Recent changes in the ranks of Australia's racing industry decision makers could be leading to a thaw in the frosty relationship between Australia's corporate bookmakers and top racing administrators.

Threats of litigation to enforce payment of such a fee have been made frequently during the past 2 years by a number of senior racing administrators, with NSW and Victoria being the most vocal, labelling the corporates as "parasites" and "pirates" among other epithets.

"I think the industry is beginning to realise that the lawyers will be the only winners from litigation", said Michael Sullivan, CEO of one of Australia's largest bookmaking corporates, Sportingbet. "In racing terms, they will win by a huge margin and the industry and ourselves will be fighting for second and third place."

Sullivan attributes some of the industry's softening stance to recent changes in NSW racing, particularly the takeover of TAB Limited by TABCorp.

"In New South Wales they've marched to the tune of the TAB for years. The TAB was supposed to be the servant of the NSW industry, but its become the master."

He sees the recent departure of TAB Limited CEO Warren Wilson as being beneficial.

"Warren Wilson was the most destructive person I've seen in racing for the past 30 years", said Sullivan. "I didn't say it, but I applaud the person who made the observation that the one good thing Wilson did was to unite Sydney and Melbourne racing."

Sullivan is obviously pleased that the agenda of the powerful Victorian and NSW racing axis is moving towards negotiation rather than fighting. It appears that the sometimes fragmented and disorganised corporate bookmakers are also getting their ducks in a row.

"We've set up a task force to negotiate with the industry", said Sullivan who confirmed reports that a corporate bookmakers trade association was in the process of creation. The corporate bookmakers, which include Sportingbet, International All Sports, SportOdds/Centrebet, Sports Acumen, Centre Racing and Sportsbet, are united on a number of issues related to payment of a product fee and what they expect in return.

"We've always made it clear that we are prepared to pay a reasonable fee", he said.

"However, we can afford nothing like the 1.5% of turnover which the industry was demanding."

"That would represent 37% of my gross profits. Even the TAB's pay only 25% of their gross profits. There is a point in law which says when you are demanding a payment, the ability to pay has to be taken into account."

He continued, saying "if you look at the history of turnover tax, it was introduced 50 years ago. Its a draconian tax which has no place in the modern world."

Sullivan is referring to the turnover tax imposed on bookmakers 50 years ago by state governments. In more recent times, the "tax" has been paid directly to the race clubs running the meeting the bookmakers have fielded at. However it is not levied at a constant percentage to all bookmakers across the country and still today is not styled as a "product fee", thus leaving the issue of what the racing product is worth hanging in the air.

Sullivan made the point that TAB's, who are increasingly offering fixed odds markets in competition with bookmakers, pay the racing industry a percentage of gross profits on that form of betting, thus setting a precedent for all bookmakers to pay according to their profitability.

"It would be full of unfairness to allow them to continue doing that and expect us to pay a product fee based on turnover", he said.

On the level of product fee the corporates are prepared to pay as a percentage of their gross profit, Sullivan would clearly like it to be much less than the 25% paid by TAB's.

"We believe that 10-12% would be reasonable", he said. "The TAB's get enormous advantages for the amount they pay. They have a monopoly on off course retail outlets in all states and they have a monopoly on pari-mutuel betting which means they can't lose."

"Its not as if we want to set up 25 shops on Parramatta Road", he went on.

Sullivan would however, like to see the rigid restrictions on advertising relaxed, which see companies like his unable to advertise in the mainstream media in most states.

"The current laws are a mess anyway", he said. "You can pick up a Melbourne paper in Sydney and see all kinds of advertising for Victorian wagering operators which is supposedly banned in New South Wales."

Of course, businesses like Sullivan's Sportingbet are increasingly operating through the internet, where the location of the site owner is irrelevant in terms of where advertising can be seen online.

The issues being confronted by the new corporate bookmakers association are a mirror image of those affecting the racing industry. Regulations and payment arrangements based on individual state based legislation are increasingly being viewed in a national and even international context. Single state TAB's have merged to create multi-state operations, while technology has created a generation of punters who can bet anywhere in Australia, in fact the whole world, from the comfort of their own home.

Sullivan is hopeful that the people changes at senior levels of the racing industry will lead to constructive solutions to the long running dispute over payment of a product fee by the corporates.

"The recent appointment of Andrew Ramsden as Chairman of the Australian Racing Board has been a breath of fresh air", he said.

"He has signalled to us a preference to negotiate a product fee payment arrangement, rather than fighting it through the courts".