Racing authorities will ask the NSW government to change the law after a court ruled that bookmakers Tom and Bill Waterhouse do not have to pay a 1.5 per cent fee on turnover.The Waterhouses successfully argued they should not pay the fee for publishing NSW race fields on the basis that they operated by telephone only and did not publicly display a list of names of horses in a race.Justice George Palmer of the NSW Supreme Court agreed.Racing NSW had sought to establish that by naming a scratchin

Racing authorities will ask the NSW government to change the law after a court ruled that bookmakers Tom and Bill Waterhouse do not have to pay a 1.5 per cent fee on turnover.

The Waterhouses successfully argued they should not pay the fee for publishing NSW race fields on the basis that they operated by telephone only and did not publicly display a list of names of horses in a race.

Justice George Palmer of the NSW Supreme Court agreed.

Racing NSW had sought to establish that by naming a scratching a bookmaker effectively identified a field, but Justice Palmer also rejected that claim.

"I am naturally pleased with the judgment," Tom Waterhouse said.

"I want to make it clear I am happy to pay tax but the extra 50 per cent would have changed my business.

"It would cost me $2 million a year."

Racing NSW chief executive Peter V'landys said the racing administrative body would ask the government to address the "loophole" in the race fields legislation as a matter of urgency.

"It should be stressed that the Waterhouses did not challenge the validity of the legislation but rather sought to confirm that their operations did not require an approval under the legislation," V'Landys said.

"There appears to be a deficiency in the legislation regarding telephone betting."

V'landys said the turnover based fee under the legislation was not a "tax" but a fee which contributed to the cost of running the three codes of racing in NSW - thoroughbred, harness and greyhound.

The legislation was introduced to try to halt the leakage of money to corporate bookmakers, most of whom are based in the Northern Territory and operate online businesses.

Tom Waterhouse, a fourth generation bookmaker, has formed a company with his grandfather Bill operating mainly on interstate races in the Sydney betting ring.

The legislation will generate around $25 million to $30 million for the NSW racing industry, which V'Landys says is needed to keep people in the game.

"This is money that should be going to our participants, particularly those on $33,000 a year," V'Landys said.

"Unless we can increase their wages, we will lose these people.

"These people - stablehands, trackwork riders and the like - are vital to the industry, something that really hit home during the equine influenza crisis last year.

"The Northern Territory bookmakers have been taking money out of NSW for years."

Most online corporate bookmakers are currently paying the fee but have not ruled out taking legal action.