AFL plan to extract more money from gambling faces potential legal challenge | Gambling

The AFL’s bid to secure a bigger share of gambling losses – despite public health warnings and criticism of sports betting – faces a potential legal challenge from bookmakers who believe it is already taking too much.

A draft proposal sent to bookmakers shows the AFL wants to significantly increase the cut it takes from bets placed on its matches. The cut, known as a product fee, is a percentage of a bookmaker’s turnover or revenue, whichever is highest.

Correspondence also reveals the AFL wants to charge all bookmakers a $20,000 annual fee if they offer bets on games, in an apparent effort to turn away smaller players without well-financed integrity units. The move may also reduce competition for its official wagering partner, Sportsbet.

Three peak bodies representing bookmakers have outlined their opposition to the AFL in a joint statement, and Pat Brown Legal, a law firm often used by gambling companies, has raised the prospect of a formal legal challenge.

“A number of clients have approached us regarding a challenge to the AFL product fees, including the increase in turnover / revenue based fees and the $20,000 minimum annual fee,” a letter from the law firm to bookmakers said.

“We are offering our clients and any other bookmakers an option to challenge those fees. We believe bookmakers have good prospects to challenge these fees because of the significant increase and large minimum fee.”

The letter urges bookmakers to sign up to the challenge with an offer to spread legal fees across clients to reduce costs.

Josh Tews, a lawyer at Pat Brown Legal, said the AFL’s proposal was “unsustainable” and would punish “smaller family owned and operated businesses” that were willing to pay their “fair share” to support integrity programs.

“In some cases, the fee will more than double,” the spokesperson said. “On behalf of each of our clients, we hope constructive discussions with the AFL will resolve this issue without the need to resort to formal legal processes.”

The Australian Bookmakers Association, NSW Bookmakers Co-op and Victorian Bookmakers Association have told the AFL the proposal is “unfair, disproportionate, anti-competitive” and will favour foreign-based gambling giants.

“The AFL reportedly collects over $40m in levies annually, which more than overwhelmingly covers the cost of its integrity operations and indeed generates significant returns,” said Lyndon Hsu, the joint chair of the Victorian Bookmakers Association.

“We are concerned that such a significant Australian sporting body such as the AFL would implement policies that place so many Australian businesses at a significant disadvantage to larger overseas conglomerates.”

The AFL wants to increase the product fee from 0.9% of turnover for regular bets to 1.5%, as first reported by the Australian Financial Review and verified by Guardian Australia with industry sources. The draft proposal shows product fees would be higher during finals or on multi-bets, which allow punters to bet on multiple outcomes.

The league has been criticised for promoting multi-bets from its official wagering partner, Sportsbet, which had an 85% fail rate. The promotions were strongly criticised by gambling reform advocates and federal politicians.

The AFL is hoping to reach agreement by the end of the month.

The AFL has been contacted for comment.

One of the bookmakers the AFL is negotiating with is Tabcorp, which is now led by the former longtime AFL chief executive Gillon McLachlan, who acknowledged the fees during a federal parliamentary hearing into gambling harm in 2023.

The AFL’s financial reliance on gambling was heavily criticised during the inquiry, led by the late Labor MP Peta Murphy, who recommended a complete ban on gambling advertising. So far, that recommendation has been ignored.

Several crossbench MPs, who have been lobbying the government to introduce tougher advertising restrictions, have also criticised the AFL’s relationship with the gambling industry.