Dean Shannon’s career in wagering has seen him have a short-lived spell as an on-course bookie, a longer-term engagement as a punter, a founder of a couple of successful start-up bookmakers and, since 2019, chief executive of Entain’s businesses in Australia and New Zealand.
It’s a good grounding on what the ups and downs of the gambling world can provide. Regardless of how much the odds may be stacked in your favour, it is, by definition, a caper that has its risks and rewards.
The ups in Shannon’s Entain role came swiftly through the pandemic, where wagering exploded and corporate bookmakers, or wagering service providers as they are known, were able to grow their customer base and their revenue.
Across its Ladbrokes and Neds business, Entain grew its net gaming revenue by 43 per cent between 2020 and 2023, expanding its footprint to an 18 per cent share of the Australian market from 13 per cent just five years earlier.
In a rising tide, it was a rising star, but what were tailwinds quickly turned to headwinds as wagering turnover dropped an estimated 10 per cent across the board through 2023. There were three main reasons for this, taxation, regulation and cost of living.
The latter has been well-documented in many industries in Australia over the past 12-18 months. Inflation added significant pressures on cost-of-living and the method used to combat that was to raise interest rates, which in turn reduced discretionary income.
The spend-easy days of the post-pandemic disappeared and investment in wagering dropped. Heading into 2024, his fifth in charge of the Australasian arm of the business, Shannon is acutely aware of the challenges faced not just by Entain, but the wagering industry as a whole.
“I don't think the softness we have seen in the Australian market over the past 12 months should be that surprising,” Shannon tells The Straight. “Rising interest rates and other cost of living pressures are impacting discretionary spend and ultimately that is where we play.
“When people have less disposable income then all forms of entertainment feel the pinch. When you combine that with the return of international travel and other forms of entertainment, then it makes sense that wagering numbers will be impacted to some degree.
“Of course that is all before you take into account the significant mitigation that WSPs (wagering service providers) have been forced to implement to deal with the ongoing pressure from increasing POCT (point of consumption tax) rates.”
Taxation has been a burgeoning challenge for all WSPs in Australia. Seeing the boom in online wagering, state governments have progressively introduced, and then increased, POCT since 2018.
While WSPs, who already pay race fields fees on racing in Australia, now also pay the POCs, the net impact has been passed on to punters through increased margins and higher market percentages. That acts as a disincentive to bet and reduces the amount of turnover generated.
While states continue to ramp up POC - Victoria moves to 15 per cent as of July 1 this year - the greater uncertainty for the wagering industry surrounds government regulation.
Chief among this is the federal government’s plans to reform the promotion and advertising of gambling.
A report entitled ‘You Win Some, You Lose More’ set the scene for the reform agenda, and among the 31 recommendations are a complete ban on all gambling advertising and a ban on incentives.
The prospect of those two changes has made the Australian wagering industry particularly nervous.
Shannon said Entain understands the broader community concern about the growth of the wagering industry, and the prevalence of gambling harm, but wants a balanced approach.
“We are a business that at its core believes strongly in sustainability and providing our customers with the best and safest betting environment,” he said.
“We support sensible, targeted and evidence-based gambling regulation and advertising reform.
“We will continue to work with key stakeholders and policymakers to ensure changes are based on real evidence and not emotion.”
Bren O’Brien
Gambling, and the anti-gambling movement, have become increasingly politicised in recent years. The broader public concern about the advertising of gambling, something the wagering industry arguably brought upon itself because of its proliferation of promotion, has political capital, be it in the halls of state parliaments or Canberra.
“We understand the sentiment from sections of the public around advertising and we recognise and support that there will be some change,” Shannon says. “In many ways we have been proactive in this space, through our decision to withdraw from sport sponsorships and alike.”
“But there needs to be an understanding that the financial impact of a blanket ban on gambling advertising would be significant. Analysis suggests the impact on racing and sporting codes through reduced product fees and to governments through reduced tax revenue would be upwards of 30 per cent.”
