Last Friday, Racing NSW wasted tens of thousands of dollars on a full page advertisement in the Sydney Morning Herald, which among other misrepresentations claimed victory in the Court cases against Betfair and Sportsbet. Since to win the Sportsbet case, Racing NSW must win its appeal and Betfair is likely to lodge an appeal in its case this week, any claim of victory is somewhat premature.
And just to make matters worse for Racing NSW, Sportingbet has lodged its own Federal Court action, very much along the lines of the Sportsbet one, but taking advantage of the issues raised by Justice Perram in his Sportsbet judgment to make an even better case of discriminatory protectionism.
Another example in the Sydney Morning Herald advertisement of Racing NSW Chairman Alan Brown being just a tad misleading, is his statement suggesting that "key corporate bookmakers are not prepared to negotiate".
Micheal Sullivan, CEO of Sportingbet responded by saying:
"I personally have brought up the subject with Alan twice, once at the races and once at the Inglis sales."
"Both times he told me that they were going win the court cases and didn't need to negotiate."
Sources within New South Wales Racing informed me that immediately after Perram's devastating criticism in the Sportsbet judgment, Brown suggested to a meeting that perhaps its was time to sit down and talk.
He was apparently overruled by Racing NSW CEO Peter V'Landys who said "we've spent too much money to turn back now."
The quotes may not be accurate because they are only hearsay, but the subsequent actions of Racing NSW mirror exactly that scenario.
The point is that Alan Brown was not the Chairman when the disastrous race fields strategy was put in place. Ownership of that concept sits squarely with V'Landys and Robert Nason, formerly of TabCorp.
V'Landys therefore has more to lose from the strategy's failure.
It's worth revisiting the original race fields concept, because it is only with the benefit of hindsight that it can be seen how bad it was.
The race fields legislation went through Parliament in 2006. It only became active with the now controversial regulations in 2008. During those two years, there was plenty of time for the Government, in consultation with the racing industry, to get the legal framework right.
The intention of the legislation is reasonable enough, which is to get all wagering operators to contribute to the racing they bet on. The problem was always to apply a race field fee to interstate operators in such a way that they would not claim a breach of the Constitution while simultaneously not increasing the burden of the local bookmakers and TabCorp.
The obvious answer would have been to reduce the TabCorp burden while introducing a new fee on a gross profit basis, which in New South Wales was the advice given to the Minister by the Office of Gaming and Racing.
But rather than level the playing field, it appears that Racing NSW and TabCorp decided to take the opportunity to wipe the opposing team off the ground.
The grand plan was to slug the corporate bookmakers and Betfair with a 1.5% turnover fee, which Racing NSW has recently conceded will wipe out their own bookmakers. This would be followed up with Luxbet, which would impose price competition on the bookmakers.
Where we now? The bookmakers and Betfair are thriving, Luxbet is losing money, TAB distributions are falling and race clubs are going broke. All of this when the bookmakers have handed over the money, which unfortunately cannot be spent.
So not only did New South Wales finish up with a scheme which "did not deserve the appellation sophisticated", to quote Justice Perram, it was always going to be overturned in Court.
With Sportingbet now pursuing a further case, Racing NSW has a huge dilemma.
While ever TabCorp is not paying the 1.5% turnover race fields fee, any case by a wagering operator against Racing NSW alleging discriminatory protectionism is bound to win. This means that all previous payments sitting in the $60 million "honeypot" cannot be released and future payments are not legal either.
But on the other hand, if Racing NSW seeks to solve the ongoing problem by changing the distribution agreement so that TabCorp pays less in RDA fees and makes up the difference in a race field levy, it has more problems.
Such an action would shine a light on the fact that the 2008-10 race field levies have been collected unconstitutionally and therefore they must be returned. Under such circumstances Racing NSW's appeal in Sportsbet is bound to fail and Betfair would undoubtedly win its appeal.
If Racing NSW decides it is going to fight the new Sportingbet case in Court, futher issues emerge, not the least of which will be the legal costs.
The main reason that it lost the Sportsbet case was because Justice Perram saw through the amateurish scheme to exempt TabCorp from the race fields fee. He drew adverse conclusions from Racing NSW's refusal to have any Board member testify under oath about the arrangement.
Its only hope of winning any future case is to have Peter V'Landys go into the witness box and convince the Court that everything about the rebate arrangement was above board.
Given the incredible reluctance of Racing NSW to disclose even the existence of the rebate in the lead up to both the Betfair and Sportsbet cases, there is clearly a lot to hide. My guess is that no one will ever testify about it.
With legal opinions already circulating about the grounds for yet another case against Racing NSW, Harness Racing NSW and TabCorp alleging breaches of the Trade Practices Act, further evidence in the Sportingbet case could completely demolish the already teetering reputations of many involved.
It is interesting that when it comes to Court action, only those bodies which set out to tax the bookmakers out of existence are being targeted. The big sticking point is turnover versus profit as a taxing mechanism, not about whether there should be a payment at all.
Brown can stick to his mantra that the key corporate bookmakers don't want to negotiate. He fails to understand that they negotiate every day for a living. He only has to look in his own Board room to find the real non-negotiators.
Courtesy of BILL SAUNDERS of TVF, 16/07/2010
WAR WITHOUT END
