UK horse racing is in uproar following a nation-wide race fixing raid, as arguments mount as to whether it’s all the fault of
on-line betting exchanges which are meeting fierce opposition to keep
them out of Australia. But below, leading racing consumer advocate,
Peter Mair, provides a very different perspective on this “shrill and
inappropriate overreaction”.

UK racing found itself plunged into its biggest ever betting
scandal when detectives swooped in nation-wide dawn raids to arrest 16
people in connection with race-fixing that included nabbing Britain’s
best known Flat jockey Kieren Fallon.

The shockwaves will
be felt for many months after more than 130 officers specializing in
tracing money deals and fraud networks launched the anti-race fixing
operation, with more arrests expected, including possibly jockeys now
racing overseas.

Mike Bowron, Assistant commissioner at the
City of London police overseeing the investigation, said of the scandal
with possibly even some understatement: “This case is of great national
significance, not just to the racing community, but to the wider public
throughout the UK.”

But this race-fixing scandal isn’t
just of paramount importance to the UK, because at the heart of the
problem lies a looming global betting crunch, that makes it not just a
PR disaster for UK racing, but is precisely the sort of scenario our
own racing industry has been very vocally warning against for months
now.

Australian racing is implacably opposed to the
spread of on-line betting exchanges, either as locally licensed or
allowed to operate offshore. Given that Australia racing boasts
billions in betting turnover and its racing product makes it our
biggest dollar sport, any scandal that feeds into the global racing
scene, represents a clear and immediate danger to the integrity of our
own.

British Horseracing Board chairman Peter Savill
agrees that globally racing faces a mounting crisis with the spread of
on-line exchanges.

“Betting exchanges have suddenly
enfranchised 30 million plus people in Britain to make money out of
horses losing a race. When you add to that figure every other person in
the world with the desire to make money out of horses in Britain losing
races – including, possibly, illegal Far East bookmakers and even
organised crime – you have to wonder whether the decision [to allow
franchises] was reached after appropriate research.”

Ever
since the Federal Government left legislation alone not to ban betting
exchanges from being licensed in Australia recently, which had the
immediate affect of putting the Packers PBL wagering empire in bed with
UK betting exchange market leader Betfair; virtually the entire
Australian racing industry has been on red alert with the Australian
Racing Board (ARB) leading from the front.

ARB chairman
Andrew Ramsden, believes exchanges that permit clients to bet or lay
odds on any race or sporting contest anywhere in the world by acting as
their own on-line bookmaker or punter, represents the greatest threat
to the well-being of his industry in its 170-year history.

“Betting
exchanges have no place in Australian racing and threaten the very
existence of the sport and it long-term sustainability,” he says.
“Anyone who thinks that good can come from turning millions of
Australians into unlicensed bookmakers and encouraging punters to make
money from horses losing, rather than winning, is grossly naive.”

Following
an industry conference on August 17, the ARB attacked betting exchanges
and launched a concerted strategy to try and stop them in their tracks
from being able to operate either in Australia, or to bet on the local
product. This included launching legal action along with other leading
racing jurisdictions internationally, intense political lobbying, and
even a form of technology blocking of the net through intervention with
ISP’s (Internet Service Provider). Perhaps if they cut off all
Melbourne Cup Carnival freebies for politicians this year, that might
concentrate their attention more effectively than warnings of industry
decimation from any major leakage of TAB patronage to foreign on-line
exchanges.

Following his own visit to the UK in July to
clock the problems posed by betting exchanges, Ramsden said of the
local industry’s vow to have them prohibited in Australia:

“For
me, the most telling impression of my time in the UK was the appalling
cloud that betting exchanges have now cast over the integrity of
British racing.”

British Horseracing Board chief
executive Greg Nichols himself Australian, also recently warned the
local industry that such betting exchanges if allowed to operate,
essentially threaten core funding from existing regulated betting that
helps our racing to survive.
So with the UK now smack in the
middle of this still developing scandal that has the potential to
inflict enormous damage on racing’s betting integrity, the local
industry wake up call for protective legislation is hardly alarmist.

