In my opinion piece the other day What If No One Pays? I suggested a number of reasons why corporate bookmakers would object to paying the proposed 1.5% fee for the use of New South Wales race fields.

At the time of writing I was puzzled about why TabCorp would issue a press release which suggested that the fee should be even higher - 2% was suggested.

This reminded me that the same suggestion was made by Tabcorp Wagering CEO Robert Nason in his conference call with journalists after announcing the launch of TabCorp's aNTi-TAB operation in the Northern Territory.

The reason that TabCorp wants the race fields fee set higher is because it can offset whatever the fee is against its normal operational fee payable to NSW Racing (currently 4.9%).

Obviously its competitors don't have this luxury.

Sunday's piece by Rod Nicholson in the Herald-Sun suggests that Victoria is going to completely revamp its race fields payment system in the face of almost certain defeat in the Federal Court case launched by Matthew Tripp's Sportsbet.

Apart from the validity of Sportsbet's arguments about the legality of the Victorian race fields legislation, another factor instrumental in Racing Victoria's back down is serious concern about what might come out in discovery.

In any court case, the plaintiff puts his case and the defendant has to put in a defence. Then there is a process called "discovery" where both sides have to supply to the other all documents relating to the matter.

In the Sportsbet case, Racing Victoria has not yet supplied a defence and there are good reasons to suggest that it would prefer not to.

This is because it would then have to provide by way of discovery all of the correspondence between Racing Victoria and the state government relating to the original legislative changes. The initiative for these came from Racing Victoria while Nason was CEO.

It would not have escaped the attention of Sportsbet's lawyers that after the law was passed Nason was then privy to the operational details of all wagering firms who applied to Racing Victoria for approval to use race fields.

Upon announcing the new race fields fee arrangements, which exempted interstate TAB's from paying anything to Victoria, Nason promptly left to join TabCorp on a salary considerably higher than he was on at Racing Victoria.

An interesting question for the Court would be "at what point had Nason decided to join TabCorp", because clearly one does not walk into such a senior position overnight. The knowledge that he took with him of TabCorp's competitors would have been invaluable.

It is ironic indeed that just as the New South Wales race fields legislation is about to become law, Racing Victoria is planning to move away from the draconian "pay the fee or go to jail" flavour of the Nason initiated legislation.

It is perhaps no co-incidence that the NSW law has much of the same nature as that about to be abandoned in Victoria. Nason's spirited support of it last week suggests that at the very least he was consulted about its contents, if not actively involved in its drafting.

The announcement of TabCorp's Northern Territory venture just a few weeks ago cannot have been made in ignorance of what was planned for the race fields legislation in terms of the fees set by Racing NSW.

If all went according to plan :-

TabCorp's payments to Racing NSW would remain the same
New South Wales racing would continue to be able to freeload off the Victorian product
Corporate bookmakers and Betfair would have to endure a crippling 1.5% slug on turnover
Trade Practices Act considerations would not apply as government was imposing the fee

However as forecast in What If No One Pays? :-

Victoria will most likely change its race fields payments so that interstate TAB's also have to pay
Bookmakers and Betfair will challenge the constitutional and TPA validity of the NSW law and quite likely not pay anything in the meantime

Sportsbet is already openly flouting the NSW laws preventing out of state wagering providers from advertising. The NSW government has admitted that the High Court case that Betfair won against Western Australia "could" have application in relation to cross border advertising.

It won't stop the government from spending a small fortune on legal opinions suggesting otherwise, but I'll give them some free advice - it bloody well does!

The fact is that the monopoly which TabCorp enjoys for street front agency operation is increasingly unable to sustain the monopoly rent which TabCorp agreed to when it was first privatised.

It is stuck with an uneconomic business model at a time when lower cost competitors are able to attack its client base at will.

TabCorp senior management were alerted to the opportunities and threats of the internet in 1996. Now 12 years later the company struggles to be competitive on that platform as well as phone betting.

The wonder of it is that the NSW government and Racing NSW could devote as much energy as they have to a strategy so bound to fail as this race fields legislation.

For at least 5 years large chunks of the Australian racing industry have spent countless hours and who knows how much money trying to preserve an unsustainable TAB monopoly.

If the same energy had been applied to increasing racing's popularity, the "little people" who are supposedly the beneficiaries of the campaign could rest easy in their beds knowing that the industry they love was going somewhere.

Its going somewhere alright - to oblivion.

There is only one long term solution and that is to adopt a policy which sees all wagering operators contribute to racing, not only in cash terms but also to build the racing fan base.

This cannot be done via legislation but only by sensible commercial agreements. Why is it that football can negotiate multi-million dollar deals to fund itself without a government department in sight while racing runs to government every time?

Its about time Racing Ministers and Departments of Racing were abolished.