Open Letter from Kingsley Bartholomew to RVL and Racing Queensland

Kingsley Bartholomew has been one of the more significant punters in the Australian wagering marketplace for 15 years now. He’s deeply concerned about the future of the industry – and what it means for punters – in the face of proposed new tax models. He has written an interesting open letter to the CEO’s of Racing Victoria and Racing Queensland.

Dear Mr. Saundry and Mr. Condon,

My name is Kingsley Bartholomew. I have been a  punter on Australian horse racing for 15 years. My turnover in that time has been significant. I’m compelled to write to you due to the parlous current state of the wagering industry. I believe the bookmaker tax model you plan to introduce will be the tipping point.

What impact I believe the new model will have:

An immediate decline in fixed odds turnover – followed by a gradual decline in pari-mutual turnover.

Less competitive and higher percentage markets being offered by bookmakers.

Bookmakers will no longer be willing to manage or accommodate low-profit margin or winning clients.

Corporate bookmakers will become more stringent in the closing and restricting of accounts.

Under the RVL model, bookmakers will be willing to take less risk, as they do not want their profit/loss swings to be too volatile. Reduced risk equals reduced turnover. The 15-30% gross profit per meeting rule is one of the greatest ways to suppress the marketplace.

Bookmakers will head offshore where they can offer far more competitive markets in an unregulated environment. The majority of corporate bookmakers headed to the Northern Territory in the 2000’s for this reason – we must make sure the same mistake is not made twice.

Where I believe we’re headed:

On-course bookmakers will become non-existent, apart from major carnival days.

The majority of corporate bookmakers will only service small, recreation punters.

Pari-mutual pools will decrease gradually due to the lack of stimulation in the marketplace.

Both bookmakers and punters will look to other forms of gambling, as Australian horse racing becomes no longer viable.

What I believe should be done:

All states should adopt Racing NSW’s current taxation model.

A 50% reduction of this fee should apply for all on-course bookmakers. On-course bookmakers are the lifeblood of the wagering industry in Australia. They are currently being left to die – I believe we will only realise how important they were to the industry when they’re gone.

State regulatory bodies work together to adopt a federal law where corporate bookmakers per bet risk limits are introduced. It’s absurd that the corporate bookmakers landscape in Australia is made up primarily of foreign owned companies who are virtually able to ‘write their own rules’ when it comes to accepting, declining or cancelling bets.

Ban the closure of accounts by corporate bookmakers. In the UK bookmakers are not obliged to accept bets from anyone. As a result of this unfair marketplace, Betfair now dominates the market and their racing industry is in dire straits. In the past the Australian gambling marketplace has always prided itself on fairness and integrity, this sadly is no longer the case. Bookmakers have always been granted licenses to provide a market (with a percentage in their favour) to all punters – not to find, prey on, and exploit losing gamblers. The online industry has morphed into the latter.

Create state of the art ‘betting pavilions’ at major racetracks in Sydney and Melbourne where punters have access to personalised computers with high speed internet, database access, custom designed betting applications, TAB incentives, etc.

Options to consider:

Tax bookmakers higher on non-fixed odds bets (tote derivatives). This would have a much lower impact on turnover levels, as bookmakers would find it much easier to adjust their betting models. This would also provide less competition to pari-mutual pools.

Reducing pari-mutual takeout and allowing bookmakers to only offer a fixed odds product. I believe we would then be left with the best of both worlds. A vibrant fixed odds market where bookmakers are not continually trying to undercut the TAB, and a competitive pari-mutual with larger pools. Even in Hong Kong – with no fixed odds bookmakers – the government has realised that a 10% rebate is needed to ensure the long-term future of their racing.

A taxation model that includes a tax reduction for bookmakers whose average bet size is high. Bookmakers should be encouraged to accept larger bets – but they are reluctant to – not only because their risk is greater, but also because their profit margin is a lot lower.

In summary

I believe the first question you need to ask yourself when making a decision concerning the wagering landscape is – will the proposed change increase or decrease turnover? If the answer is decrease, it’s the wrong move.

I implore you to give careful consideration to my thoughts. Punters generally, are bewildered at the quickly vanishing integrity of the marketplace. There’s a strong feeling that we’ve simply become fodder for the industry – we have no rights and no voice. If smarts and ingenuity is not nurtured and rewarded by the racing industry, punters will have no choice but to invest elsewhere.

