Freehills -

Mr Richard Chadwick General Manager, Adjudication Branch Australian Competition & Consumer Commission richard.chadwick@accc.gov.au

FILE No:

DOC:

MARSIPRISM: i 25 June 2009

Matter 81 283638 By email and post

Dear Mr Chadwick

Applications for authorisation by TOTE Tasmania, RWWA and ACTTAB - A91 123 and A91 124

We act for Tabcorp Holdings Limited (Tabcorp).

We refer to the applications for authorisation (Applications) by TOTE Tasmania Pty Ltd (TOTE Tasmania), Racing and Wagering Western Australia (RWWA) and ACTTAB Limited (ACTTAB) (the Applicants). The Applications relate to the establishment of a fixed odds wagering joint venture between the Applicants (JV) and a Management Services Agreement between the JV and Centrebet (Management Services Agreement).

The Commission granted interim authorisation of the proposed arrangements on 29 April 2009. Subsequently:

RWWA launched its sports betting brand, Player, on 27 May 2009;

TOTE Tasmania launched its sports betting brand, BETASPORT, on 30 May 2009; and

ACTTAB launched independent sports betting operations.

The Applicants' submissions in support of the Applications asserted that, under the proposed arrangements:

the Applicants would act as a competitive constraint on other suppliers of fixed odds wagering services; and

more attractive odds would be available to punters as compared to the counterfactual.

However, the Applicants' assertions in this regard are negated by their fixed odds pricing (and that of Centrebet) since the implementation of the arrangements. Further, the evidence supports submissions made by Tabcorp (which were specifically rejected by the Applicants) that the implementation of the Management Services Agreement would result in price fixing between the JV and Centrebet.

1 Competitive constraint on existing suppliers and more attractive odds

The Applicants' submission in support of the Applications states:

Doc 80031 4699.7

MLC Centre Marlin Place Sydney NSW 2000 Australia Telephonet61292255000 Facsimile+61 293224000 GPO Box 4227 Sydney NSW 2001 Australia www.freehills.com DX 361 Sydney

Sydney Melbourne Perlh Brisbane Singapore Correspondent ofices in Hanoi Ho Chi Minh City Jakarta

Freehills

"the Agreements will ensure that the Applicants can continue to offer fixed odds wagering products.. . and more attractive odds, thereby providing punters with greater choice and more competitively priced products".'

"These benefits [to the wagering industry] include:

the establishment (effectively) of a new fixed odds wagering 'competitor' able to compete with Tabcorp, UNiTAB and corporate bookmakers;

... additional suppliers in the industry from whom such products can be sourced and who will provide a competitive constraint to existing suppliers. . . ...g reater competition in relation to wagering".2

The Applicants' further submission, dated 29 April 2009, states:

"The arrangements ensure that the Applicants can continue to supply fixed odds wagering products [REDACTED], thereby ensuring three additional suppliers remain in the fixed odds wagering industry to compete against Tabcorp and other operators (includino centrebet) y 3 (emphasis added)

"the arrangements do not restrict any aspect of competition between the Applicants and Centrebet, whether in relation to price or non price factors.. . "

Similar statements also appear in the Applicants' request for interim authorisation dated 9 April 2009.

However, the evidence suggests that the Applicants have failed to place any competitive pressure on Centrebet, or any other corporate bookmaker, since implementing the arrangements. Tabcorp has re ularly reviewed the pricing offered by the Applicants and B Centrebet since 30 May 2009. On all books except one monitored by Tabcorp, Centrebet offered a more competitive price than the Applicants. Tabcorp observed only one market in which the Applicants matched the Centrebet price and none in which the Applicants undercut Centrebet.

Tabcorp's observations in this regard are supported by a number of media reports. In Trackdata Racing News, after analysing numerous books and concluding that "the odds for PLAYER are almost always significantly SHORTER than those for CENTREBET", Kevin Skene states:

' I . . . in the current situation, even uneducated punters are almost being taught to stop betting with their TABS in WA, Tasmania and the ACT, as this atrocious situation of unders becomes even more publicised in the mainstream media.

At the end of the agreement, surely Centrebet would not only have been paid a commission to run the operation, but will probably have increased their customer base to the TAB'S detriment. ''

On 14 June 2009, the Sunday Times in Perth quoted opposition racing and gaming spokesman Mick Murray as saying that Western Australian punters were being "ripped off' because Centrebet is offering better odds than player.'

' Applicants' submission in support of the Applications, at pages 4 and 5.

