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Tabcorp, Victoria State Win Appeal to Ban Online Bar Bets

Tabcorp Holdings Ltd., (TAH) Australia’s biggest racecourse betting company, and the state of Victoria won a ban on online wagering kiosks in bars with an appeal court ruling the prohibition is constitutional.

The Australian federal appeal court today overturned an Aug. 22, 2011 decision by Justice Michelle Gordon which said the ban on Sportsbet Pty’s Betbox -- an Internet-connected betting kiosk -- prevented free trade and commerce between the nation’s states and territories in violation of the constitution.

Sportsbet, Australia’s biggest corporate bookmaker, and the Eureka Stockade Hotel sued Victoria in 2010 over the ban on the kiosks, claiming the Darwin-based company’s Betbox is regulated and authorized in the Northern Territory, where the bets are accepted. Gordon’s decision would also have affected prohibition of remote access betting facilities in New South Wales, Australia’s most populous state.

“The impact of betting kiosks on the traditionally exclusive ‘retail’-front presence has the potential to significantly impact the wagering landscape,” Clayton Utz lawyers Tony Rein, Chris McLeod and Kym Fraser wrote in an analysis of Gordon’s ruling on the law firm’s website. “The Internet is undeniably playing its part in challenging existing market structures in the wagering sphere and breaking down traditionally well-defined State and Territory boundaries.”

Sportsbet, with annual revenue of about A$2 billion ($2.1 billion), can still ask the High Court of Australia to overturn today’s ruling.

‘Significant Hit’

Tabcorp, based in Melbourne, paid A$410 million in January for a 12-year license to run race-betting operations in Victoria. The company also was part of a duopoly, with Tatts Group Ltd. (TTS), operating about 27,500 slot machines in the state, in venues other than Melbourne’s Crown casino. It had successfully sought to be added as a defendant in the Sportsbet lawsuit.

Tabcorp and Tatts’s slot-machine operating licenses expired in August and Victoria didn’t renew them, passing the licenses instead to pubs and clubs. Tabcorp and Tatts sued the state, claiming they were owed a total of A$1.2 billion for the loss of the licenses.

“A A$1.2 billion hit on the Victorian budget would be a very significant hit and have a very significant impact,” Premier Ted Baillieu said following the filing of the lawsuits in August, adding the state would defend itself against the claims.

The case is The State of Victoria v. Sportsbet Pty. VID1000/2011. Federal Court of Australia Full Court (Melbourne).

To contact the reporters on this story: Joe Schneider in Sydney at jschneider5@bloomberg.net Ben Sharples in Melbourne at bsharples@bloomberg.net

To contact the editors responsible for this story: Douglas Wong at dwong19@bloomberg.net

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