Despite dire warnings, Australia opens door to Betfair

Jul 18, 2006 4:48 AM

Repulsed — and repulsive — in America, the English betting exchange Betfair has been knocking on doors elsewhere, and in some cases knocking them down

Aided by influential and financially powerful allies, Betfair has chosen its targets carefully.

Founded in Great Britain in June of 2000, it quickly became the largest online betting company in the United Kingdom. Its turnover now is approaching $100 million a week, with 100,000 betting customers. As a betting exchange, Betfair permits people to bet on horses to lose, rather than win.

Its first expansion move was to the island of Malta, in the Mediterranean south of Spain.

Last November the target was Tasmania, the Australian island state 125 miles or so south of Melbourne across the Bass Strait. That remote state, with less than half a million population, was offered much needed help with its racing finances by Betfair and its partner, Kerry Packer’s Publishing & Broadcasting Ltd. Tasmania’s premier, Paul Lennon, a friend of Packer, embraced the idea, espoused it to his parliament, and gave Betfair the foothold it was seeking.

It didn’t take long for Betfair to seek bigger game, on the Australian mainland itself, in one of its biggest racing jurisdictions, Victoria, with its major city, Melbourne.

The success there caught the rest of Australia by surprise. The other five states besides Tasmania had strongly opposed the admission of Betfair. Western Australia went as far as introducing legislation specifically banning it, with penalties of $10,000 or 24 months imprisonment, or both, for establishing a betting exchange, and making it a criminal offense for a person to bet using one.

Betting on a horse to lose is part and parcel of the exchange system, and a threat to the integrity of racing.

That danger was outlined forcibly by the chairman of the Australian Racing Board, Andrew Ramsden, the day after Victoria’s announcement on accepting Betfair was made.

"The integrity issue that is at stake here is clear," said Ramsden. "Allowing unlicensed persons to lay horses (to lose) is a guaranteed recipe for undermining public confidence in racing”¦The basic problem remains that betting exchanges encourage people to make money out of horses losing races, and that, of itself, is fundamentally incompatible with racing’s integrity."

A day later, however, apparently after Ramsden discovered that Victoria had talked Betfair into paying its way into the game, the integrity issue dissolved into thin air. In a remarkable turnaround, he abandoned his previous statement that Betfair’s welcome "was an immensely disappointing outcome for racing," and was calling the Victorian development "a truly watershed development. The government and Racing Victoria Ltd. (the controlling authority in that state) confronted the problem head-on to show that there is a workable solution”¦Accordingly, July 2006 marks an enormously important turning point”¦RVL has been able to say to corporate bookmakers that if they use racing’s intellectual property then the industry must be properly compensated."

No question about that. But a serious question as to what happened to Ramsden’s integrity argument in a 24-hour span.

We think we prefer the view of others, including the plainspeaking newspaper The Guardian in England. It said editorially, "Meanwhile, it was mostly pat-on-the-back time for the betting exchanges and their ”˜audit trail’ which has apparently informed the City of London police investigations that led to charges of conspiracy to defraud punters being leveled at Kieren Fallon (the UK’s leading jockey) and 10 others”¦Without wishing to comment on any individual case, will racing’s situation improve while the ability to profit from horses losing is clearly at the heart of the problem?"

And on the other side of the world, this from Larry Wong, the CEO of the Hong Kong Jockey Club: "Betting exchanges will destroy racing if we allow them to enter our midst." The head of the Japan Racing Association, Masayuki Takahashi, also weighed in, saying Japanese racing never will allow that form of wagering.

You can’t put it much clearer than that. Being paid for the entry of the exchanges does not eliminate or lessen the threat to racing integrity. It is, as Wong called it, a Trojan horse for racing.

An English trainer, quoted by The Guardian, put it even more succinctly. "The Jockey Club," he said, "should never have sanctioned Betfair in the first place. They shot themselves in the foot by doing so."