Seeking a Solution to the Exchange 'Problem'

Despite indications that Australian consumers--and now regulators-- are ready to embrace betting exchanges, some in the racing industry are determined to pull out all the stops to prevent--or at least delay--what many consider an inevitability.

The Howard government completed its yearlong review of the 2001 Interactive Gambling Act in July, at which time it determined that amending the law to address P2P betting exchanges is not necessary. The report issued by the Department of Communications, Information Technology and the Arts suggests that individual states and territories should be left to decide whether they want to allow betting exchanges. The decision not to amend the Act will likely open the door for betting exchanges to establish themselves in Australia.

Many racing and gaming ministers believe the government passed the buck on betting exchanges, and most agree that as soon as one state or territory license an exchange, the rest will follow. Even industry giants like UniTAB, which have been vocal opponents of betting exchanges, have said they will seek an exchange license if that happens.

City racing club chiefs from all over the country are scheduled to meet Monday in Melbourne to discuss a clear strategy for confronting betting exchanges, and Racing Victoria chief executive Robert Nason said he senses a willingness to get more aggressive.

"We will look at what we do if one of the states breaks ranks (and licenses betting exchanges)," Nason told the Melbourne Herald Sun. "We've been passive, but now (that) the federal government has taken no action (toward outlaw betting exchanges), that will change."

Betting exchange opponents argue that exchanges increase the chances of race fixing and don't pay revenues back into the sport.

Betfair, the world's leading betting exchange, contests that it's willing to pay fees and taxes equivalent to what traditional bookmakers and tote operators pay. The company has taken play from Australian punters for nearly two years and is willing to pay back a percentage of its Australian revenues earned during the last 18 months.

But that's not enough for Nason, who said racing clubs must explore new means of blocking exchanges in the absence of support from the federal government.

"We may look at copyright issues and making it illegal across Australia," Nason said. "At the moment, it is only illegal in New South Wales and Western Australia to bet offshore."

Nason also said that each state and territory would have to agree to ban exchanges--an unlikely scenario--and most Australian states and territories have begun (or will soon begin) formal inquiries into whether they should license betting exchanges.