Betfair wants a major slice of Aussie betting pie

The
Packer aligned Betfair, is said to control 90% cent of the world
betting exchange market which sounds rather optimistic to me. It claims
to currently turn over an estimated $200 million in betting on
Australian sport, while paying no commission or fees to our racing or
other sports because it has no license. But for the very reason that
our racing is so well controlled and regulated, Betfair is desperate to
offer the product officially to its global bettors. As an inducement it
has offered to pay racing five cents in the dollar on wining bets to
gain official approval or licensed access to Australia’s market. But
what Betfair offers as a carrot must surely pale by comparison with
what the likes of Tabcorp already remits back to the industry as a
percentage of all bets. Also our major “gallops” look to be heading
towards greater prosperity with the pending development of a new elite
Sydney-Melbourne racing channel.

Consider Tabcorp’s results
for year ended on June 30, which sees the Victorian racing industry
receiving a total of $261.4 million from the last financial year from
the betting giant. Why would the local industry even begin to consider
the slops to be thrown its way by any potential Betfair or exchange
commission? It’s entirely reasonable for the industry to argue that as
it puts on the show that provides the betting product, while punters
like everywhere else around the globe are unhappy with a Government and
industry tax take out, it’s why they have such a world class product to
start with.

One that is the envy of markets like the UK
that has now through the Blair Government sanction of betting
exchanges, effectively sown the seeds of the current disaster
culminating in yesterday’s raids. Is it any wonder then that the local
industry now wants to try and put the cork back in the bottle with what
is happening in the UK, with regard to the integrity of its own
licensed people being banned from exchange betting?

Age
racing writer Tony Bourke has reported that Racing Victoria Limited
(RVL) and Racing NSW were preparing to challenge Betfair to produce the
names of Australian racing licensed people (jockeys, trainers, stable
hands, owners and bookmakers) who maintain Betfair betting accounts.
But even then that’s hardly definitive if seriously bent racing people
seek to operate through others on their behalf?

Bourke
further wrote that with RVL chief executive, Robert Nason claiming that
under existing racing rules in Victoria and NSW which prohibit licensed
people using Betfair, and the ARB since ratifying a national rule to
back this up, Betfair would be put to the test to provide racing with
names.

“They (Betfair) have said they are willing to
co-operate with the Australian racing authorities to provide such
information, so we’ll see how genuine they are,” Nason said in the
Bourke article.

However, what is inescapable that the
Australian industry will seize on; is that the arrival of betting
exchanges even allowing for their claim that they can follow the money
if not a computer click, to assist any race fixing investigations that
might involve their clientele.
But that doesn’t alter the fact that
Betfair’s arrival coincides with an unprecedented surge in race fixing
that is now undermining the betting integrity of UK racing. What’s the
point of a gatekeeper if he keeps letting the riff raff in?

So
with this huge police bust under way, Andrew Ramsden and other exchange
doomsayers will be feeling totally vindicated in their plea to
Government’s here and abroad to outlaw the likes of Betfair, or face
what is now happening in the UK. But in fairness to one UK journalist
in commenting on these arrests, he makes this point in defence of
Betfair and how it actually improves racing integrity.

Betfair,
which dominates the betting exchange market, is an obvious scapegoat
for what may turn out to be the most significant betting scandal in
living memory.

The pivotal question, however, is whether
Betfair increases the amount of corruption in racing, or simply shines
an unforgiving light on what was already there, often thanks only to
the deliberate connivance of the same “traditional” bookmakers who are
now so resentful as the exchanges move on to their territory.

My
personal opinion tends far more towards the latter position. If you
want to crunch cockroaches in a dark kitchen, it is always helpful to
have a torch, and that is what Betfair’s detailed betting records have
started to provide.

Greg Wood (The Guardian – September 2)

But
I find it difficult to believe that in the current mix we have in
Australia of tote betting and bookies, you have a huge hidden level of
abuse that is managing to escape our racing authorities, that is of a
scale remotely like what The Independent newspaper figures is the
current scale of investigation with more to come in the UK.

“The
magnitude of the dawn swoops reflects the seriousness of the
investigation into 80 suspicious races, with 130 officers from four
police forces headed by the City of London Police, raiding 19 addresses
across three counties.” Hardly a few isolated abuses?

Naturally
the ubiquitous Betfair was anxious to claim credit for helping the
police in their investigations, while the irony appears lost on them
that the exchange mode of operation appears largely responsible for so
much race fixing!

