If you thought 2023 was a big year in wagering and its relationship with the thoroughbred industry, 2024 promises to be even more significant. We look at the stories that will likely shape the headlines in the wagering space in the New Year.
Wagering industry on edge as advertising reform looms
Ever since the ‘You Win Some You Lose More’ report was released by a federal parliamentary committee in June, the wagering industry has been on tenterhooks as to what the Albanese government reform agenda may be.
The key concerns are two recommendations of the report, one which suggests a total ban on gambling advertising in the space of three years and another which proposes an immediate end to all online gambling inducements and inducement advertising.
The wagering companies have suggested that those proposals, applied most strictly, would mean anything up to $800 million cut off their bottom line, with the racing industry at risk of losing $100 million of funding a year immediately, quickly parlaying to $500 million a year within a few years.
The racing industry has been lobbying hard to get the ear of key ministers in this reform, Michelle Rowland (Communications) and Amanda Rishworth (Social Services). It was expected an announcement of reforms would happen by the end of 2023, but it is now likely to be in early 2024.
The wagering service providers (WSPs) say the ongoing uncertainty is making it hard for them to plan a way forward.
Bren O’Brien
Turnover and taxation adding pressure to prize money levels
The pandemic betting boom on Australian racing is well and truly over. All WSPs and racing bodies have reported a drop in wagering turnover in 2023, as cost of living and interest rates put the squeeze on the discretionary dollar, while increasing taxation on gambling makes it harder for punters to get a return.
The precise nature of this drop sits somewhere between 7 and 10 per cent, with the requisite knock-on for the coffers of the racing industry.
It’s a pattern that is set to continue in 2024, with further gambling taxes coming, including a hike on Point Of Consumption Tax in Victoria, while interest rates are expected to remain high until at least the second half of the year.
What this means is a reckoning in the prize money space for racing. Under the declining returns from wagering, the record levels on offer at the racetrack can not be sustained and some hard decisions will have to be made.
And there might be another spanner in the works. A High Court decision earlier this year opened up the possibility that state-based consumption taxes may be unconstitutional.
The Straight believes at least two parties are looking at challenging the state-based POC taxes on gambling in the highest court in the land.
Bren O’Brien
The $600 million question facing the Victorian industry
So the Victorian licence deal has been decided, unsurprisingly in Tabcorp’s favour, but surprisingly for another 20 years.
As part of that deal, Tabcorp will mail a $600 million cheque to the Victorian State government in June. Exactly who ends up with what of that $600 million is yet to be determined.
Given the Tabcorp deal will only yield $45 million a year for the subsequent three years and a fixed $30 million annually thereafter (the previous joint venture deal injected $130 million into thoroughbred racing alone last financial year), the battle will be on for the slice of the big pie.
That is completely at the discretion of the Victorian government, who given it is facing a bit of a debt crisis, may opt to put the money into areas rather than racing.
Certainly language out of the Minister for Casino, Gaming and Liquor Regulation Melissa Horne after the announcement was more about gambling harm than it was about racing’s net benefit to society.
It should be mentioned that the Victorian racing industry has secured a much better deal from the Labor-led government on Point Of Consumption Tax.
It will now receive half of the increased 15 per cent, which should cover off 75 per cent of the shortfall caused by the end of the JV, but it still needs to cover the gap to ensure it will be no worse off.
Bren O’Brien
Entain favoured to secure WA TAB deal
With the NZ Tab deal done, and Victoria’s licence post-2024 locked up, attention turns back to Western Australia, its still state-owned TAB, and its on-again, off-again sale status.
The WA government put the TAB on the market in 2020, but pulled the pin in its exclusive negotiations with Tabcorp, with the COVID-19 pandemic cited as the main reason for the change of heart.
In October last year, it was at the altar with new player BetR, only for another last-minute change of heart.
By who depends on who you ask, but given BetR’s subsequent challenges, the WA government will feel it has dodged a bullet.
The NZ TAB deal opened up a different way forward and Entain, who won that bid, is now seen as a likely front-runner in any new process in WA. A deal there, said to be worth around $1 billion, would give Entain its first retail foothold in Australia.
Australia’s other two wagering giants Tabcorp and Sportsbet, are likely to be interested parties as well.
Where to for Pointsbet in the chase for Australian marketshare?
Pointsbet, which this year sold out of its US business, is ’stuck in the middle’ when it comes to the Australian wagering landscape.
It sits well above the multitude of smaller corporate wagering players, but with a 5 per cent share of an Australian market that is confronting headwinds, it faces a major challenge to get up there with Ladbrokes, Sportsbet and the TAB.
It is a logical acquisition target for one of the bigger players. This time last year its Australian business was at the centre of a $250 million bid from the aspiring BetR and it wouldn’t be a total surprise to see it part of a broader consolidation play at the top end.
However, there may be another twist in this story. Recent reports in the Australian Financial Review have suggested prominent Australian-based investors in the cryptocurrency casino space have taken a 4 per cent holding in Pointsbet.
