Instead, the betting exchange has offered to give it 20 percent of gross revenue - provided all other wagering operators are charged the same fee, reports The Australian newspaper.
"Let me be very clear on this," Betfair Australia chief executive Andrew Twaits told the newspaper. "We have offered to pay the industry on gross revenue -- that is on the same basis as the TABs in NSW, Queensland and Victoria.
"Further, we think 20 percent is the right amount, and we'll pay at that rate if everyone else does the same. What we won't do is pay tax at a rate that's six times higher than our competitors.
"That's the recipe for us going out of business."
Twaits went on to explain that Racing NSW has set the fees for TABs at just 9.37 percent of their gross revenue.
"If it sets its product fees at 20 percent of gross revenue for all wagering operators, we believe they would be likely to generate more than $10 million a year in extra product fees for the industry. While no one likes paying more tax, we've consistently said 20 percent is the right amount for race fields.
"We'll pay it if our competitors do the same."
Betfair is taking Racing NSW to court, with a hearing scheduled at the NSW Supreme Court on November 16, 2009.
Betfair's Australian chief said the total national gambling take was about $2.4 billion a year, of which NSW contributed about $740 million.
Betfair in Australia is half-owned by James Packer's Crown land gambling group, with the other half held by Betfair UK.
"It's all about protectionism," Twaits said. "Every racing authority in the state wants to protect their own patch. But the great threat to racing comes from other gambling products such as sports betting, casinos, poker machines and online poker - not from low-margin operators such as Betfair and other corporate bookmakers.
"Even if there is cannibalisation, it will make no difference to industry funding if all operators pay the same share of punter expenditure to the racing industry as a product fee."
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