Australian High Court Showdown Online Gambling Appeal

Published Wednesday, February 02, 2011 -

The big legal battle that is brewing in Australia over whether the Northern Territory's licensed online bookmakers and Betfair must pay a product fee based on turnover, rather than revenue is being watched closely by media and consumers alike.
The big argument stems from unfair taxation situations in Australia. The Federal Court back in November 2010 ruled to allow Racing NSW to impose a 1.5 per cent tax on turnover from wagering on its racetracks. This led to speculation that other sports will be allowed to charge a tax on gambling on their particular events.
The horse racing industry in Australia has seen a serious decline in their revenues which the industry blames on overseas wagering and better deals from those operators in New South Wales who do not pay the same taxes.
Gerry Harvey, the sole owner of the Magic Millions thoroughbred sales and auctions, and one of the biggest investors in the Australia racing industry, says, ''If the High Court rules the other way, it will be catastrophic for the racing industry. If prize money is halved it would weigh heavily on the minds of the major players whether to stay in the industry. Prize money must increase five times for us to stay in.''
Peter V'landys, chief executive officer of Racing NSW, says he does not accept the argument the corporate bookmakers cannot afford to pay more, ''The claim that a turnover-based fee would increase the costs to the punters is not necessarily correct. Corporate bookmakers are already generating significant profits which are increasing yearly.''
To clarify his point V'landys used the example of Sportsbet, based in the Northern Territory, which was acquired in 2005 for $250,000 and is now valued at $338 million. The company's profit last year was $20.3 million, a figure expected to grow significantly over the next two years.
Sportsbet has applied for an appeal of the Federal Court ruling. Both sides are confident their side will win.




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