HRV wins test case

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Harness Racing Victoria (HRV) defended an action brought against it by Sportsbet Pty Ltd (Sportsbet) in the Federal Court of Australia.  The case ran over two weeks (in March and August 2011).
Sportsbet challenged the Victorian legislation under which HRV charges a race field fee.  Sportsbet also challenged HRV’s ability to charge a fee based on turnover.

HRV charges approved Wagering Service Providers (WSP’s) a race field fee of 1.5% for the use of HRV race fields for wagering purposes.

Sportsbet’s fundamental argument was that the fee is discriminatory, not least because Tabcorp (who pays substantial amounts in excess of the race field fee under contractual arrangements with the Victorian Racing Industry) and on course bookmakers are exempt from the legislation.

Justice Mansfield has now handed down his decision.

In his judgment, Justice Mansfield found that:

1.    The Victorian race fields legislation is valid;

2.    WSP’s, who make a profit from wagering on Victorian harness racing, are obliged to make a payment, providing the fee is valid;

3.    This means that WSP’s such as Sportsbet must pay a fee;

4.    A fee levied on WSP’s based on turnover is valid;

5.    HRV’s entire 1.5% of turnover race field fee imposed on Sportsbet was impermissible due to a 0.5% of turnover subsidy it pays to on course bookmakers for offering a bookmaking service to patrons at Victorian harness racing meetings.

For information, HRV charges on course bookmakers an aggregate 1.5% turnover fee, however the 0.5% turnover subsidy is paid to bookmakers who attend tracks around the State.  For the year 2011/12, the subsidy amounted to $12,600 in total.

Although Justice Mansfield found that on course bookmakers’ attendance at Victorian harness racing meetings provided a benefit to HRV, he found that there was insufficient evidence to justify the amount of that benefit.

As a result, Justice Mansfield found that the practical effect of applying this subsidy meant that Sportsbet had been discriminated against and the 1.5% Turnover Condition was an additional burden on Sportsbet, when compared to on course bookmakers, and concluded that the whole race field fee was invalid.

The HRV Board at its meeting this week will consider the judgment and take advice on appealing the decision.  Until that has been determined, I am unable to quantify the financial impact on HRV.

In the interim, HRV will take on board the findings contained in the judgment and immediately remove the 0.5% subsidy to on course bookmakers, so as to ensure that Sportsbet and all other WSP’s make an equal contribution to HRV.

Courtesy of John Anderson,Chief Executive, HRV.