Tabcorp’s ambition to establish what it says is a ‘level playing field’ in Australian wagering is set to take a major step forward, with the NSW government announcing it is reviewing the long-term agreement between it and the wagering giant, which still has another nine years to run.
In a move which will change the nature of funding for the NSW racing industry, Tabcorp has expressed a desire to the NSW government to exit its current deal and renegotiate terms which would put it in a similar position to that it has negotiated in both Victoria and Queensland.
Treasurer Daniel Mookhey confirmed he has received a proposal.
“The NSW government will apply strict scrutiny to Tabcorp’s proposal. Change will happen if it is clear that the public will be better off,” he said.
“Gambling companies should always be paying their fair share.”
He said the proposal would be considered based on value for money, as well as benefits to the NSW taxpayer and a sustainable future funding model for the NSW racing industry.
“The NSW government wants to ensure the industry has a sustainable future for all those who make a living from it and participate in it and that the public is getting its fair share from all involved,” Gaming and Racing Minister David Harris said.
“We must be satisfied the proposal meets the interests of both the wider community and the racing industry and its stakeholders, before we consider implementing any elements of it.”
The Straight understands that Mookhey has been involved in discussions over the Tabcorp deal since at least the start of the year and a deal in the realm of $700 million was discussed, with a substantial boost in club sponsorship, and even the possible acquisition of Tabcorp properties.
Mookhey alluded to these discussions in parliament on May 7.
“Other states have introduced reforms to replace their racing distribution agreements with POCT funding to ensure that the racing industry is in a position to compete and thrive. States like Queensland and Victoria have completed such reforms,” he said.
“Of course, interesting proposals are always being given to the NSW government, as well, about such matters.”
Tabcorp released a short statement on Friday welcoming Mookhey’s move.
"This is a positive step towards ensuring the sustainability of the NSW racing industry. Tabcorp looks forward to working constructively with the NSW government and the NSW racing industry during this process," the statement read.
The difference with the NSW funding model on that interstate is that Tabcorp still has nine years of its contract to run, while it was due to expire in Victoria in August. Any deal will likely require an upfront payment by Tabcorp to essentially ‘buy out’ of the contract.
Separately to its retail and totalisator exclusivity, Tabcorp has a licence to run a totalisator in the state until 2097.
NSW is also a different model from the other states as race club funding has been tied to the Tabcorp deal. The decline in totalisator returns over the past decade has left clubs with flat-lined wagering funding.
Bren O’Brien
In 2014/15, the ATC received $83.5 million from TAB distribution. In 2022/23, that amount had grown slightly to $85.1 million, or 1.9 per cent in nine years. In comparison, across the same period, wagering on Australian thoroughbred racing has increased by 59 per cent.
It is easy to draw a line between that stagnation in wagering funding and the current debate over the sale of Rosehill racecourse.
Any new Tabcorp deal in NSW would involve a change of that club funding model.
Complicating the matter is a current court case between Racing NSW and Tabcorp, which centres on the promotion of The Kosciuszko. Papers filed in the NSW Supreme Court say Racing NSW alleges it will lose $6 million as Tabcorp has failed to promote that event properly.
Bren O’Brien
In Victoria, Tabcorp paid $864 million for a 20-year retail exclusivity which ended its long joint venture agreement with the state government, while in Queensland, it ended a long-running legal dispute with the state government there via a $150 million deal which put it, what it said was on the same terms as the other corporate bookmakers.
Both deals involved a removal of Tabcorp’s direct funding of racing, with a boosted POCT rate used as a revamped funding measure. In Victoria, POCT will rise to 15 per cent on July 1, with 50 per cent of tax revenue flowing back to racing.
In Queensland, the 20 per cent POCT came in in December 2022, with 80 per cent pushed back to the racing industry, usurping a host of other funding measures.
It is not known whether the review of the Tabcorp deal in New South Wales will result in a similar hike in POCT. A jump to 20 per cent has been rumoured for some months but there has been no indication from the NSW government that it intends to announce this at next Tuesday’s state budget.
