New Report Reignites Battle between Racing and Exchanges

Racing officials in Australia and New Zealand believe that a new report commissioned by Australian racing interests solidifies their stance against betting exchanges, but some within the interactive gambling industry aren't so sure.

"I have seen the independent economic analysis on the implications of exchanges for racing, and anyone who thinks that betting exchanges would be a good thing for the New Zealand industry should think again."

- Guy Sargent
New Zealand Thoroughbred Racing

The study looks at the implications of betting exchanges for state governments and the racing industry. The research was conducted by independent firm Access Economics, and the results were unveiled by Australian Racing Board Chairman Andrew Ramsden.

Access found that state taxes from wagering in Australia would fall by something in the range of $30-$40 million a year by 2007/2008 if one or more betting exchanges were issued an Australian license.

Further, Ramsdem believes that legalized exchange betting would hurt business to the extent of driving the losses up to between $60 million and $80 million a year.

The report came to light last week at the Australasian Conference of Racing Ministers in Auckland, where New Zealand Thoroughbred Racing Chairman Guy Sargent clarified that the country's thoroughbred industry opted to oppose betting exchanges after reviewing it.

"I have seen the independent economic analysis on the implications of exchanges for racing," Sargent said, "and anyone who thinks that betting exchanges would be a good thing for the New Zealand industry should think again."

He added that betting exchanges in New Zealand could run some race clubs out of business.

"The research undertaken for our Australian counterparts shows that licensing betting exchanges could cut their revenues by up to $119 million per year, equivalent to almost one-third of Australian Thoroughbred racing's total funding," he said. "A similar fall in the percent amount of our funding would see over 30 of New Zealand's 70 race clubs wiped out."

Betting exchange advocates are quick to point out, however, that the report was funded by the Australian racing industry, with the Australian Racing Board taking much of the lead on the project. They're also skeptical because the full report isn't being released to the public.

Betfair's Mark Davies said that neither he nor anyone else in the exchange industry, to his knowledge, has seen the report.

"It's very difficult to comment when they haven't had the courtesy of giving us a look at the report in order to give some element of scrutiny to it," Davies said.

"It's very difficult to comment when they haven't had the courtesy of giving us a look at the report in order to give some element of scrutiny to it."

- Mark Davies
Betfair

Davies also pointed out that the researches did not appear to pay any attention the success of betting exchanges in the United Kingdom, where they have increased the amount of turnover on races and the amount of money pumped back into racing.

"The reported theoretical findings fly in the face of five years' hard evidence in Britain, where funding is double what it was and is up every year since Betfair started, and two years' hard evidence in Australia, where no scandal has been attributed to exchanges, and all pools are up," Davies said.

The racing and betting industries in Australia have long been opposed to the concept of betting exchanges and have vowed to keep them out of the country. Their opposition only grew stronger last year when the federal government opted to make it a state concern.

Betfair, which has been accepting wagers from Australians for nearly two years, has a presence in the country but does so without the ability to advertise its services and without revenue sharing plans in place with governments or the racing industry.

The company is lobbying various states and territories in hopes of being awarded a license in Australia and has publicly stated that it would back-pay a portion of its revenue to racing and the governments if it's granted a license.

Officials with the Australian Racing Board were unavailable for comment, while attempts to contact Access Economics were unsuccessful.