Bren O’Brien spent last week on the Gold Coast and reports that while the temperature may have come out of the bloodstock market, the uncertain conditions in the wagering industry also point to a stormy 2025.
Gatherings of the various corporate factions of the wagering industry are rare.
Even on racetracks, previously the middle ground where all in the bookmaking caper could come together under a common cause, are now coloured ‘team blue’, ‘team red’ or ‘team green’.
Those terms are used as an in-joke in the industry, but the reality is that it's hard for anyone to find neutral ground. No matter which track you find yourself on in Australia right now, you are on the ‘home turf’ for one bookie or another.
Last week’s Magic Millions Yearling Sale was nominally team green, with TAB holding the rights over the racetrack and the sales grounds themselves, but the informal environment created some opportunity.
Tabcorp chief executive Gill McLachlan found himself ensconced at ringside dining on the sales complex for the first time.
A first visit to the chaotic commerce of the Magic Millions sales can be intimidating. It can pay to keep a low profile while you assess the lay of the land. Still, when you are the recently appointed CEO of what has historically been Australia’s most prominent wagering company, it's hard to keep your head down, even more so when you are 6 feet 6 inches tall.
Less prominent were the senior executives of the other “teams”, red and blue, but they were there. The demographics of the wagering and bloodstock industry are fairly similar and in their Gold Coast holiday attire, it’s easy for the wagering service provider (WSP) crowd to blend in.
They mixed with executives from the clubs and principal racing authorities (PRAs), talking shop ahead of what shapes as a hugely important year for the wagering and racing industry in Australia.
A cocktail party hosted by Betfair on Thursday night provided more common ground and more conversation.
Again, a function hosted by any of the “big three” wagering operators would usually automatically restrict the invite list to those of the right “colour”, but on the dime of the exchange, an operation seen as useful for liquidity but not a threat to their business models, they were happy to “arbitrage” a few beers and compare notes.
Much like the week itself, while the holiday atmosphere made for plenty of banter across the bar, the dark clouds were ever present.
Bren O’Brien
The failure of the federal government to resolve its stance of wagering advertising restrictions is not just a sword above their heads. It’s a millstone around their necks.
No one wants to speak on the record about what it means that 18 months after the ‘You Win Some, You Lose More’ parliamentary inquiry, and months out from a federal election, we still don’t know what Communications Minister Michelle Rowland and Prime Minister Anthony Albanese want to do with betting advertising.
However, it is easy to see that the impact of the delay, the prospect it will be dragged front and centre at an election, and the likelihood of a minority government, has the big wagering companies terrified.
There are plenty who think they deserve to be worried, especially given the way that punters have borne the brunt of the increased taxation and regulation in recent years but the reality is such an environment makes it difficult to strategically plan or innovate.
The “big three” make up around 75 per cent of the Australian market and their profitability and success will have a major impact on their ability for their revenue to power the Australian racing industry.
It was an interesting contrast on the sale complex that while in the sales ring, vendors were furrowing their brows about an 8 per cent correction in yearling aggregate, out the back in the garden bar, the corporate executives were comparing notes after three consecutive years of close to 10 per cent turnover declines, plus the prospect of a major change in how they can promote their businesses.
Then there are the challenges in each organisation. Tabcorp is going through a major restructure after McLachlan’s arrival corresponded with revelations of a $1.4 billion annual loss. Entain/Ladbrokes is at the centre of an AUSTRAC enforcement process, which could result in massive fines while Sportsbet contemplates where its strategy sits after the market leader ceded share over the past 24 months.
Aushorse Investor’s Guide 2025
- More Races worth $1 million+ than Europe & America combined
- More than 140,000 Australians involved in racehorse ownership
The latter two are also part of massive global publicly listed companies, that are extremely focused on their businesses in the United States. While the Australian operations used to be the shining stars of the global portfolios, they now tend to command only a couple of paragraphs in earnings reports.
The two emerging players, PointsBet and betr, are ambitious and growing, but would be significantly hamstrung should wagering advertising be more heavily regulated.
There is the challenge of the unregulated betting markets. It’s become apparent that the global deals struck to bet on Australian racing in overseas markets could be impacting turnover here.
Two industry insiders who spoke to The Straight raised concerns about the global influence of operators like stake.com, who are Australian operated, but headquartered overseas. Under Australian law, these businesses can not take bets from Australians.
A straw poll of professional punters in Australia tells you that they are being shut off by the regulated options, or are having to find more creative ways to get their bets on. The nebulous, unregulated exchange Citibet is awash with options for those wishing to find a way to wager on Australian racing.
Taxes, fees and regulations, plus the policies of the WSPs have got to a point where anyone betting more than just play money on Australian racing faces significant hurdles trying to get set for the amount they want. Cash betting is all but dead, a win for anti-money laundering campaigners but arguably a loss for market liquidity.
The resurrection of the tote was mooted in dispatches but may prove a pipe dream in a market now saturated by fixed odds.
This is all known by the powers that be in both racing and wagering. It’s an ongoing challenge, and any other environment might see them looking for solutions.
But, as mentioned, they have mainly been strategically paralysed by the lack of progress on the gambling advertising proposals.
Bren O’Brien
There is perhaps some irony that the current environment is reportedly leading several WSPs to revise their marketing budgets for 2025, with significant cuts rumoured on the sponsorship and advertising front.
Regardless of the supposed “carve out” for racing in any advertising reform, if the WSPs are under even greater pressure to make ends meet, then the effectiveness of their marketing spending will be front of mind.
A lot of racing media, including industry-owned assets as well as this publication, rely on wagering advertising for some revenue.
The concept that those racing media assets are more valuable in a world where sports betting advertising is banned only holds true if the WSPs see the value of advertising in the first place.
So, you can see how the consequences of the federal government’s delay in confirming its approach on gambling advertising has a stultifying impact industry-wide.
And that equation flows back from the Garden Bar at Magic Millions through the ringside dining and up into the sales ring.
While there was plenty of high-profile “outside revenue” flowing into bloodstock last week, be it from Japan, or the United States, the lion’s share of the $210 million spent in Book 1 is invested on the premise that Australia’s record prize money is sustained.
Trainer and syndicators have already sniffed the breeze and tightened their belts, but if a further sharp decline in wagering follows in 2025, then it's hard to see how the $1 billion in returns to owners can be sustained.
If that is the case, then yearling sales in 2026 might be a lot less convivial.
