Is horseracing and wagering an existential question? The racing and wagering industries are symbiotic and should not be as diametrically opposed as they seem today.

In the early 16th century, Gerald FitzGerald, Earl of Kildare, took his Irish horses to England to race against those of King Henry VIII. The results are not recorded because clearly the Irish horses put the English King’s horses to shame!

Horse owners were primal in the development of wagering; for only they were prepared to back their steeds (a wager) against someone else’s (another wager) in a match race.

That’s how it all started: with equal stakes (evens, 1/1, $2, 100% of turnover) being put up by each owner in a winner-takes-all scenario for bragging rights in a two-horse race – no matter what the purse – to be first past the winning post.

Bookmakers (who take bets – and steal from punters for a living) are secondary. They only became involved when the general populace came-in on the great Irish idea of having fun with your clothes on by riding bare-back in the betting ring.

Racing NSW executives trudge in a down-trodden procession to the Federal Court for judgment in 2010. Pix: Phil Hillyard, Daily Telegraph.

When the GP were allowed to bet on the results of owners’ match races with a bookmaker (who paid nothing for the privilege of making his book) the rot set in.

We are now of an age when bookmakers are prepared to gamble on every ball between the fall of the next wicket in a Twenty 20 cricket match (inherently corrupt on the sub-continent) and to the name and time of the first Carlton player to score a goal against the Paper Tigers from Richmond at the MCG last night.

Of all the industries that form the rich tapestry of the Australian economy; the racing industry (like information technology and telecommunications) is one of the most complicated; with many inter-dependent sectors and cross-linkages right across the broad Australian cultural landscape; changes to one can have significant, often unpredictable, effects on the others.

Today, the High Court, in dismissing an appeal by corporate bookmakers Betfair and Sportsbet, ruled that all wagering operators taking bets on races in NSW must pay Racing NSW 1.5 percent of turnover under the state government’s racefields legislation.

Since 2008, Racing NSW has been collecting 1.5 percent from on-course and off-course wagering operators. It has accumulated the $100 million mentioned above, but while the matter was being played out in court the money hasn't been injected into the industry.

Racing NSW chief executive Peter V’landys said the decision could result in a further $40 to $50 million a year being collected for the industry after the High Court ruled Sportsbet and Betfair had to pay the racefields fee.

 ‘‘It’s not a victory for Racing NSW but a victory for the 50,000 participants in the industry,’’ V’landys said today.

Racing NSW chairman John Messara said: ‘‘It’s time for all to take off the battle fatigues and put the overalls on [and start working together].’’

Sportbet’s executive chairman, Matthew Tripp, said the company was disappointed with the ruling.“We accept the court’s decision, however, our focus now shifts to protecting our members from the impact of the decision,” Tripp said.

“We will not be passing on the cost to our one million-plus members. In fact – we’ll work even harder to give them the great value they have come to expect from Sportsbet.com.au.”

Announcements in regard to significant prizemoney increases are set to be announced next week. Long needed infrastructure for strategic racetracks around the state are set to be given the go ahead as Racing NSW, the regulatory body, implements a strategic plan aimed at developing centres of racing and training excellence.

The long-awaited and highly crucial High Court decision gives the NSW racing industry certainty in regards to its future funding streams.

Sportsbet and Betfair both believed paying a percentage of gross profits was the way to go. The two launched separate legal action some four years ago and it went all the way to the High Court which today gave the racing industry a sound financial future.

Major sporting organisation like the NRL, AFL and Cricket Australia will no doubt be keen to follow the Racing NSW lead. These bodies have agreements in place that allow wagering operators to return a percentage of gross profit.

The Full Bench of the Federal Court took this salient fact into account in 2010 when it unanimously upheld the 2008 NSW legislation that gives Racing NSW the right to charge corporate bookmakers and betting exchanges a turnover tax (levy of 1.5%) for betting on their racing product.

