fees.
I would want my money back if that's the best legal advise available.


One - You have to prove it, which means they have to give evidence of being singled out from the others which would not be so, seeing that its a broad based tax.

I feel they could of taken an angle similar to a co-op operational business.
Run by the members, for the members.
This is what makes it distinctively different to a point where a Turnover Tax on the Betfair model of operation would render it untenable.

To enforce a turnover tax on a business that does not profit from turnover would then maybe argued that their position should be looked at differently & therefore taxed differently.

They could have argued more successfully by stating that their business model is totally different to TABS & Bookmakers.

Betfair's turn over is based on lots of five percents, after the outcome, not prior to outcome ,therefore Tax should be based on 1.5% of 5%.
e.g. 5% = $100,000 income x 1.5% = $1500 Tax to be paid.

Because the business structure is based on the ebb & flow of Back & Lay transactions, unlike Bookmakers where their profit percentage is built into the price being sold.


Does the Tax wish to be applied to the Lay bet turn over or does one Tax the Back bet turn over only or do they wish to Tax both Back & Lay which would then make it a form of double taxation if a punter where to Back & Lay the same runner.

I don't believe the learned parties where totally abreast of how an exchange actually works when it comes to Back & Lay betting.

Why is all the thinking left up to me around here.

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Cheers.

Well another point of view may be that the High Court, which I assume now has intimate knowledge of how BF makes a crust, concluded that the 1.5% could successfully be absorbed by BF etc & they could continue on business as usual...

We shall see

The Racing Industry had made it very difficult for Betfair to operate in Australia.
The Racing industry is now making it very difficult for Betfair to continue operating in Australia.

I see it as the Turnover Operandus is irrelevant.

It is no coincidence that Victoria followed NSW example.
I see it as the Racing Industry simply want Betfair out.

I don't quite see the motive , but feel that the Recent New Contract with TAB that mentions the possibility of TAB operating as a Betting Exchange may be at least part of it.
Part of the motive may or may not be a drift of TAB Punters to the Exchange Operators , and that may not be a good thing for the Australian racing Industry.

Like I said , it's not about Betfairs Turnover , but Betfair itself.

The racing industry has made their point clear. They want betfair out.
In the end unless their is an exchange running here I think most exchange participants will move offshore and trade the UK markets.

The tab's will not operate an exchange. They would have to bear the same costs which betfair is now facing. Not to mention the liquidity would be a lot less then that currently on betfair (look at betdaq for example).

In the end the educated punter loses out unless we move our money off shore into the UK market.

That revenue which would have gone to the racing industry in NSW and VIC is now lost.

Hopefully other states do not also adopt this stupid policy.

Its funny how the politics between different people in any business are usually to the deteriment of the business. In this case the politics are internal in the NSW and VIC racing industries and is a childish play to exact revenge on betfair. Its a "I'll show you" decision and unfortunately the punters are the ones who suffer as usual.

Agreed, hidden agenda.

Or like me , they now go to the corporates , the TAB Fixed Odds Betting or Totalisator.
Punters bet as healthily when Betfair wasn't around as they do now I figure.

I only bet Overlays so I don't care who provides it.
Just means there will perhaps be lesser betting opportunities.
Easily overcome by increasing my bet size.