Betfair reacted with dismay, but not surprise, at the Australian Racing Board Chairman Bob Bentley's calls, reported in today's Sydney Morning Herald, for statutory intervention to protect the TABs from competition in the market for betting on racing."Mr Bentley's calls for federal legislation to allow the racing industry to protect the TABs aren't surprising given his dual roles as Chairman of the ARB and Director of the Tatts Group which operates the TABs in Queensland and South Australia

Betfair reacted with dismay, but not surprise, at the Australian Racing Board Chairman Bob Bentley's calls, reported in today's Sydney Morning Herald, for statutory intervention to protect the TABs from competition in the market for betting on racing.

"Mr Bentley's calls for federal legislation to allow the racing industry to protect the TABs aren't surprising given his dual roles as Chairman of the ARB and Director of the Tatts Group which operates the TABs in Queensland and South Australia," said Betfair CEO, Andrew Twaits.

"It looks like we're back to square one with the ARB, which is disappointing given the progress we've made in building solid relationships in other States. For instance, in addition to paying product fees in Victoria and South Australia, Betfair is sponsoring fifteen race clubs in those states. Betfair is not racing's enemy. We're proud of our association with racing and we want to see the sport prosper. The real danger to racing's future is the other products that offer punters a cheaper, simpler and more attractive alternative to betting on racing. The ARB's use of the Productivity Commission inquiry as a platform to promote an anti-competitive agenda is highly inappropriate.

"The real question that racing industry stakeholders should be asking the sport's administrators is what plans they have to address the massive losses of market share the sport has experienced by racing over the past 25 years. We think we are part of the solution. If Mr Bentley thinks otherwise, and that the TAB's, including his own, are deserving of protection, let him explain how this will help the racing industry prosper in the face of increasing competition from other gambling products."

Response to specific comments in SMH article:

Mr Bentley: "... the industry "faces the greatest challenge in our lifetime" due to "the rapid growth of new types of Australian wagering providers, corporate bookmakers and betting exchanges".

Betfair: Statistics, compiled by the QLD Treasury, shows that racing's market share suffered its greatest setback before betting exchanges and corporate bookmakers even existed. Racing's greatest challenge has been, and will continue to be, from other gambling products; not competitors of the TABs.

Mr Bentley: "Individual pieces of state legislation being tested by the 'free riders' and the 'pay-what-we-like operators', is subjecting the industry to too much uncertainty,"

Betfair: Betfair has not been free-riding on the racing industry. Since being licensed in Australia, Betfair has paid 35% (plus GST) of its gross revenue on racing in product fees and taxes to the Tasmanian racing industry. The TAB of which Mr Bentley is a Director has similarly paid all of its product fees and taxes to QLD and SA - and paid nothing to racing bodies in other jurisdictions. Similarly we do not want to "pay what we like". We have always said that we will pay what the TABs pay.

Mr Bentley: "... the racing industry was acknowledged as the content originator that made the wagering business possible and product fees were set that delivered fair returns back to the industry".

Betfair: The important fact Mr Bentley fails to mention is that those product fees were set as a percentage of gross revenue; not turnover. Mr Bentley and his NSW counterparts want to shift to a turnover-based model because it favours the TABs.

Mr Bentley: "Crucially, the federally endorsed mandate must enable the racing industry to set the fees payable having regard to objective criteria."

Betfair: The ARB should state what fees it believes should be applied on a national basis and, if its model differs from the models based on gross revenue that have been applied in Victoria, South Australia and Tasmania, on what basis it believes that it will be better for the industry.

Mr Bentley: "This is in complete contrast to newer types of wagering providers who refuse to recognise the right of the racing industry to set its own prices for wagering,"

Betfair: The racing industry has no right to set the price of wagering. That right is reserved to the wagering operator. The TABs have complete discretion as to what price they charge the punter, below the statutory caps. What the racing industry should be able to do is set the product fees payable by wagering operators - but they must set those fees in a non-discriminatory way.

Mr Bentley: "We hear a great deal about newer operators 'growing the pie' but it looks blindingly obvious that cannibalisation of existing business from TABs is front and centre."

Betfair: There is no doubt that some punters will switch some of their betting from TABs to low margin operators such as corporate bookmakers and Betfair. However, these lower margins represent the only real chance racing has to compete with other low margin gambling products such as sports betting, casinos and online poker. To the extent there is cannibalisation, however, it should be of no interest to the racing industry whether punters spend their gambling dollars with the TABs, bookmakers or Betfair, as long as each of those operators agree to pay the same percentage of that punter expenditure to the racing industry as a product fee.