Northern Territory Turns Cold Shoulder to Betting Exchanges

Cross the Northern Territory off the list as the first jurisdiction in Australia to license and regulate online betting exchanges, at least for the time being.

Sid Stirling, the deputy chief minister of the Northern Territory, sent a letter to the chairman of the Australian Racing Board stating that the territory will not be issuing any betting exchange licenses in the near future.

The news is a somewhat of a surprise considering that many in the industry thought the Northern Territory would be the first Australian jurisdiction to license an exchange.

"The NT was always seen as a good bet for the exchanges," explained Warwick Bartlett, lead partner for Global Betting & Gaming Consultants in the United Kingdom.

In his letter to ARB Chief Andrew Ramsden, Stirling said the Northern Territory is holding off on issuing a license because of arguments put forth by the racing industry.

"Given the Australian Racing Board and other Racing Ministers' stance on betting exchanges operating on Australia racing, the Northern Territory will not be considering any betting exchange submissions," Stirling said in his letter.

Betfair, which controls nearly 90 percent of the betting exchange industry, has been lobbying national and terrestrial governments for nearly two years in an effort to obtain the first exchange license in Australia.

The federal government opened the door for states and territories to license betting exchanges in July when it released the findings of its 18-month review of the Interactive Gambling Act.

In its review of the act, the Howard government said that each individual state and territory can decide for itself whether it wants to license and regulate online betting exchanges.

The Northern Territory and Tasmania became leading contenders to be first because of the potential financial windfall of hosting an international company like Betfair.

But Ramsden said the Northern Territory has "had a consistent position on betting exchanges" since March, and Stirling's latest comments only reinforce the ARB's effort to keep exchanges out of Australian racing.

"This latest statement illustrates once again, with absolute clarity, that the Northern Territory has no intention of acting in a way that would harm the Australian Racing Industry," Ramsden said. "It is a timely and responsible statement by Sid Stirling and I applaud him for making it."

Officials with Betfair had no comment regarding Sterling's statements, but executives with the company have long argued that even without a license, they can accept bets from Australian residents under the terms and conditions of the IGA.

A license would allow them greater freedom to advertise their service, something they have been unable to do (although they've experienced enormous growth in Australia in the last two years despite the restrictions).

Many in the industry believe that once one jurisdiction breaks rank and licenses a betting exchange, others will follow. And although the Northern Territory says it won't consider any betting exchange licenses in the immediate future, that could change if Tasmania or another jurisdiction opts to move first.

The ARB has threatened sanctions against the first jurisdiction to license a betting exchange by banning that jurisdiction from using race data and other measures that could hamper the running of a betting operation.

Ramsden said the ARB has been working wth individual jurisdictions to effectively ban betting exchanges in the absence of a federal ban.

"The racing industry is committed to working with each state and territory government to put in place such legislative measures dealing with advertising, publication information and administrative services related to exchange wagering, that are available to limit the capacity of betting exchanges operate on Australian racing," Ramsden said. "We also will propose this as a key issue for consideration by the racing ministers when they come together as a group in March 2005."

He added that the board will continue to lobby the federal government for an outright ban.

"Australian racing is a national sport as well as being a major national industry," Ramsden said. "Demarcations of constitutional responsibility cannot be used as an excuse for a federal government failing to act responsibly. There is already legislation in place--which the national parliament has enacted--to deal with gambling over the Internet, and the terms of this legislation must be revised to prevent betting exchanges from damaging Australian racing."