Aussie Federal Government Reiterates its Position on Betting Exchanges: It's up to the States

A high ranking Australian government official said last week that the country's federal government will not stand in the way of any state or territory that wants to issue a betting license to Betfair, the world's leading betting exchange.

The position, confirmed by Communications Minister Helen Cooonan, goes against the wishes of the Australian Horse Racing Board, Tabcorp and others in the traditional betting industry who have lobbied feverishly against legalizing betting exchanges.

Officials with Betfair welcomed the news and said they are in talks with a handful of jurisdictions. Tasmania is believed to be the frontrunner, but the company isn't saying with whom it's negotiating.

Speculation is that Betfair, which has been taking wagers from Australian residents through its betting hub in London for nearly two years, could have its Australian license within six months. That means the company's joint venture with Kerry Packer's PBL could be up and running in a matter of months. PBL and Betfair entered a branding deal in July that would have Betfair launching a PBL-branded betting exchange if, and only if, the joint venture acquires a betting license.

Such a scenario would likely open the door for other betting exchanges as well. A "well placed" source in the Northern Territory government told The Australian that there are many jurisdictions trying to land Betfair, and a domino effect will likely follow after it is awarded a license.

"At the moment it's a case of everyone standing at the edge of the cliff waiting for the first one to jump," the source said. "Betfair would provide enormous revenue, and none of us would want to see it lost to other states."

The Australian Horse Racing Board led the charge to keep Betfair out of Australia, with its chief executive, Andrew Harding, in October proposing a ban on U.K. horses at Australian tracks. Harding said such a ban would force owners and trainers to cooperate with countries that don't want the exchange operating within their borders.

Harding has often stressed concerns about the effect exchanges can have on the integrity of races and reiterated those concerns last week at the Symposium on Racing in Tucson, Arizona.

Coonan said on Friday, though, that it wasn't the government's role "to unilaterally move to regulate or protect the racing industry."

Betfair has been lobbying Australia's state governments for several months, with key personnel relocating to Sydney this year to step up those efforts.

The only two jurisdictions that have gone on record saying they won't license Betfair, or any other exchange, are South Australia and Western Australia.

Tasmania is a leading candidate because of the potential employment opportunities that Betfair could bring as well as the windfall from tax revenues and licensing fees.

A spokesman for Tasmanian Finance Minister Jim Cox said the Lennon government was keeping an open mind on the issue.

"We haven't had any formal application from Betfair, but we've left the door open on the proviso that we get racing industry support," the spokesman said.

Coonan's position reemphasizes the federal government's decision (following the 18-month long review of the Interactive Gambling Act) that the exchange issue should be left up to the state governments.

"Industry issues, including . . . the integrity of the racing industry, are a state-based jurisdiction," Coonan said.