Regards,

Kingsley Bartholomew

Debunking The Spin

Sportingbet pay the King of Spin, Shane Warne $1 million a year to be their brand ambassador. Their adversaries, Sportsbet have saved a million by having their own in house King of Spin, Cormac Barry.

Most of you would have heard the almighty load of self-interest inspired spin that Cormac Barry and Mary Collier of the Australian (European) Wagering Council served up to racing’s most informed and relevant voice Shane Anderson earlier in the week.

They shit they spun troubled me so I felt a need to debunk it.

Let’s start with Mr Barry who took over Sportsbet 2-3 years ago after the Paddy Power buyout.

Cormac told us what innovators he and all the other corporates are, and how much they do for the punter. Shane asked him are punters really getting great service if a lot are getting barred?

Cormac’s response was – “The genesis of customers being banned came into place with the advent of turnover based tax”. Ahhh, no, mate – Sportsbet and Sportingbet ferociously barred punters all the way through the early 2000’s as they were paying no tax at all to RVL, Racing NSW etc.. So that’s that one out of the way – moving on.

Cormac suggested that corporates could service low margin or “winning punters” if a gross profit based turnover model was introduced for low margin clients. Claiming “we lose to the punter and then lose to RVL as well with the present system”.

Seems a pretty stupid idea to me – if I win off Sportsbet they pay me but nothing gets returned to the industry? Further, you promote yourselves as the “fixed odds specialist”. Fixed odds come with risk management – you’re a bookie – if you lose, that’s your problem, not RVL’s. Okay, taken care of that – moving on to Cormac’s corker!

Unprovoked, Cormac went on to claim that the main reason winning clients are barred is because –

“There’s an assumption there is perfect information in the market”

“We can’t be sure if a punter is continuously getting good information, that that information isn’t questionable”.

“In a perfect world where if there was no integrity issue I would have no problem taking bets off all punters”

Luckliy Ralph Horiwitz, Shane’s co-host, reined him in on this one. It was a baseless, deeply unqualified statement. Cormac should have retracted it and apologised immediately – but he didn’t.

I was offended. I’ve been barred by just about everyone – does that mean I’m a hot worker?

Cormac insulted all punters and the industry at large. Not to mention Australian stewards who are proven to be the best in the world.

Where there is money there will always be corruption and bookmakers must protect themselves and sports from corruption, but to claim that’s why punters are barred was disgusting.

I didn’t agree with one word Cormac said. I feel he missed the biggest point of all for corporates in the new tax structure – the per meeting charging of the new tax. He and Mary never mentioned it, maybe because their businesses are so fat they win every day so they need not worry about the unfairness of paying turnover tax on losing days and gross profit tax on winning days.

Mary Collier trotted out the “we reject 1 in 10,000 bets” line when pressed by Shane about account closures.

What is this stupid line? It made no sense when they produced it 8 months ago and it’s still just as irrelevant. All the bookies she represents except for Unibet don’t reject bets, they either accept your bets or shut you down. Unibet who are respected as being one of  the fairest bookies in Australia might reject 1 in 10,000 bets – is she referring to them?

None of the “vocal minority” as she labelled us are complaining about rejected bets – we’re sick of being straight up shut down.

And this is the genesis of my problem with Cormac and the Australian (European) Wagering Council – if they want the respect of the horseracing industry and the community at large they need to stop the groundless spin and start telling the truth about their business models. At present the Govt. are allowing their business model so what’s there to hide?

 

Racing VIC drop a bomb

Racing Victoria has set the cat among the pigeons today with their announcement of a new set of product fees for betting on Victorian Racing product, all to take effect in just over six weeks.

Instead of the current 1.5-2% turnover rate, the new scenario would see 1.5-3% turnover or 15-30% of gross revenue – whichever is greater. Racing Victoria had previously supported the turnover model fought so hard for by Racing NSW in its court battle with the corporates.

Interestingly, it is to be applied on a per meeting basis, which does seem unfair. i.e. If a Corporate turnovers $1 million on Melbourne Cup day and wins $300,000 they pay $90,000 to RVL – they then back up on Oaks Day and turnover $1 million again and lose $300,000 they pay RVL $30,000. They’re square for the 2 days but they’ve paid RVL $120,000. If they’d broke square both days they would have paid RVL only $60,000. Corporates and on-course bookies have a right to be upset about that.

Australia’s biggest operator TABCORP, were supporting Racing NSW in it’s corporate battle. Now that the Victorian racing authority has changed tact with a gross revenue model, TABCORP won’t escape this money grab. They have already announced a $4 million earnings hit for the next financial year.