* /bid at pages 29 and 30.

Applicants' further submission. 29 April 2009. at pages 4 and 5.

/bid at page 25.

This is in accordance with Tabcorp's normal practice of monitoring pricing in the market.

'The article is attached as Annexure B.

The article is attached as Annexure A.

Applications for authorisation by TOTE Tasmania, RWWA and AClTAB A91 13 and A91124 - supplementary further submission page 2

Freehills

The absence of price competition between the Applicants and Centrebet has also been recognised by punters.'

2 Price fixing between the Applicants and Centrebet

In its submission dated 1 June 2009, Tabcorp submitted that:

"It is highly unlikely that Centrebet would provide, to a direct competitor, a better price than that which it offers to its own cu~tomers".~

The Applicants' specifically rejected this submission in their further submission dated 29 April 2009.'~

Tabcorp has not been able to review the Management Services Agreement, which has not been placed on the public register in full, and is therefore unable to confirm whether or not the Applicants are contractually restrained from offering better odds than Centrebet. However, given Centrebet's persistent undercutting of the Applicants' odds since the implementation of the arrangements, the Commission should query:

whether the Applicants are contractually restrained, either directly or indirectly, from offering better odds than Centrebet; and

whether there is a structural relationship between the odds offered by Centrebet and those of the Applicants.

If the Applicants are prevented from offering better odds than Centrebet, or if there is a structural relationship between the odds offered by the JV and those offered by Centrebet, this should guide the Commission in its consideration of the existence and extent of price fixing between the Applicants and Centrebet as a result of the arrangements.

Tabcorp encourages the Commission to undertake its own observations of the Applicants' and Centrebet's pricing and other behaviour since the implementation of the arrangements, and to satisfy itself that it provides evidence of the public benefits claimed by the Applicants.

Yours sincerely

Michael Gray Partner Freehills

+61 292255286 +61 414 642 068 michael.gray@freehilIs.com

Senior Associate Freehills

+61 2 9225 5415 +61 403 857 528. lisa.emanuel@freehiIls.com

See Annexure C.

Tabcorp Submission, 1 June 2009, at 5.3. 10 Applicants' submission. 29 April 2009. page 4.

Applications for authorisation by TOTE Tasmania, RWWA and AClTAB A91 13 and A91 124 - supplementary further submission Page 3

Freehills

Annexure A

Sunday Times (Perth), 14 June 2009

Betting agency at odds with punters

6y MlCHAn WASHBOURW E

WA rn~nt,ers am b d n ~ shnrl- f i2 CERTREBET'

changed by tlre state's leading betting agcnq, claim 111e Uppa- $1 .%I m@kJIMJ (FktmIbmW) $1.95 rritSnrl.

mcmg and W ~ d g WA mxnkb strirek n rteaL wlUh Calmbet Ihr Lk@

$6.!50 Hawthm jPteznlership) ~~ Sydncy--d online q c n q tct yro- vide PU, !iw& 0dc5~ spurt% Brttilq at $2B .6ary - r n ~ ~ ~ ) *so mcm t.h4m3nQ TARul?tkts iim the st at,?. 1111rirr I UYV I W S J I ~ -May- $3.40 Se~m Williams Cmnmbbdan) $3.50 bcrkcr odds thnr1 Pbgcr, wh.k11 L& OpprgradRrrn ma makes Eame bta n TiEa ~ L T I ~ pslr~tlcm whln pr~ater wtums c m be wau~ei md~nr.

AFL ~ I X I wtm be: at TAB outlets sre among tnose who appear to be loslng mi? under t k uew arrmge- meut, w ~ i h Flay* o&i*i~?~ O.25 l u ~ Gwkna: suprnf~~ Gfzp Ablett $0 win tljc & - ~ I I ~ U W 3lrdal, u~hila Cr:lttr hr t off*?% $Z.F-k

~ ' ~ W E S h priced ld gsar's prermmrs H s tho rn an the thsrd line car tr,.ttir@ 01 S0.50 to Stbtk tl&% ye;u's bla, b11t gl; lntc~ u~bll fit14 ~t rllnrp brrrelrcwl to gu with Cratrrbet. at

1Q,73 zrfparkld tht Hawk% s ~ ~ ~ r r r d W i n Sepkmber,

B]aycrwi\sfnune,heridl l~~'I an6 ~ ~ h p e s 'TAB Sportabet

Vppm:%~cn n c u a and @mhg spokesnmn Wick Munay aard WA grunt&= weer: being Wpped cdr'.