The decision has totally blind-sided racing authorities in Victoria (RVL) and other states who are now locked into a percentage of gross profits deals with corporate bookmakers (10% rising to 15% during the spring carnival) which leaves them some $50 million a year behind the NSW eight-ball.

Australian Racing Board CEO Andrew Harding said in 2010 that the Federal Court’s ruling was "the most significant day for Australian racing since the introduction of the TAB in the 1960s".

The NSW levy obliges corporate bookmakers and betting exchanges to pay a reasonable price for the industry’s main racing product that they field on the Internet in competition with the full-fee paying TABs and on-course bookies.

Bookmaker adjusts Alcopop's odds during thew 2009 Big Cup: Source: Joe Castro, AAP.

That the parimutuel totalisators (TABs) are full-fee paying is a moot point. Queensland Racing CEO Malcolm Tuttle said: "An expectation exists within the Queensland racing industry that a change from the current charging framework of 10 percent of gross profit with a 15 percent premium charged in May and June, back to the pre-existing turnover-based approach would lead to a significant increase in the revenue that flows to RQL.

"This is simply not the case. More than 85% of revenue on a gross profit model is received from parimutuel (TAB) wagering operators and, on a 10 percent gross profit model, these operators pay a higher percentage of turnover than 1.5 percent,” he said.

"Subject to the High Court overturning the Full Court's decision (which has now happened) in the Sportsbet matter, the path is now set for Tabcorp to press ahead with its claims for the NSW TAB, Luxbet, TAB Sportsbet and the Victorian TAB to receive an offset for their race-fields fee payments," Betfair Australasia chief executive Andrew Twaits wrote at the time.

''The concerning reality for NSW industry participants is that the cost of this will be significant – possibly in the tens of millions of dollars –  regardless of whether a turnover or a revenue model is ultimately in place.

"Racing NSW has an obligation to come clean on what the potential downside is for the NSW industry if the Tabcorp group is entitled to the rebates that both parties (and the Federal Court) seem to think it is.

"It remains to be seen if Tabcorp will press the same claims in relation to Victorian race-fields obligations, but it's something the Victorian industry should be asking questions about."

So, do RVL have to careful in what they wish for?

Corporate bookies in Victoria have already agreed to pay RVL a fee based on their gross profits. Now they have to pay a much higher fee based on turnover as the TABs do. They say having to pay the higher fees will make them uncompetitive and force them out of business. I bet that doesn’t happen.

In 2010, RVL signed an agreement with interstate bookmakers for a 10 per cent gross profit levy, which it is claimed returns about one-third of the revenue of the turnover tax.

It is estimated that Racing NSW will receive more than $120 million in back taxes from the corporate bookmakers and will gain an extra $20 million more than Victoria until Victoria's agreement ceases in August, 2012.

So, why is it so?

In England (a country located somewhere near the middle-earth of Europa), the British Horseracing Authority charges both on-course bookmakers and off-course betting shops a 10% charge on all domestic horseracing gross profits.

The horse, of course.

In Victoria, Queensland, Singapore and Hong Kong they also only tax profits which mean the betting exchanges and corporate bookmakers (with lower margins and less commitment to support the racing industry as a whole) get a better deal; which they say they pass on to the punters.

Until a few years ago, the British levy was also calculated on bookies' turnover rather than their profits. That this change of calculation has had a deleterious effect on the British horseracing is apparent in the BHA’s bottom line.

Five years ago, the income from the levy was £116m but it dropped the following year to £63m; and is expected to be down to £37m in 2011. The BHA argues it should be between £130m and £150m if all bets taken on UK races are taken into account.

But the 2009 decision by both William Hill and Ladbrokes to move their online arms offshore has cost racing an estimated £4.2m, and the overall take from the levy on bookmakers' profits was £93m in 2008-09, down 20% on the previous year.

"If you look internationally at where racing is and where it is currently going, we are getting the equivalent of less than 1% of [bookmakers'] turnover," Paul Struthers, the BHA's director of communications, said recently. "In Hong Kong, it's 2%, in France it is 8%, and there are others that are higher than that."