So what does in mean for punters and the continuing battle for fairness in the Australian wagering landscape?

It’s quite difficult to get an accurate idea, but you can bet that it will be the punters who in one way or another will end up the losers.

Foreign corporate raiders are hardly going to settle for a lower return on their investment here – and the local giants TABCORP and Tatts have shareholders to answer to and revenue targets that won’t be reduced.

Further restrictions and account closures on winning punters will be inevitable. Perhaps we will even see more restrictions on punters who only lose 1-5% of their money. That makes it more important than ever that regulators such as the Northern Territory Racing Commission finally stand up and do something about fairness.

The Australian (or is it European?) Wagering Council’s (AWC) response smacks of hypocrisy as usual. Firstly, let’s acknowledge that the AWC is made up of Bet365 (UK), Sportingbet (UK), Ladbrokes (UK), Paddy Power (Ireland) and Unibet (Euro). There isn’t too much “Australian” about it – it’s a lobby group for foreign interests.

The soon (if not already) to be 100% Crown-owned exchange Betfair are also a member. We’re not quite sure why as in the past they have even disassociated themselves with AWC statements. (Mind you, this decision does have a huge impact on their business also – could they dump Australian racing altogether?)

Anyway, the main argument put forward by the AWC is about integrity and the risk that less competitive prices will lead to a rise in “illegal and offshore betting”.

This may well be the case, but how convenient is the argument now?

Closing winner’s accounts, restricting punters to $1 bets, advising punters that they are “uneconomical” because they have the temerity to win – all factors that drive punters offshore or underground. Integrity doesn’t seem to be an issue when punters are the ones being disadvantaged through a money grab.

Perhaps racing needs to sort out its sustainability issues on its own. Is there too much racing? The answer is most certainly yes.

You can’t help but feel this new fee structure is aimed at getting more of a return for the industry from corporates betting tote odds. Maybe restricting Corporates to only being allowed to bet fixed price and charging them a 1% turnover tax and then 2% turnover tax on Group 1 racing days would be advantageous to all.

If this were adopted, racing regulators and the Tab would have to look seriously at dropping tote pool take-out rates. They’d be loathe to but they are staring down the sports betting juggernaut that charges its customer on average 13% less than racing.

It’s a fine balance between having enough money to sustain a healthy racing industry and then starting to drive punters away to lower margin sports betting.

One thing is for sure, bookies will be passing on most, if not all of the added cost to punters through greater risk-management. Winning will get a lot harder – if it wasn’t hard enough already. If it becomes too hard to have a win, then racing and its direct participants will be the ultimate losers.

UPDATE – Code of Conduct

UPDATE

I have put together a draft Code of Conduct for Corporate Bookmakers in Australia. I feel it is a fair Code of Conduct and considers bookmakers needs and potential liabilities, yet provides a fair market place for punters. It is a code that if introduced, both punters and bookmakers can have confidence in the integrity of the market place they are betting into.

It also presents a straight forward solution to the so-called “untenable on-line conditions” that the Northern Territory Government put forward as to why they abolished their minimum bet rule for corporate bookmakers.

The code can be viewed here.

I have taken the code to the top regulatory bodies in racing in Australia and have sent it to some of the corporate bookmakers in Australia to get their opinions.

Australian Racing Board

I organised a meeting and presented the Code of Conduct to Australian Racing Board Chairman John Messara and CEO Peter McGauran. They believe it to be a credible Code for bookmakers and punters on the issue of corporate bookmaker obligations and account restrictions.

The ARB is acutely aware of the issue due to the significant number of complaints received from disgruntled punters and is considering the issue.

The issue was tabled and discussed at the ARB’s December board meeting.

I will be in touch with the ARB on the way forward in the New Year.

Australian Bookmakers Association

I organised a meeting and presented the Code to Peter Fletcher, CEO of the Australian Bookmakers Association. The ABA is the peak body for on-course bookmakers in Australia.

The ABA tabled the Code for discussion at their annual general meeting that was held a week ago in Perth. The ABA has fully endorsed the Code. They have written to the ARB suggesting that the ARB work with state regulators for the Code to become legislation Australia wide.

On-course bookies are rightly very angry and disillusioned with the unfair playing field they are subjected to. They are enforced to bet all comers while corporates hide up in the Northern Territory and other lax jurisdictions and pick and choose who they want to bet with them.

I have heard rumours that if things don’t change quickly, and corporates are not made to have obligations set on them as well, on-course bookies will no longer acknowledge betting obligations placed on them.

