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In NSW an election is coming up so I tried to organize interviews with Grant Mc Bride, the NSW Racing Minister and Peter Debnam, the Opposition leader. I got agreement from both of the respective offices for an interview and was asked to supply a list of my “questions”, which I did. From that point everything stalled.

The questions I asked related mainly to “when were punters and bookmakers in NSW going to get a fair deal?”. “When was the policy of the rounding down (never up) of TAB dividends going to be abolished?”. “When would the policy of banning competitive advertising going to cease and when would NSW bookmakers be permitted to bet over the Internet so they could compete and create Australia wide competition?”

Peter Debnam’s office admitted that Peter “was not a punter” and had no knowledge of punting, however we did not receive a response from George Souris, the Opposition spokesman on Racing, either. We had hoped to provide the views of both parties so NSW punters could make an informed choice but obviously, as most readers would be aware, the average punter is treated as merely a guaranteed source of gambling revenue for State Finances.

I can understand why we did not receive a response from Grant McBride’s office. Published below is the letter he sent to the Chief Minister of Norfolk Island objecting to Austote competing for business in the national betting market. He refers to the “Gentleman’s Agreement” which basically means that the NSWTAB would not try to take business from the Victorian TAB and other State TAB’s etc. and vice versa. The policy is anti competitive but the ACCC advises that it is COAG (the Council of Australian Governments) who have control over such issues. The policy was established many years ago when all TABs were operated by their respective State Governments but of course these days we are talking about publicly listed companies who a spokesperson from the ACCC advised us, have an obligation to their shareholders to do everything in their power to compete with other betting organizations but don’t.

There are now over 100 betting organizations in Australia including the TABs but apart from being on the Internet where there are no restrictions, they are bound by outdated and anti competitive State protectionist legislation preventing them from advertising in traditional media such as Print, TV and Radio. We still live in the Dark Ages.

I had discussions with representatives from NSW Gaming and Racing and it is clear that nothing will change soon. Interestingly I was advised that Tabcorp can eliminate the unfair practice of rounding down of TAB dividends whenever they choose. They are allowed to make 16% and no more from their TAB operations and in the current year are making more than this. They used the surplus to run a reduced win bet pool on selected race meetings in February. That doesn’t help the punters who had their $1.29 dividends reduced to just $1.20 and while ever the politicians continue to adopt their current attitudes, nothing is going to change.

*Please note we are holding copies of the Original Letter in the Office.


The Hon Geoffrey Gardner NLA
Chief Minister
Legislative Assembly

14 June 2004

Dear Minister,

I wish to raise with you a matter of serious concern associated with the activities of a licensee, “AusTOTE,” under the Norfolk Island interactive wagering licensing regime.

Information available on the Internet indicated that AusTOTE commenced operations on 28 April 2004 – apparently fielding solely on Australian racing events. Inquiries by my Department of the Norfolk Island Gaming Authority Secretariat reveals that AusTOTE was issued a wagering licence on 5 June 2003.

An excerpt from the home page of the AusTOTE website suggests very strongly that Australian TAB punters will be the primary target market.

AusTOTE offers a safe and legitimate alternative to punters who are fed up with paying substantial commissions to totalisators.

Why should punters be left with only 85% if the pool just so the TABs can maintain huge profits? AusTOTE deducts only 2% to 5%, leaving successful punters with 95% or more of the entire pool. There’s just no comparison.

AusTOTE introduces the lowest commission wagering in the world through a government-regulated Australian pari-mutuel system that returns 100% dividends and deducts a small commission from winning returns. Players’ funds are protected in a separate audited Trust account.

AusTOTE’s focus on the betting medium of Australian racing exclusively combined with the relatively small population of Norfolk Island points to an AusTOTE business model based on cross-border betting from other Australian jurisdictions such as New South Wales.

The whole area of cross-borded betting has been the dominant topic in international racing circles over the past two years or so. The extent of recognition of the threats to racing’s viability is evidenced by the international racing industry’s embracing of the “Good Neighbour Policy.”

No Signatory will allow wagering in its own jurisdiction on another jurisdiction’s racing without the approval of the latter jurisdiction.

