Betfair Pty Limited v Racing New South Wales & Ors; Sportsbet Pty Ltd v State of New South Wales

Betfair Pty Limited and Sportsbet Pty Ltd (the appellants) brought proceedings against Racing New South Wales and the State of New South Wales (the respondents) in the High Court of Australia. The dispute concerned the validity of certain provisions of the *Totalisator Act 1997* (NSW) and the *Racing Administration Act 1998* (NSW), which imposed a levy on betting turnover generated by the appellants, who operated betting exchanges and corporate bookmaking businesses. The appellants argued that these levies were invalid as they constituted an impermissible tax on interstate trade and commerce, contrary to section 92 of the Australian Constitution.

The High Court was required to determine whether the levies imposed by the New South Wales legislation, which applied to betting turnover generated from bets made with bookmakers and betting exchanges operating within New South Wales, but also from bets made by persons located in New South Wales with bookmakers and betting exchanges operating outside of New South Wales, were invalid. Specifically, the Court had to consider whether these levies discriminated against interstate commerce or were otherwise contrary to the freedom of interstate trade, commerce, and intercourse guaranteed by section 92 of the Constitution.

The Court, by majority, held that the levies were valid. It reasoned that the levies were not taxes on interstate trade *per se*, but rather charges imposed on the business of bookmaking and operating a betting exchange conducted within New South Wales. The Court distinguished between a tax that directly burdens interstate commerce and a charge imposed on the conduct of a business that may have incidental effects on interstate transactions. The levies were found to be a legitimate exercise of the State's power to regulate and derive revenue from activities conducted within its jurisdiction, even if those activities involved interstate elements. The Court applied principles established in cases concerning section 92, focusing on whether the legislation created discriminatory burdens on interstate commerce.

The High Court dismissed the appeals, upholding the validity of the New South Wales levies.