"1 mn't um~ldemtand why wyom mtkf SI~~~QGIQII he sa!! mrI&p m s p:~t tn EO a1. I>rtt wc11:z.l br cqllal m d wauld stop t.hc 1e;lka~r of imlinc b~tting g n i n ~ nvP=rxz nr ~nt~rs?~:~,''

V J ~ All~m!L?t~ Crleke: tesm ~s $1.68 Centwhet ravourrte to retain stu Ashes. Player hi ufferirq: 51.85.

Trlbrla 8lW Samm&h Stcly~r k a k ~ l t h y $25) chssrarr wiih Plnyet La wfn Wnzzblrrlau, hut is ail wcna hcalLiria 8?I. with Crntrrhrt.

"It dlrsltid he s h i e f f Rtllnl IW the WA pulttcr, hnt nnw vttr Rnd aut that it% nut," *m -Murray said. "Th~rels &ill qt1tt-e a nstrbst,m€i?l d~Vcrenw hi retuals. eafetl if the dlIIesewre I-4zot-n ndRs hx ma l l .

-'UrkX&lU'~ lh! p0lfIt hl t h e Laa'Priazg Iolvr' the B&-t aMswk!n ywk% mot p l r r K t o pi them when they &cr.tld be4 This h sarnethmar the unt1ig-e mu& Jurrqp on sk33gll9 ilurny."

R w b g iild CRmWg WIWlel" Terry W3Mt-m dcellinrd to cotnlrrcEt soap the LB,F~~P 13~mi~se HtSUfA u9as ~r~rirywn- dcr-t of tkr C DTLV-mnt .

HtVtCA chef exmtme R i c W Durt dcfcndndsd C l x dcu; swhg W x dtK*rrnrr in nrl& wn- brcsrzcse cef overhead c&

Ec w M RUWA w 3 ~ i mqlxired to put R n ~ l l vsrc~nt;llh of its pmfttx Into L h Dcpsrh:~eut of $part and Rccrr;rtibtk A"l11'& C%D~tl%hCtt dtd PIC& hnve t o P- mvcnmtl~l tnx C V K ~ I I L V ttarlf irr tllr Nartliem Tenltory, usthere 15hy &so exid w Ilcej~cr.

''Stprc!? we IouMned, Player h w had 30 per c e n t mwth, an I'd aRy the cuetomes arc acmaablg happy." he mid.

'~Whak we use Centmbet for is a back-end, Rxcd.~dd~ hrttittg ptm- vlder sndnrelevera~~~th~irbnckn~k- ing w~rrhi:itkrct and px! cjn the % i % ~ j f p t0 QUC r ? G m L l m .

W L ~ I E ml go LI~M 3. ma p k ~ ? a bet m d sncinlist witlt t k i r nzatea. You cm't d3 WLI~ w11!1 Ccl~t.re?Jd.''

Applications for authorisation by TOTE Tasmania, RWWA and AClTAB A91 13 and A91 124 - supplementary further submission Page 4

Freehills

Annexure B

TrackData, Kevin Skene, 9 June 2009 'TABS rip punters off - the weekend review'

http://www.trackdata.com .au/Story.asp?ld=l027

W l t h ~ b & n c m r r r p f a d n g T ~ a s B s M a n s g s r d t h 6 F d a b d ~ a wnke for the West Austra)& Tamantan ard tht hstrdien ChpLl TbnOCory fataitsator mrnpwws, Tabcap are wasting m tlmt In attempting to po* bedr their pwious " a r s m d , by offering ttcs m f h t s of thoso rsspsctire states a $50 Free Bet fw opening up an online account vrtth T-p.

And who b W them?

~ , m ~ y ~ ~ U g g ~ h ~ ~ z d ~ @ ~ 8 1 6 ~ ~ , guredy Takmp mruld do Wer bo pdnt wl that much mom 7fie mnay" k adable Bo poWal cusbnets by showing a p r b campsrison bsMwan the two stales insksd?

Tabcap pm- ere dg'lHlcently ehsed af 'PlW (WA). TwswW ( 7 6 1 , end SpmIsbel (ACT), In regads to the odds thet theyreceive. .

When Ptoyar' WAh VASX and Sportsbet (0 h t mmeslced w e r a t l o n o a ~ m k ~ g ~ p u r r t e r s m ~ b e d a l a c g a r r e n g e a f o p t i o n s to bet on, and a competlttve set d odds which lvaold rot bu a mpy of C e n m prices.