If on-course bookies did do this, it would have serious implications for the horse racing industry. Market place integrity would disappear overnight along with a lot of punters.

I will continue to work closely with the ABA.

Australian Wagering Council

The AWC is the peak body for corporate bookmakers in Australia. I emailed Chris Downy, CEO of the AWC, a copy of the Code and a request for a meeting. To Chris’s credit he said he would look at the Code and is happy to meet in the New Year to discuss.

Tabcorp

I emailed David Attenborough, CEO of Tabcorp, a copy of the Code and a request for a short meeting to discuss. Unfortunately, Tabcorp were not interested in meeting with me to discuss the Code.

Tabcorp had a change in management in their fixed odds team roughly 18 months ago. Since that change they have gone to great lengths to get rid of winners.

Luxbet is just simply banning any successful gamblers from their fixed odds service.

Tabcorp’s own fixed odds department now pick and choose when it suits them to accept bets from clients. They also drastically reduce the size of bets cash punters can have at TAB agencies as soon as they think a winning cash punter is betting at a particular agency.

If you’re losing you can have $5,000 bets, if you start winning they’ll cut the whole agency to maximum $50 bets.

This is to the determent of all other punters frequenting the agency not to mention the betting turnover incentivised franchisee operator.

Changing bet limits in this way is very likely to be against the regulatory framework Tabcorp are bound by.

Tabcorp’s behaviour is how the online industry works now. Corporates do whatever it takes to stop punters winning for the sake of their bottom line, with little regard for market integrity.

Tabcorp consider themselves one Australia’s leading corporate citizens, this conduct in my opinion doesn’t fit this ideal.

Independent Senator Nick Xenophon

I had a brief conversation with Nick Xenophon and left him with my thoughts and what I am campaigning for. He is to consider all this and be in contact with me in the New Year.

Credible Corporates

I have been scathing in my assessment of most corporates. In the interests of fairness, I would point out that when I bet, I bet with Lloyd Merlahan’s Topsport, Mark Morrisey’s Unibet and the Tatts Group owned Unitab. These are three outfits that I, and all other punters I have spoken to, consider to be fair and will always bet you to win a t least 1k. Give them a try if you like.

The Code

Obviously some people will agree and some will disagree with the Code I put together. Please give your feedback in the comments section below.

I am aware that a lot of punters bet on sport and they also need to be considered. Hopefully, if bookies agree to this code, common sense will prevail and sport will be included in the Code of Conduct. While I am getting racing administrators to look at the codes viability for horseracing, sport has to be left out, as they have no jurisdiction over sport.

If I’ve achieved anything out of the noise I have been making it is that now at least all of racings most senior administrators know about the issue.

Racing administrators need to deal with this issue swiftly and decisively in the New Year. Punters deserve a fair marketplace.

If racing administrators believe corporate bookmakers should be allowed to behave like they do, then they need to let us all know. Then at least we can all vote with our feet. Let’s hope for racing’s sake it doesn’t turn into a stampede.

– Richard Irvine

Regulatory changes on the horizon?

Racing punter Richard Irvine has been in the media recently with appearances in the Sydney Morning HeraldToday Tonight and the ABC’s Radio NationalWriting for Fair Wagering Australia and supporting our quest for fairness, Irvine expands on the huge issue of Australian online bookmakers banning winners and betting only losing clients. Could Federal regulation of sports and race betting in Australia be on the horizon?

Media outlets are reporting that Sportsbet have signed a $40 million, 4 year sponsorship deal with Channel 9 to be their wagering partner for their Rugby League coverage. It is interesting Channel 9 are still pushing ahead with having a bookmaker as part of their coverage considering the backlash against Tom Waterhouse last year.

Of course it as all about revenue for Channel 9 and $40 million goes along way to offset the $1.1 billion they paid for the rights to the NRL in 2012. The Sportsbet revenue also comes in handy for the impending float of Nine Entertainment Corp.

Sportsbet and various other bookmakers are determined to become part of our sporting culture because in their opinion they offer an enhanced entertainment experience by giving people the chance to make money whilst supporting their favourite football team. But can Australians really make money off these organisations?

Bookmakers are in the business of selling people the opportunity to make money. If you are shut out by these bookies as soon as you turn a profit (no matter how large that profit is) more consistently than having one or two winning days aren’t they in contempt of their product offering?

So where is the evidence of how ruthless I claim these bookies are? You don’t have to look far.