But whereas the British bookies moved offshore, Australian internet corporate bookies merely moved to Darwin, Canberra and Hobart (Betfair) to negate their responsibilities to the racing industry/improve their low-margin offering to punters – whichever is your particular poison.

Maybe RVL acted hastily in adopting the profit model; a bit like the man with the racing snail who was not winning races any more, so he decided to remove his shell to make him more aerodynamic. It didn't work. If anything it made it more sluggish. Bom! Bom!

The bastard bookmaker: By name and by nature.

When England’s betting shops were legalised on 1 May 1961, up to 10,000 opened within the first six months. More than 50 years on, there are scarcely fewer in operation and nearly every high street in the country seems to have at least one, most of them modernised and respectable, standing cheek by jowl with the butchers, chemists and building society branches. Like it or not, betting shops are now an established facet of the British landscape.

"I climbed the rickety wooden stairs to Jack Swift's first-floor betting office in Dover Street, off Piccadilly. On that first day of legal betting shops, this tiny emporium was glorious bedlam, packed out with punters shouting their horse’s home. The place was filled with cigarette smoke but that day a breeze of fresh air wafted into the lives of British punters.

“Gambling was being dragged out of the Dark Ages, when the only legal bets were made on the racecourse, or the phone. Street betting had been rampant and everyone knew it. Bookies' runners ferried bets between punters and bookmakers, collecting in pubs and clubs (commonly in the urinals), and on street corners."

This is how Channel 4's ebullient betting guru, John McCririck, recalls that moment in 1961 when betting shops came into being. OK, it's not exactly Martin Luther King's "Free at Last" speech but it does give a flavour of how Britannia began to loosen her corset from the 1960s onwards. And this first act of social reform came from a Tory home secretary, "Rab" Butler.

But whereas the British bookies moved offshore, Australian internet corporate bookies merely moved to Darwin, Canberra and Hobart (Betfair) to negate their responsibilities to the racing industry/improve their low-margin offering to punters – whichever is your particular poison.

Maybe RVL acted hastily in adopting the profit model; a bit like the man with the racing snail who was not winning races anymore, so he decided to remove his shell to make him more aerodynamic. It didn't work. If anything it made it more sluggish. Bom! Bom!

We can be sure Henry Lawson’s man didn’t rush things when he departed home:

The Sliprails And The Spur

The colours of the setting sun
Withdrew across the Western land—
He raised the sliprails, one by one,
And shot them home with trembling hand;
Her brown hands clung—her face grew pale—
Ah! quivering chin and eyes that brim!—
One quick, fierce kiss across the rail,
And, 'Good-bye, Mary!' 'Good-bye, Jim!'

Oh, he rides hard to race the pain
Who rides from love, who rides from home;
But he rides slowly home again,
Whose heart has learnt to love and roam.

A hand upon the horse's mane,
And one foot in the stirrup set,
And, stooping back to kiss again,
With 'Good-bye, Mary! don't you fret!
When I come back'—he laughed for her—
'We do not know how soon 'twill be;
I'll whistle as I round the spur—
You let the sliprails down for me.'

She gasped for sudden loss of hope,
As, with a backward wave to her,
He cantered down the grassy slope
And swiftly round the dark'ning spur.
Black-pencilled panels standing high,
And darkness fading into stars,
And blurring fast against the sky,
A faint white form beside the bars.

And often at the set of sun,
In winter bleak and summer brown,
She'd steal across the little run,
And shyly let the sliprails down.
And listen there when darkness shut
The nearer spur in silence deep;
And when they called her from the hut
Steal home and cry herself to sleep.

And he rides hard to dull the pain
Who rides from one that loves him best;
And he rides slowly back again,
Whose restless heart must rove for rest.

By Henry Lawson

*Horse and Jockey is the fair-dinkum name of a town in County Tipperary, Ireland. TP Maher comes from a long line of horse thieves and whisperers who once roamed its townlands – finally, they were warned-off by the stewards and moved to Australia.