I a o m p d Ihs ad& bbMrs6fl WA M 8 PLAYER awl CENTREBEI brf(xed odds raclng bn Momlay, and mte that the odds fw PLAYER sre alrrPogt always signflcarrlly SHOWER than Itrose for CENTREBET.

I Spdncldly ehadgd wary race at KsnainnBon on lilmday 8h Arm, a d the early odds are also BELOW what w a &ere4 by CENTREBET at dfiemrtt lJrne% seemingly by the samo pmxn.tage, excapl fa Race 3, where the odds wcre exactly lhe same.

J u s t k k x s I h c s l a r t d U r r ~ t h s y a r e ~ a m ~ B E E O W v m a t r v a h offered by CENTREBET.

Rr*;s t, Kenrimgbm, Monday, 09.15am G E T TABWA TABCORP 01. Scr 02.503.75 M9.M $03.60

Applications for authorisation by TOTE Tasmania, RWWA and AClTAB A91 13 and A91 124 - supplementary further submission Page 5

Freehills

I also chedbed the merkat far tha- rugby Isague match on M O W night behresn the TRam and the Dragons, with the match bdds' prices being 7c less #an Cer~Wl prices. For d-w mark* with more ccmbinat'ins, the odds were pmgressWy w 6 f ~ e m amparism to C e m m , usualty 51% per combirlatian.

I put the cam PB P W E R (TABWA) thmt there bid not seem my nse66n fff me to continve to bet with ahem considering that their Odds Menagm was offdng Wer pricas diecA at Cenlre$Bt

I 8~gasart thiY p u m in ihabe sMaes should )re asklng th.mxdv# th same quewh. In this d q and age, kt Is nddrffisult to betwilts Centrebet and a n u m k of other bmhalaers vta ywr mobite phone, in your TAB oWlet.

You can check the odd8 on the weems in yaw own TAB rotid outlst, anb then gets b m s for sending pw bat through to CeCentrebet via your mobile.

*t**nmrr

One final mttertbt needs rnedbnkrg.

Why did b e three TABS twnpky C e d W as their Fixed Odds rnamqer to begin with?

With betting odds oh disptay From Chtmbat and other bookmbrs, it mfdn't be that d'rfficult to weare your own market as an average d what is avsilaMe elmhcsl.a, and Wen discdunk 16 a percentage margin of their rrhok,

Unlike o n l h bookmakers, TAB wWs aRmd many punters Hmo a@ not a m of betting percentages and bet ?f~raugh TAB m@la de~plite Ihs pocw marglrts, This is the so-called "slly money* in the wagering mdustry, which makes balamng a book so mvch easier for 8n agency.

In any case, a gmtpu i m ~ ~ book wad be Iw'd oR wi4h o f k organisathns. Maw wagers can be refused.

Applications for authorisation by TOTE Tasmania, RWWA and ACTAB A91 13 and A91 124 - supplementary further submission Page 6

Freehills

But in the mmnt si2uatlon. wewen u r n & & punters am dmmt Mng taught tc stop with their TABS in WA. Tasmania and the ACT, as this atrodour siluation of uncbs becanes e m now publicir4ed in the mainstream media.

A$ th m d of the agreement. surely Cbmebd wx.dd nd only haw tmm paid E commiss'm R, nrn the operation. but will pmbably haw inmased thei customer kade fb the TAak debiment.

T h e n k y o u k K m e W r y i n r m t 9 P l a y f 3 r - ~ n e w m e i n r a c i n g a r n : sparts belNng at tha WA TAB. Wogb fur Wing a fw days to $%I bath k you - As yw would appreciate It has beem a pretty busy period with the relaunch of ow new brand.

t n t e g s r d s b y o u r ~ i y a m u s f b e n d i e d f M h ~ m w r b d i m a n m e l r t sar\rice - the .same chal TAgcorp our book managemei-r wmioe when we op%satsd as TAB Spmtstm~

W e ~ r o t a c w p a r s C b o o k m a l a K a n d w s h n r e ~ d a l m e d t o b . ~ margin we aperate under in ow agtement wih bur mw book manager i s exactty the same as It uns vken we operated as TAB SpwWbef so redisticab our prtces am going to very dmlbr Lo what ttey have been in fhe pest whw with TAB Spoatsbet

The w d e to WF nmv busfness Is ttrat we nu aRsa a fhr wpmh range a product to whatt we have in the past including bMhg m W A R foolball. Dmn Team betting, PSdc Your Owtn Line, more live in the run betting, more fined odd! betting on hundreds of mrte races for boh ihwwghbreds and greyhounds ant harness events. For local tborwghbred fans it k tremendous b arusdunce ma P1q.w is -ng all WA SKY covered Uwmxr~hbred svents - To haw U?e optlon Df fwd odds rx bte for dl Belrnmt tCalgoorlie, Northam, Pinjam meetlngr; ek. is sorrh3hhg WA c u s l o m have nwer had he @on of in the past and k a great resutt for WA Racing fans. Like Ihe addition tyf the WAFt betting it is about getting bocal punbrs the option of bertlng on lh& lace product.

