Racing NSW defence of Betfair's Federal Court case against it dribbled to an ineffectual end yesterday. Justin Gleeson, counsel for Racing NSW claimed in its defence that Betfair had not shown that its business in New South Wales was hindered by the newly imposed race field levy.

This is despite evidence proffered by Betfair which demonstrated that catastrophic effect that the levy had on its profitability if it was based on turnover.

From all accounts this is exactly what Racing NSW intended when the levy was put in place, with it modeling the impact that a turnover based levy would have on the profits of Betfair and other low margin operators such as the corporate bookmakers.

It is also apparent that Racing NSW never expected TAB Limited to pay an additional levy as well as exempting the majority of NSW bookmakers who turned over less than $5 million a year.

This goes to the heart of Betfair's claim under Section 92 of the Constitution, which mandates free trade among the states.

As an interstate operator, to have Racing NSW impose a fee on it which is not similarly imposed on all New South Wales based wagering organisations, is clearly a breach of Section 92.

It is interesting that the fact of TAB Limited not paying any race field levy at all took several days to become apparent in the court case. Despite the Virtual FormGuide alerting the world to the fact that they were not paying many months ago, Racing NSW only disclosed the information to Betfair a month ago.

For the majority of the past 15 months or so since the race field levy first came into existence, Racing NSW has carried a prominent statement on its web site claiming that TAB Limited was paying 6.2% of turnover as a contribution to racing in NSW.

This is a little more than spin. In fact its a complete fabrication.

Not only has TAB Limited never paid the race field levy of 1.5% of turnover, but it has never paid any amount to Racing NSW based on turnover.

As became apparent during the Federal court case, all payments from TAB Limited to the racing industry are based on gross profit.

This gives the lie also to the repeated claims by Racing NSW that turnover was the only "fair" basis on which a race field levy could be charged.

When the single biggest contributor to the racing industry was not paying the levy at all, whether turnover or revenue based and the majority of other New South Wales operators were also exempt, how Racing NSW could assert that turnover was a fair basis for assessment defies logic.

It is only "fair" if you set out to achieve what Racing NSW did, which is to remove competition to TAB Limited by imposing a turnover based fee which would dramatically increase the costs of its competitors.

The lack of testimony from Racing NSW or TabCorp about its motivations leads inexorably to the conclusion that they did not want them exposed in open court.

Unfortunately, we do not yet know the full background to TabCorp's launch of Luxbet to co-incide with the introduction of the margin destroying race fields levy.

It is hard to escape the conclusion however that Luxbet was intended to impose yet more pressure on the low margin operators by stealing market share from them.

The fact that TabCorp rushed out a media release gushing approval of the race fields regime within minutes of its announcement by Racing NSW suggests that at the very least the wagering giant was well briefed.

While it took the rest of the wagering world several weeks to realise that Racing NSW had effectively torn up the so called gentlemen's agreement, TabCorp was certainly acting as if it knew exactly what was going on.

More on this subject is likely to emerge when Sportsbet takes the stand on Monday in its very similar case against Racing NSW.

With the Betfair case doing an excellent job of informing judge Nye Perram about the background to the issue, Sportsbet promises to take the public knowledge of events surrounding the race field imposition to a new level.

In contrast to the Betfair case, where discovery was resisted on privilege grounds for months, Sportsbet has seen an avalanche of documents in the past week, leading its counsel Tim North to complain that he has not had sufficient time to prepare his case.

However Perram  is obviously in a mood to have the full facts before him in considering both cases and wants the Sportsbet matter to get underway on Monday.

With Sportsbet proposing to subpoena witnesses from Racing NSW, Harness Racing NSW, TabCorp and others, this case promises to be more entertaining.

Given that Racing NSW has done such a pathetic job of defending the Betfair case, it's hard to imagine that it can do much better against Sportsbet.

© Cyberhorse 2010 Bill Saunders Published 28/11/09