Racing New South Wales regulator may no longer impose fees on interstate gambling providers in order to protect TabCorp Holdings’ Tab Limited.
Tuesday 29th June 2010
In Australia, a Federal Court has ruled in favour of corporate bookmaker SportsBet Party Limited by finding that the state of New South Wales may no longer impose fees on interstate gambling providers in order to protect its main wagering taxpayer, TabCorp Holdings Limited.
Darwin-based SportsBet is majority-owned by giant online and land-based bookmaker Paddy Power with regulator Racing New South Wales now required to give back approximately two million Australian dollars although it is unclear whether other fees may also need to be refunded.
TabCorp's Tab Limited has an exclusive retail licence to provide wagering throughout New South Wales until 2013 and has a 95 percent market share. It pays various fees as part of this licence, which amounted to $221 million for the 2006 to 2007 financial year while its turnover was $3.3 billion last year.
Racing New South Wales began charging all bookmakers a 1.5 percent fee on turnover over five million dollars in 2008 for the right to use race field information. The state government promised that this would stop ‘free riding’ by online and telephone bookmakers registered in other states that it said were likely to take $150 million from Tab Limited over the next decade and $719 million by 2028.
However, SportsBet disagreed and took the matter to court. Justice Nye Perram stated that there had been ‘no doubt’ that low-margin interstate corporate bookmakers were a threat to TabCorp but that Racing New South Wales could not portray itself as an independent regulator as it had a commercial gain in Tab Limited’s success and a conflict of interest in imposing fees.
“There can be little confidence in the instrumental capabilities of a system that puts a power of taxation in the hands of entities dependent substantially for their funding on the commercial fortunes of one of the taxpayers,” said Justice Perram.
SportsBet had paid its fee under protest, approximately $229,000 a month, while the Federal Court found that the bookmaker had been discriminated against because the charge collected from Tab Limited and on-course New South Wales bookmakers had been returned through rebates ensuring that they were not out of pocket.
“Each of the state of New South Wales, Racing New South Wales and Harness Racing New South Wales intended to engage in discriminatory protectionism.” said Justice Perram.
