ANOTHER COURT VICTORY FOR BETFAIR

28 March 2008

Australian litigation successful as judge rules that territory bans are unconstitutional


Western Australian politicians and betting companies that tried to constrain the Australian operations of the betting exchange group Betfair received a setback this week when the company won a High Court challenge against Western Australian laws that prohibit residents placing bets using the online exchange.

The High Court ruled the legislation was unconstitutional because it imposed protectionist burdens on interstate trade and therefore contravened section 92 of the constitution, reports the Australian Daily Telegraph.

As a global operation, Betfair enables punters to choose their own odds and bet against each other, even after an event has started. The company processes 5 million transactions a day and more than 300 bets a second.

Betfair challenged a WA law that imposed punitive restrictions on any local resident betting through an exchange, with fines of up to A$ 10 000 and/or two years imprisonment threatened. It also challenged a law that made making a WA race field available without approval an offence.

The WA legislation was introduced in January 2007, and was widely seen as an attempt to stop Betfair's Australian expansion in its tracks to protect vested interests in the horse racing industry. Betfair was granted its Tasmanian betting exchange licence in January 2006.

In a unanimous judgment the High Court Thursday ruled the laws were invalid and WA residents could place a bet with Betfair's exchange in Hobart by telephone or on the Internet.The Court also ruled that Betfair could publish or make available WA race fields by telephone or on the internet between Tasmania and another state.

The High Court held that the WA legislation contravened section 92 of the constitution as it imposed "discriminatory and protectionist burdens" on interstate trade and was inconsistent with the guaranteed absolute freedom of interstate trade and commerce."

Betfair is currently seeking a licence to set up an operation in the New South Wales territory but the racing industry claims that this could cripple the sport.Racing officials say lay bets could harm the sport's integrity, but more importantly the industry is heavily reliant on revenue from its own TAB wagering outlets.

Queensland Racing chief operations manager Malcolm Tuttle said in October last year that "we must protect the significant revenue streams that flow into the industry as a result of wagering through Unitab".

Justice John Heydon said on Thursday that West Australia had argued its legislation had a "non-protectionist end" - namely, ensuring that persons who utilised horse and greyhound races for a wagering business "make a contribution to the persons who conduct those races".

"(But) instead of providing in terms for a neutral contribution to the persons conducting Western Australian races (the legislation) has a tendency to exclude persons in the position of (Betfair)," Justice Heydon said.

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