Lobbying of the federal government from representatives of the thoroughbred industry has centred around this potential commercial impact, estimated at anything between $100 million and $500 million a year for racing alone.
The ‘You Win Some, You Lose More’ report did suggest a carve out for the racing industry, which is heavily reliant on wagering revenue, but the lack of detail elsewhere in the report has many others concerned.
“It is important for regulation to strike the right balance between freedom of choice and evidence-based safeguards to protect those in our community who are vulnerable and to minimise gambling-related harm,” Shannon says.
“A nuanced and targeted approach is needed to truly protect those who need protecting while ensuring that the vast majority of customers who gamble safely and for enjoyment can continue to do so.
“This approach will ensure that the racing industry, along with the tens of thousands of jobs it supports, is not placed at unnecessary risk.”
While the downturn in wagering, increase in taxation and the ‘You Win Some You Lose More’ report meant 2023 was a year of challenges for the Australian wagering industry, Entain posted some significant wins.
“We support sensible, targeted and evidence-based gambling regulation and advertising reform" - Dean Shannon.
The biggest was the 25-year deal it did to secure the operation of the New Zealand TAB. Not only did it enable Entain to get a near-exclusive foothold on the New Zealand market, but it also saw a massive, and much-needed, investment into the New Zealand racing industry.
It was also a sign of intent for Entain’s ambitions in the Australian market.
“For Entain it is a significant deal. TAB NZ is uniquely positioned in New Zealand, with the only wagering licence and is the only operator of retail wagering,” Shannon says.
“This partnership provides unrestricted access into the regulated New Zealand market which has significant potential for growth. We have already seen very positive signs coming out of the market with improved outcomes for the racing industry and an uplift in betting.”
Shannon said the knock-on for the broader Entain business is already being felt.
“We are seeing initial benefits of the integrated business coming together via the sharing of knowledge and resources,” he said.
“In addition to the core wagering operations, TAB NZ's media business presents exciting opportunities for growth. These include bringing Entain’s content production, marketing expertise and streaming capabilities to enhance TAB NZ's media offerings and vice versa complimenting our ambitions in the Australian market.”
In an industry of imitators, Entain has sought to differentiate itself through both its media offerings and through its community engagement and sponsorship strategy.
In the media space, it has sought to create premium video content focused more on a racing narrative than wagering, with a strategy around fan engagement.
“For Entain it is a significant deal. TAB NZ is uniquely positioned in New Zealand, with the only wagering licence and is the only operator of retail wagering” - Dean Shannon
Shannon said by the end of 2023, the Ladbrokes and Neds brands passed 120 million video views, with engagement doubling year on year.
“This approach has been of particular benefit to the racing industry, as much of what the team has produced hasn't had a wagering focus. It has very much centred on the participants and the equine athletes and building and broadening the fan base for racing,” he said.
Shannon said that approach aligns with Entain’s goals of being ‘racing focused’.
“I'm proud of how we’ve brought the emotion of racing closer to our customers than ever before and as we continue to grow, we’ll push the boundaries further in 2024,” he said.
Jessica Owers
It is a similar strategy with Entain’s focus on race club sponsorships of which it has more than 30, with a view of underpinning the grassroots that supports the racing industry and in turn the wagering industry.
“We have a genuine focus on a sustainable model to strengthen outcomes for all Australian racing stakeholders and participants,” he said.
“Entain holds key partnerships and sponsorships in every jurisdiction where currently permitted, and this has been further supported through the launch of our Ladbrokes Racing Club and the Ladbrokes Owners Incentive Scheme in Tasmania and Victoria.”
“We are unashamedly the only racing-first brand in the market.”
So with those buttresses in place against the winds of wagering change, how does Shannon see 2024 evolving?
“Again our industry is not immune to broader economic conditions and we don't expect any dramatic turnarounds,” he said.
“It will be a period of stabilisation and then steady growth. We are competing for people's entertainment dollar, so we need to continually be evolving and enhancing our offering.”
