Straight Up – A wagering ripple runs through the thoroughbred industry

In this edition:

• Bookmakers at odds over early betting changes
• A $139 million reality check – Victorian government’s racing tax shortfall
• Prescribed pari-mutuel – Fancy a mandatory bet with your racehorse share?
• Restructure at Racing Victoria sees key faces depart
• The $5 billion Rosehill question that only the NSW government can answer
• Unibet fined $1 million for breaches of self-exclusion regulations
• PointsBet fined $500,000 after breaching spam and BetStop responsibilities

In major stories we cover on The Straight there is almost always an element which involves the challenges to the Australian wagering landscape.

As respected analyst Daniel O’Sullivan posited in his excellent column earlier this month, all of racing’s opportunities and challenges can be seen through the prism of betting turnover.

This week, Racing Victoria announced it was implementing a restructure which will reportedly see up to 15 per cent of its workforce depart. While the cost cutting has been mooted ever since Aaron Morrison took the CEO seat last August, it is related to a slump in wagering revenue.

RV recorded a $11.4 million deficit last financial year as wagering turnover dropped 10 per cent. This year, wagering is down a further five per cent, and the cuts announced this week are unlikely to be the last ones, with prize money certain to come under focus.

Combined with that, the windfall the Victorian government expected to gain from raising the Point Of Consumption Tax has fallen short of its own initial expectations. It appears to be a living case study for the Laffer Curve, that a rise in taxation does not always correspond with a proportionate rise in revenue.

The difference is not immaterial. It is $139 million over this and the next three financial years. That is around $70 million that the Vic government was expecting to give to the racing codes over that period.      

Next Tuesday, the biggest issue in Australian racing in the 21st century, the future of Rosehill, which reach its head when Australian Turf Club members vote on whether to progress with the deal.

One of the key reasons why it needs to sell such a core asset, according to the ATC, is a decline in wagering. The details, and indeed the maths, are different, but the core issue remains the same. Revenue is down and things need to change.

It is an issue internationally too, prize money in France has been cut in response to a drop in wagering.

Solving this issue is far from straight forward. The wagering ecosystem is complex, with taxation, fees and regulation playing their part. Bookmakers are altering course in order to maximise their upside and minimise their risk.

Earlier this month, Tabcorp stopped putting up markets on some non-metropolitan race meetings until the day of the meeting. It is not a move which will impact a lot of punters, but it will impact those who invest most, professionals and semi-professionals.

The implications of this move are not yet known, but in such a reactive landscape, a ripple over here can lead to a tsunami somewhere else, and it a market in such a delicate state as racing wagering at the moment, it could prove significant.

That is certainly the opinion of a bookies and punters spoken to by The Straight.

Bookmakers complain how taxation has robbed them of the incentive to offer true competitive markets, especially in racing where they also pay product fees, but the other major challenge is regulation.

In the last seven days, ACMA, one of the federal regulators responsible for advertising, marketing and responsible gambling, handed out $1.5 million in fines to two wagering companies. Perhaps even more of a penalty for Unibet is having to refund bets from clients who had registered for self-exclusion, but who it had continued to take bets from – 954 of them in all.

Some, including Tabcorp CEO Gillon McLachlan, have suggested pari-mutuel wagering could be the key to reviving betting on racing. A national tote has been identified as a key priority of McLachlan’s strategy for Tabcorp.

Perhaps he could take a leaf out of an approach in Malaysian racing, which will see owners of horses pay an additional entry fee which will be automatically fed into betting on their horses through the lagging local tote.

It appears a bold strategy, and owners are far from pleased.

Don’t forget to check out this week’s Straight Talk Podcast where we talk racing’s biggest issues, the wagering challenge and preview the Magic Millions Weanling and Broodmare Sales.

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Regards

Bren O’Brien     

Managing Editor and Founder

The Straight