“Betfair has played a key role in
helping the police with their investigations into corruption in
horse-racing,” a statement said. “Sophisticated technology now
available enables all bets to be tracked, and all transactions linked
to an end customer. Betfair has long maintained that the transparency
of its exchange model, with the audit trail it provides, is a
tremendously powerful weapon in keeping sport clean. The capability of
tracking every mouse click is an important asset for investigations of
this nature.”

It sure sounds impressive but there are still
many ways to skin your victims that can circumvent such techno babble,
as the Association of British Bookmakers themselves told The Independent:

“The
ability of betting exchange customers to act as unlicensed bookmakers
without revealing their identities to punters is the equivalent of the
sport sitting on a smouldering powder keg. For the betting exchanges to
say that cases of alleged corruption would not be identified but for
the excellence of their audit trails, is akin to a householder leaving
his doors and windows wide open and then claiming credit for reporting
a burglary.

“The ability of individuals who may be in a
position to influence the performance of a particular horse to then
take bets on that horse – known as laying to lose – is a particularly
invidious by-product of the betting-exchange situation. The reality is
that the ability to lay horses to lose offers a far easier opportunity
to the criminal than attempting to arrange for a certain horse to win.”

Which
is where our own racing industry agrees 100% but has yet to convince
Canberra it’s about time it got a grip on the issues now tearing racing
apart in the UK. But what’s the betting they have more pressing matters
to deal with?

===========================

BETFAIR AND SPEAK TRULY

3 September 2004

by
Peter Mair
Leading racing consumer advocate

The always inevitable emergence of a scandal in British racing
associated with Betfair transactions, has fueled a shrill and
inappropriate overreaction in Australia to the prospect of betting
exchanges.
At times like this, the absence of a truly free press covering the
Australian racing industry is a major shortcoming.

The scandal now engulfing British racing may neither have happened or
been revealed without Betfair. It is, however, unreasonable to then say
that Betfair should be outlawed.

It would be unthinkable to deny investors the freedom to buy and sell
shares over the internet: it is similarly unthinkable that a most
significant development in the technology of race betting operations can
be proscribed.

In both cases, while there are risks that insiders (and others) may
unfairly manipulate the market, the solution is regulation ensuring bets
and trades of any substance are ‘on account’ for which the ownership is
subject to ‘100 points’ identity checks and activity on accounts subject
to audit by regulators.

Insiders trading unfairly on the stock exchange eventually find
themselves dealing first with another kind of ‘inside’ and then excluded
because their trading licence is cancelled. Racing should be no different.

As I have said before, the business of betting exchanges has ‘coming
ready or not’ written all over it – and it is best to get ready.

Errant nonsense

It will not help to reproduce anti-exchange remarks of industry leaders
reported in the Australian media in the wake of the British racing
scandal. Quoted sources are allowed the liberty of making unfortunate
remarks in the heat of the moment. In due course those now making
outlandish remarks will be shamed when reminded of them.

The British scandal will build both the resolve and the acceptability of
an appropriate regulatory framework for betting exchange operations. The
scandal is, of course, ‘bad’ but it will be worse if the response is
ineffective.

Outlawing exchanges would be an ineffective response to the proper
regulation of an industry prone to corruption – an industry where
traditional betting technologies (with attendant anonymity) have been
and remain ineffective in revealing all but the most blatant market fixing.

Put more sharply: there is no reason to expect that ‘traditional
technology’ would have revealed the scandal – but there is no reason to
believe that comparable misbehavior would not have occurred in the
absence of Betfair. [Usually it seems the revelation of systemic
misbehavior in racing flows from ‘phone tap’ surveillance of other
criminal activity.]

The real issue

The real issue here is about money – about less money for racing.

The prospect of ‘less money’ has little to do with betting exchanges
directly – the evidence so far is to the contrary.

The real issue is about the way emerging broadcast technology will
revolutionise the business of racing (and race betting) globally. It is
the same reason why Australia no longer has local ‘speedways’ or local
road car races of any significance – the grand prix circuit is an
international business. It is the same reason why Australia no longer
has local producers of many internationally traded goods – other
countries do some things better.

The lamentable reality is that, while Australia could once surely have
been a net exporter of racing entertainment, Australia will soon be a
net importer of racing entertainment.

The Australian racing industry is becoming an irrelevance — Australian
racing is on the wrong track.

Betfair, simply something that is happening at the same time, is not the
problem.