This is aA about giviw wrr amtornm more cholm and from a radng pers- the mkn d taking the choke k W m kBte pticm and a fixed & option. There wtll be llmss where We We p r i m are better than faed odds anc vim m a - the chatlenge for our urslomers Is working out which they think i: bettw wlur! - the rdtty Is It is m a 1 for thm ia have We dloiae wkir31iI-q have rsleYw Rad in he past urrder orrr prevZaus brand.

In mgads b prfdng it must be mhxi ahat Wayw newk to -rate at tk margins we do for a m b e r of reasons in crdw to remakt viable. Them reasons are as foknm :

' We are obRg& under our m l agreement to dlsblbute a percentage 0 esmhgs to the Ministry of Swrt And Recreation- fast yew approximately 51 .€ million was distributed back into grass roots qort in WA to pay for s p a fadlrlss. sports clubs, uollarms, gtound mainlewnce atc.

Applications for authorisation by TOTE Tasmania. RWWA and AClTAB A91 13 and A91 124 - supplementary further submission Page 7

Freehills

'We have overhead costs in operating a retail network of mote than 300 shops statewide -It provides convenience to a lot of our customers but it costs money to nm.

We operate out of WA not Darwin where a number of the corporate bookmakers receive substantial tax relief.

It is also worth noting that further proftt are distributed to the local racing cades to assist in stakemoney payments. facility upgrades etc.

In regards to Mering special prices on certain events, it is something that is not out of the question in the coming months on specifmd events.

As a customer you are entitled to bet with whoever you like however I can reassure you that ttw product Player pv ides is superior to what we have offered in the past and from a pridng perspective is almost identical to what we have offered in the past as TAB Sportsbet.

Our customers are certainly enjoying the new brand - despite a few minor technical difficulties in the first ccuple of weeks of operation Player's turnover is up by 30% which is a very positive sign for the future.

1 appreciate your business in the past and hope you continue to bet with Player -after all it's more fun being a Player!

COURTESY OF DAVID SHORlTE.

MANAGER, THE PLAYER AXED ODDS BETTING, 11106/2009

Applications for authorisation by TOTE Tasmania, RWWA and ACTAB A91 13 and A91124 - supplementary further submission Page 8

Freehills

Annexure C

PuntingAce.com, screen grab from 22 June 2009,

1 L W

shor t e r t han tl makes it; 3 to ta l j o k

- a

i e prices I on Centre

Centrebet shows Hawthorn vAde la ide a t 1.62 and 2.34

I t z k a v*. k e k y e s t d a y am? prirt or, +@e W4 T45 sit= was a Yew erk sP&--r Pan V"- -3 zr C r f i ~ h ? . %t ma%= R a tztal ] k c .

It gets worsewhen Centrbet bets a higher percentage on certain markets. For example l ooka t tonight's AFLrnostgoaIs h ~ a d t o head. Take b o l a v Lecras from Tass ie t o t e

Rt )Open :Ef Open i

Tha i W T h e otherTABs I ISportsbet are Fev 1.45 Leeras 260, So punt SlTassie wanting t r iis market havejust .gote i ther4c or 1 8 c w o r s ~ I.'RBL= Ctian theywould haveyuLUIHiCrthe old arrangement

H e n

--. ticing pric

. -. -. - f Open $1,

I In..-.. +,

35 KENN - - .---. ., EDY, 3 [W --.. -. ,- CE] Open --. -.-

Rem

a ~ ~ l

o t ofthesc LL - . - - - -.

P markets - -32- - -

will end ir :&:- - -:--

I draws so i I presumedead heatrules

. . y, w ~ m porn r u n n e r s o a n s o n I C 1s a ~ I C P l i t t l e risk-free lO%for theTABs ifanyone i s s i l ly ensugh t o be ton these ma rkets.

Applications for authorisation by TOTE Tasmania, RWWA and AClTAB A91 13 and A91 124 - supplementary further submission Page 9