By Alli Peacock and Matt Burgess, Director.
A “monumental” turning point for sports betting as High Court hands down a decision affecting the future viability of sporting organisations as a whole.
Following a lengthy court battle, the High Court agreed with Racing NSW and Harness Racing NSW in their action against Betfair and Sportsbet regarding the fees charged for betting information. On March 30, the High Court held racing organisations (including any other sporting organisations for that matter) have the proprietary right to charge a fee to any betting associations that profit from bets placed on the particular sport. This serves as a momentous change for sporting associations as it has the potential to create an unprecedented revenue stream for any sport bet. In effect, any particular betting operator, by law, must pay a betting fee to the particular sport subject to the gambled amount.
Although it seems this will only apply to betting in sports bodies in NSE, Sporting organisations will be celebrating this decision as it provides a fantastic precedent to generate a significant passive income stream for each sport bet on and aims to protect the investments made by sport’s governing bodies to run events, games or leagues.
We will look at the potential legal issues that arise from this decision and what may be involved in the future should this kind of decision be supported throughout the judiciary and legislature in Australia.
There are a lot of ancillary questions and legal issues that arise from the potential implementation of this decision wider in Australia but for the purpose of the BSE Blog, we will address a couple of major ones.
1. How would such a levy be paid or distributed to the relevant sports?
A levy to be paid to sports by betting agencies could be done in several ways. Simple options could include an enforced commercial arrangement between the relevant sport and the betting agency or by legislature which would probably involve a regulatory/collection authority being set up to monitor, collect and distribute fees. Each will be briefly summed up below.
a) Commercial arrangement between relevant betting agency and sport
Betting operators may be forced to pay the operating fee to the particular sporting organization by commercial arrangement. To confirm the legal binding agreement, those terms will need to fulfill the elements required to create a legally binding contract; offer, acceptance, consideration, intention to create legal relations, capacity and certainty of terms. The main element that may pose some uncertainty would be the ‘certainty of terms’. As each betting avenue and sporting event are subject to different rules and regulations, will the terms binding these contracts differ according to the particular sport?
b) Levy enforced by Legislature
The parliament may adopt legislation that requires betting agencies to pay a certain levy to the relevant sports that are bet on. In a similar model to AMCOS/APRA, who monitor the reproduction and broadcast of music in Australia, an authority regulating the monitoring, collection and distribution of those fees collected from betting agencies.
We believe option (b) would be preferable to avoid inadvertent commercialization of the levy and to ensure there is a checks and balances approach to use of the levy. We predict this kind of regulation would also be demanded by the betting agencies in Australia so the sports cannot use it as leverage in commercial deals.
2. How the decision affects existing sporting/betting contracts.
Prior to this decision, certain sporting organisations (such as Racing Australia and NRL) already had agreements with sports betting agencies. For example, the NRL have an agreement with Centrebet whereby Centrebet pay a certain fee to the NRL for information and NRL intellectual property (logo etc) use and in return, Centrebet provide a commission on profits earned from bets on the sport. There are many different financial models for this kind of deal. However, the High Court decision poses uncertainty regarding the future viability of these contracts, and certainly how they are currently structured.
The fundamental principal here is that rather than all profits generated from the sport (and it is hard to argue that the sports betting profits are not made from that sport existing) going into the pocket of the betting agency alone, some proceeds are being put back into the sport, providing support for the sporting industry as a whole. As you can see, the ruling fundamentally changes gambling in sport, opening the door to divide profits made from those sports in a fair and reasonable manner.
3. Who should the levy go to?
We could enter into a discussion here surrounding “ownership of a spectacle” but those versed in sports law would be sick of hearing the specifics about the “Vic Racing Case” and the result that “no one owns an event” under Australian case law developing copyright and the tort of passing off.
The legislature would likely avoid this issue by relying on the National Sporting Organisations to distribute funds and may provide a specific percentage of the levy to the specific event organizer. A multitude of questions arise: Will the investment by the event stakeholders be an influence? Will the discretion be provided to the governing body to determine such fees? If there is an amateur body involved or a mixed sanction (e.g. ISA/ASP surfing event in China in early 2012), will that fee be split or will one be forced to prioritise? Will the ability to contract that levy be available?
What are your thoughts on the issues that surround this decision?
This blog is for discussion purposes only. This must not be considered legal advice.
For legal advice on this topic and references to any information in this article, please contact
Matt Burgess, Director:
Phone: +61 405 722 739
Connect with Matt on Linked In
Image Credit: digitalart
Powered by Facebook Comments