Will Betfair Strike Back?

The next chapter in Betfair's battle to get a betting exchange license in Australia has the British operator going on the offensive.

Australian media have been reporting in recent weeks that the company is close to obtaining a betting exchange license in Tasmania.

Neither the government nor Betfair have had much to say about the reports, but the situation has brought much attention to the joint venture between Betfair and Publishing and Broadcasting Ltd. (PBL) that intends to launch an Australian betting exchange if and when a government license is obtained.

News of the impending license in Tasmania (despite being unsubstantiated) has prompted those opposed to legalized exchange betting to threaten action against Betfair if it is given a license. Among the options discussed in media reports is the possibility of certain states blocking racing signals from jurisdiction in which Betfair is licensed.

Betfair has responded by writing letters to numerous members of the racing industry asking for clarification of their intentions.

Betfair isn't commenting on the content of the letters, but Geoff Harper, a director with the Australian Racing Board, told the Australian Broadcasting Corporation that a letter from Betfair to the board mentions a possible violation of the Trade Practices Act. Harper said each director of the ARB was sent a letter by solicitors representing Betfair in Australia and that Betfair has asked the ARB to supply details of all correspondence, briefings and minutes from meetings in which Betfair was mentioned.

Harper also told ABC that the letter includes a paragraph eluding to possible collusion charges.

As reported by Harper, the letter states:

"Betfair has reasonable course to believe that some of the participants in the racing industry and/or one or more totalisators, are a party to an agreement, arrangement or understanding and/or are engaging in unilateral or collusive conduct for the purpose and effect of which is to inhibit and prevent the entry of Betfair and betting exchanges."

The TABs have been unified (with Tab Ltd. being most strident in its objection) in resisting the granting of a license to Betfair, but racing officials in New South Wales and Victoria (Australia's leading racing jurisdictions) are split over who owns the rights to racing signals.

Whether the two groups can form a unified front to keep Betfair from operating in Australia remains to be seen, as does whether they can do so legally.

The Australian racing industry is also trying to decide how to deal with corporate and Victorian bookmakers that have tried to negotiate with the ARB over rights issues only to have New South Wales, Tabcorp and Racing Victoria wanting to cease providing tote odds to them.

Betfair's Mark Davies said that a betting exchange license for his company would result in an influx of 150 jobs--many of them high-tech ones--in Tasmania.

Betfair might be in a good position to take advantage of all the fragmentation in the Australian racing industry, although it also believed that the betting exchange issue could ultimately unify the industry.