🔒 🔒 Racing, red flags, risk and responsible gambling

The recent national debate on wagering reform may have had sports betting at its heart, but Australia’s bookmakers say betting on racing remains the industry’s biggest headache when it comes to compliance and responsible gambling.

Canberra cited the growth of sports betting and its increased profile through advertising as reasons for reform. Prime Minister Anthony Albanese said the changes were intended to weaken the association between sport and gambling, especially for children.

How effective the final legislation was in achieving that is a matter of debate, but lawmakers granted racing a specific carve-out, as the link between it and gambling was seen as intrinsic to the commercial sustainability of both the sport and its related industries.

But that does not absolve the racing industry from its need to address issues of gambling harm. In fact, representatives of wagering companies see betting on racing, especially “next-to-jump” racing, as a much riskier product than sports betting.

The issue featured prominently at last week’s Backing The Punt conference in Melbourne, where delegates discussed the gap between public concern over sports betting and the day-to-day compliance challenges facing regulated wagering operators when it came to racing.

The conference was staged under Chatham House rules, which prohibit attributing quotes to facilitate free discussion. The Straight can report on what was discussed, just not who said it.

In that context, we can also reveal that a senior executive at one wagering operator struck a chord across the industry with their assessment of which betting products generated the most responsible gambling interventions.

“Next-to-jump racing, especially overnight next-to-jump racing, that’s when your red flags hit,” they said.

“This whole debate that problem gambling is connected to sport, I think is totally wrong.”

It backs up research, including that from the Experimental Gambling Research Laboratory at the Central Queensland University in 2017.

That showed that far from being a low-risk wagering product, betting on racing was associated with a clear cluster of problem gambling indicators, including higher betting frequency, greater gambling involvement across multiple products and other risk-taking behaviours.

The Straight followed up with representatives of three other operators, who all agreed, without wanting to be directly quoted, that racing presented far more responsible gambling challenges than sports betting.

Several delegates pointed out that recreational sports bettors are generally viewed as lower-risk customers, while certain racing wagering patterns generate greater levels of scrutiny from responsible gambling and anti-money laundering teams.

Operators view overnight racing, featuring a 24-hour suite of options across the world – everything from South American thoroughbred racing to French harness racing and British greyhounds – as particularly susceptible to high-frequency betting and harmful behaviour.

In that context, the challenge for the local racing industries is one of perception, given it is not always their product which is causing concern.

They also benefit, via government distribution agreements, from the point-of-consumption taxes generated from these bets, which creates another point of tension.  

However, wagering customers also reasonably suspect that additional anti-money laundering and source-of-funds compliance is being used as a reason to ban winning or marginal customers. The ability to retain customers who lose less than seven per cent, or win, was raised as a risk for the racing industry in terms of turnover.  

Professional punter Kingsley Bartholomew, who spoke at the conference, said on SEN Track that week that his turnover on racing has dropped 80 per cent in the past 10 years because it had become much harder to get bets placed.

Separately, there was also discussion at Backing The Punt around the increasing dependence of racing on sports betting as an entry point for new punters.

Executives highlighted the importance of converting sports betting customers into racing customers during peak spring racing time.

With an increasing focus on operator compliance from both state and federal authorities, discussions also focused on the potential benefit of greater data-sharing arrangements between licensed wagering operators.

It was argued that collaborative approaches adopted in sectors such as banking could provide useful models for identifying problematic gambling behaviour, financial crime risks, and other compliance concerns.

Delegates pointed to AUSTRAC reporting obligations as an example, where an operator may file a Suspicious Matter Report around money laundering concerns, only to be unaware that similar reports may have also been filed on the same customer by other operators.  

Delegates also discussed banning commissions and affiliate arrangements.

At least one senior executive questioned whether commission-based payment structures involving media organisations, influencers and other third-party marketing partners remain appropriate in an environment of increasing regulatory scrutiny.

The proliferation of wagering brands in Australia and the inability of customers to distinguish between regulated and illegal operators were also raised as a risk.