Closer to home the threats posed to the viability of Australian racing by cross-border betting with corporate bookmakers led to the formation by the Australasian Racing Ministers’ Conference of the Cross-border Betting Task Force in May 2002. The Task Force comprised a Government racing officer and a racing industry representative from each of the six Australian States plus the Northern Territory and Australian Capital Territory. Among the findings set out in the Task Force Report delivered to Racing Ministers in November 2002 was the unanimous view that any wagering operator fielding on Australian racing be required to make a fair return to racing under a product fee framework. Subsequently, Racing Ministers resolved unanimously in favour of a national product fee regime.

In the case of totalizor (TAB) betting specifically, the licensee in every Australian State is in effect required– under either contract with the racing industry of legislation – to pay a significant proportion of totalizator wagering turnover to is local racing industry. For example, the New South Wales racing industry receives around 4.5 cents per dollar of totalizator turnover with TAB Limited. The whole foundation of the longstanding “Gentleman’s Agreement” between Australian jurisdictions is that States allow access to each other’s racing product for betting purposes on the basis wagering operators do no overtly poach the punters of other jurisdictions.

I am informed that the Australian Racing Board has already corresponded with AusTOTE raising issues associated with the unauthorized use on its website of the Australian racing industry’s intellectual property in race fields, result as related information. Additionally, I note that my Department corresponded with AusTOTE on 22 April 2004, raising possible legal issues in terms of New South Wales legislation.

Clearly a significant factor in AusTOTE being in a position to offer such ‘attractive’ commission rates to Australian punters on Australian racing is the absence of any local racing industry in Norfolk Island dependent upon wagering revenue streams for survival.

AusTOTE’s attack on race wagering markets elsewhere in Australia is also curious in light of various comments made by the Director of Gaming with the Norfolk Island Gaming Commission in a presentation to the 8th Annual Australasian Gaming and Casinos Gold Coast Convention at Surfers Paradise in February 2000 in respect of the then nascent Norfolk Island internet gambling regime. The quotes following are from the presentation materials provided by Mr Leyshon.

Restrictions on Internet bets from players with an Australian or a Norfolk Island registered address apply. It is important that a good relationship with our counterparts in Australia is maintained. Also, being a Territory under the authority of the Commonwealth, it is considered that it would not be acceptable to diminish in any way a revenue stream available to States and other Territories of Australia.

The entrenched Caribbean Internet operators do not need to be given years start yet this is exactly what we are giving them. Norfolk Island wants to challenge this market, not the Australia one.

Separately from Issues relating to threats to race wagering revenues in Australian jurisdictions, the activities of AusTOTE also give rise to serious concerns for the integrity of Australian racing. Without exception, all the wagering products currently offered by established TABs reward the selections of successful outcomes. In stark contrast, AusTOTE promotes a product involving punters betting that a nominated runner in each race will be beaten.

Another matter I wish to raise in a pre-emptive sense is that of betting exchanges. Concerns associated with threats to Australian racing posed by overseas betting exchange operations led to the formation of the Betting Exchange Task Force by the Australasian Race Ministers’ Conference. In its majority report delivered to Racing Ministers in July 2003, the Task Force concluded that betting exchanges on Australian racing would directly give rise to threats to racing’s actual and perceived integrity which the industry was not in a position to satisfactorily address. Subsequently, a majority of Racing Ministers resolved against issuing any betting exchange licence's. The full Task Force report can be accessed at www.dgr.nsw.gov.au.

In summary, cross-border wagering on Australian racing against the wishes of the Australian racing industry is self-defeating in the longer term. By eroding the revenue base of the industry and compromising its actual and perceived integrity unauthorized wagering operators are ironically threatening the viability – and, hence continued existence – of the provider of the racing produce on which they operate. Additionally, the overt targeting of a population by any gambling operator not licensed by the relevant Government is, I would suggest, an affront to well- recognized principles of jurisdictional integrity.

At a minimum, I would ask that you refrain from the issue of any further wagering licence's (including for the conduct of any betting exchange) involving accepting bets from punters in Australian jurisdictions other than your own or betting on Australian racing events without the express permission of the relevant racing industry and State of Territory Government. Further, I would be pleased to discuss with you the issue in terms of racing industry viability and jurisdictional integrity arising from the practice of cross-border betting where the operator involved is acting against the wishes of the affected racing industries and governments.

I have referred a copy of this letter to my fellow Australian and New Zealand Racing Ministers along with Senator Ian Campbell, Minister for Local Government, Territories and Road.

Yours sincerely

Grant McBride
Minister for Gaming and Racing

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