A CASE that will determine the future of punting on the sport of kings in NSW begins on the 18th floor of the Federal Court building in Sydney today, reports the Sydney Morning Herald. It says: The outcome has ramifications for the funding of racing across Australia as online gambling continues to grow and and the behaviour of punters changes.In one corner is the litigant Betfair, the high turnover, low-margin maverick online betting exchange that has been making headlines since its parent comp

A CASE that will determine the future of punting on the sport of kings in NSW begins on the 18th floor of the Federal Court building in Sydney today, reports the Sydney Morning Herald.

It says: The outcome has ramifications for the funding of racing across Australia as online gambling continues to grow and and the behaviour of punters changes.

In one corner is the litigant Betfair, the high turnover, low-margin maverick online betting exchange that has been making headlines since its parent company was established in Britain in 2000. It is the world's biggest betting exchange with more than 3 million customers globally and 80,000 in Australia and New Zealand. James Packer's Crown owns half of the local operation.

In the other corner is the respondent, Racing NSW. Its mission statement demands it deliver the NSW thoroughbred racing industry ''improvement in its competitive position and increased financial returns to constituent stakeholders''.

Betfair is claiming the 1.5 per cent race-fields product fee Racing NSW imposes on Betfair's turnover is anti-competitive and discriminates in favour of the incumbent NSW TAB operator, Tabcorp. Tasmania's Betfair alleges the fee is incompatible with Section 92 of the Constitution, which enshrines free trade between the states.

Because of its business model, Betfair argues, the 1.5 per cent turnover fee is equivalent to it paying 60 per cent of its gross profit, while for the higher-margin NSW TAB it equates to about 10 per cent (assuming a blended take-out rate of 16 per cent). Betfair (which has a take-out of up to 5 per cent) instead wants to pay a 10 per cent tax on its gross profit, in line with the relationship it has with the racing industry in Victoria.

Racing NSW argues that Betfair and other corporate bookmakers have to pay their fair share to support the industry they rely on and believes that won't happen if payment is on gross profit - a figure it says businesses can too easily manipulate.