Straight Up – The rising cost of bookmaking, and why it matters

In this edition:

• Bookies dodge racing data fees bullet
• ‘It’s not rocket science’ – How a chance Melbourne meeting with John Messara sparked Haggas’ Sydney raids
• Bidding for Bella – Sales companies pitch for Everest winner as buyers contemplate her price
• TBA/Aushorse appoints Andrew Hore-Lacy as new CEO

The pandemic changed wagering forever in Australia, but we are only just now working out what that new reality may mean.

The boom-and-bust cycles were characterised initially by an explosion of turnover, which in turn drove additional competition, and the surge in the number of bookmakers in Australia, as we have reported on before.

Since, as cost of living, rising interest rates, increased taxation and regulation have bitten, there has been a considerable retraction of the market. Even the big corporate bookies have had to cut their cloth accordingly.

The Straight’s Warwick Barr has been chasing a story for several weeks on a reported six-fold increase on racing data fees charged to bookies by wholesalers.

The fees, charged in addition to the race-field fees already charged by PRAs, were set in some instances to go from $850 to $5000 a month. For smaller bookies on wafer-thin margins, a $60,000 annual impost would be a knockout blow.  

The move threatened to put at least 10 smaller bookies out of business, while dissuading others from actively pursuing racing market share.

It seems, in this instance, cooler heads have prevailed and the price increases, after The Straight’s inquiries, have been moderated, making it much more palatable for smaller bookies.

Bookies dodge racing data fees bullet

Last-minute reprieve from six-fold fee increase

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This comes off the back of extensive reporting that the AFL was set to impose a $20,000 annual fee for all bookmakers to bet on one of the country’s leading football codes, because of what it said was its mounting integrity costs.

Media attention was again followed by a change of heart, with a much more reasonable fee structure put in place earlier this month.

Why does bookie profitability matter? The answer for the racing industry is more significant than just the money which flows through from wagering.

Bookmakers large and small have been saying for years that racing has become a very expensive product to field on. It is why many of them are encouraging new customers to bet on sport, which – the AFL situation aside – is a more profitable product and much easier to market.

Companion or competitor?

The uneasy relationship between sports betting and racing

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Long-term stats indicate that legalised sports betting grew from around 7.4 per cent of the wagering market in 2001 to 25 per cent in 2021. Youth-oriented bookmaker Dabble, part-owned by Tabcorp, is already reporting more than half its turnover is on sports betting, while PointsBet is heading the same way.

Tabcorp itself is the most racing dominant player, but its publicly disclosed data indicates that sports betting has grown from around nine per cent of turnover before the pandemic to 19 per cent at last count.

Sportsbet and Ladbrokes, Australia’s two other big players, are both owned by overseas-based companies whose stated aim for global growth is through sports betting, primarily in America. Both are still strong supporters of racing, but both are moderating their marketing budgets in this area.

Racing has a fight for market share and while, as we have raised before, it is not as simple as a  straight battle for sport when it comes the wagering dollar, the reality is that racing turnover is declining while sport is rising.  

That raises questions about racing’s long-term funding, something that, when you think about the reason behind the Rosehill sale proposal, puts another question mark in ATC members’ minds as they head to the polls to vote.

Can they make an informed decision while the NSW government is undertaking a major review of Tabcorp’s deal in the state, something that has a direct impact on the ATC’s anaemic balance sheet?

Stay up to date with the latest with Straight Shorts

• Straight Shorts – Wednesday March 19 – Waikato’s Aussie replacement for retired star, doctors clear Purton, Darley stallion’s Hot streak continues
• Straight Shorts – Tuesday March 18 – Farewell Bella, I Am Me to Chairman’s, favourites draw in Slipper, Zoustar filly top in Adelaide

You may have noticed the three editions of the Straight Up newsletter sent each week are be split into the three different areas we cover. Thursday’s edition features news and analysis from the wagering industry, Tuesday’s Straight Up from Tim Rowe covers the latest in breeding and bloodstock, while Friday’s edition will see Warwick Barr put the focus on the racing industry.

This will be complemented by a new daily newsletter, The Straight Daily News, which will provide up to date coverage of all the relevant news in all three areas. We are trialling this newsletter among a select audience this week, but you can expect to have us in your inbox from Monday to Friday in the very near future.

Too much of a good thing? You can change your membership preferences easily.   

If you have any feedback for us or any story suggestions, feel free to email editor@thestraight.com.au. 

Regards

Bren O’Brien

Managing Editor and Founder

The Straight