BETFAIR'S AUSSIE CASE LOOKING GOOD

14 December 2007

Borderless nature of the Internet debated


After a brief lull, Betfair's Australian arm challenge of a Western Australian state betting exchange ban continues in the High Court today (Monday) with the liklihood of further fireworks.

Last month, the first days of the litigation saw Chief Justice Murray Gleeson and Justice Michael Kirby carry out a tough examination of WA's main argument: that the legislation is aimed at protecting the integrity of racing from those who bet on horses to lose, reports Business Australia.

"What does that demonstrate except that all forms of gambling breed some corruption?" the Chief Justice asked.

"Until relatively recently, short selling of shares was prohibited. Now, it is regarded as a good thing because it evens out the market."

Justice Kirby suggested "the fight is really about what you (WA) can extract from them as their licence fee to operate in your state".

"Unless you can show that there are a few, even a handful, of other societies that have said, 'We think this is inherent in this type of betting and we are not going to permit it', you then begin to think, well, if so many other societies have found ways of securing integrity without banning it, what is the real reason that Western Australia is banning this one?

He noted the British approach: "The British have said, 'Get real, this phenomenon is here to stay. It's new technology, get used to it'."

Under the laws, passed in January, local punters could face fines of up to Aus$10 000 or two years jail if they placed wagers with operators such as Betfair. Tasmania has licensed Betfair (see previous InfoPowa reports)

Betfair, which is partnered in Australia by James Packer's gaming arm Crown, wants the High Court to make a declaration that these laws are invalid, blocking interstate trade in violation of Section 92 of the constitution. The state of New South Wales is holding an independent inquiry into its possible licensing and Victoria, South Australia and Queensland demonstrated their interest by also arguing in support of WA.

The case is the first time the court has revisited Cole versus Whitfield, the landmark 1998 decision that guaranteed freedom of trade, commerce and intercourse between the states.

Justice Kirby said: "We are being invited to make a judgment about whether prohibition of betting exchanges is an appropriate response or an acceptable response within the limits set by the constitution to a certain problem or certain perceived problem of corruption."

The implications for cross-border commerce in the internet age and federalism were apparent, reports Business Australia, with the Chief Justice asking Neil Young QC, for Tasmania, whether Section 92 produced "a lowest common denominator effect" - that you only have to convince one state that your product is not so bad to put the states in opposition where they cannot prevent trade in that product".

Young responded: "Another way of putting that argument would be that it produces a national economic union in which one product cannot be banned for protectionist reasons from reaching into another state."

Justice Bill Gummow intervened: "They said in America that states have to sink or swim together, and that is what happens. They also say that electors in one state cannot, through their connections or influence over legislators in one state, stand out against the impact of Section 92."

Young couldn't get his "yes" out fast enough, and Justice Kirby even remarked: "You are on the winning side in this matter, but next time you are up here you might be on the losing side. You might have some environmental friendly thing or crayfish or something."

Justice Kirby quickly assured the court he was "not of course foreshadowing this case". But his comments were pointed on what Robert Meadows QC, for WA, called the "evils" of Section 92: giving a privileged position to one state because it had allowed a form of trade.

"The problem with your theory is that it is very much an antique theory because the world today is not even of national economies, it is of global and regional economies, and you are trying to sort of hive off the little fortress, Western Australia, and in a world where the economy has become global and regional and where the technology promotes that."

Chief Justice Gleeson even remarked that the court would "have to make a judgment as to whether the prohibition involves ... taking a sledgehammer to crack a nut".

Stephen Gageler SC, for Betfair, was invited back to the court today but was told his estimate of 20 minutes was a little light. "We want to torment you for more than 20 minutes," said Justice Gummow. If the case goes any longer, Gageler's detailed explanation of betting and exchanges might have consequences.

"This is getting interesting, Mr Gageler," Justice Kirby quipped. "I might get addicted."

The court is expected to reserve its decision today and hand down a verdict within six months.

Online Casino News courtesy of InfoPowa