ABC’s Four Corners did a story in May this year on the public backlash against Tom Waterhouse and his advertising. It was a well-put together, interesting story.

The Ringleader

Cormac Barry, CEO of Sportsbet was interviewed for the story. He painted Sportsbet in a positive light, as if they were the good guys of the bookmaking industry. It was difficult for people who understand the industry implicitly to watch, as we all know there is no more ruthless corporate bookmaker than Sportsbet. I would have loved the interviewer to ask Cormac Barry why profitable punters are shown the door by Sportsbet and only losers are welcome. Of course the interviewer was not aware of this and it was never asked.

Interestingly, Cormac Barry inadvertently admitted the ruthless approach of Sportsbet on Four Corners. Whilst giving reporter, Marian Wilkinson, a tour of Sportsbets plush headquarters trading floor he commented that his team of “analysts” spend their days “monitoring customer behaviour, monitoring customer bets and looking for patterns in their bets”.

This admission by Cormac Barry is actually the modus operandi for virtually all the corporate bookies in Australia. Gone are the days where if you were an analyst for a corporate bookie you would spend your days analysing the odds of a horse or sporting teams chance of winning an event.

Now, due to the reach of the Internet, corporate bookies sit back and copy odds from other betting markets and bookmakers all over the world. They then let all their losing clients bet off those markets.

The analysts then trawl through all bets on these markets looking for punters who back winners or worse still have a bet at the top of the market (where the odds shorten after their bet). When these punters with an edge are found they are shown the door.

The old school skills of bookmaking are lost on the new breed of corporates. As business men and women they obviously have acumen, but as bookmakers they can only be considered as lazy, passive and talentless.

The NRL place paramount importance on their image and reputation within the community. I would like to know what they think about their telecaster having a corporate relationship with an organisation that offer the community an opportunity only to lose money, and hence advancing the prospects of problem gambling in the community.

Problem Gambling

So why do the bookies actions lead to problem gambling? I see it pretty simply. Problem gambling is when punters bet outside their comfort levels and financial means. As punters, we all know the feeling of when you just can’t back a winner. You get angrier and often try to bet your way out of it. Even the most experienced, successful gambler would have experienced this feeling. By the bookies only letting people experience the feeling of losing, it drastically increases the chance of a punter betting beyond their means.

Further, if governments, via their regulatory bodies, condone an industry in which people can only lose money, isn’t that a problem?

I have tried to get this issue some exposure within mainstream media. It has got its fair share, considering that there are much bigger issues in Australia.

The disappointing aspect I find is that the racing mainstream media won’t touch it. You only have to watch an ad-break on TVN or Sky to figure out why. Luxbet, followed by Sportsbet, followed by Sportingbet, followed by Bet365 entertain us with their nauseating adverts.

This absolutely is a big issue for racing. NT bookies have a growing 22% of the national wagering market. Sky and TVN should have enough independent journalistic integrity to at least allow some debate over the issue on their flagship programs, Racing Retro or Racing Review. Much smaller issues get a lot of airtime on these shows.

Bookies Response

With the reasonable amount of media coverage I have received, the corporate bookies, when asked to comment in response to my claims have mostly ignored the requests or used the same disappointing, embarrassing line, “we ban a very small amount of professional punters to protect the odds for our valued recreational gamblers”.

Firstly, the vast majority of the “very small amount of punters” they ban are not pros, just recreational punters who spend a bit of time working out what horse, dog, etc. to back, and hence find an edge. Often they are punters who will bet small amounts like $20.

Secondly, the bookies don’t care at all about preserving odds for their recreational gamblers; they care for their recreational punters as long as they’re long term losers. That’s the embarrassing aspect of their comment – that they “care” for their recreational punters. If they care for their punters why don’t they let them win if they are good enough, especially considering that is the product they offer for sale, the opportunity to win money?

Australian Wagering Council

AWC

Australian Wagering Council

Corporate bookies in Australia have a peak body, the Australian Wagering Council. After much media pressure the AWC released a statement on the issue of banning punters saying –

“Bookmakers will occasionally decline bets placed by professional gamblers. This is because their bets can distort a betting market. In such instances, the odds change, meaning average punters get worse value. Bookmakers protect the interests of average punters by restricting bets from a professional. Roughly one in every 10,000 bets is declined.

Take a typical horse race, for example. Lots of people may want to stake $10 or $20 on the favourite at odds of, say $5. If a professional gambler comes in and backs the same horse with a $5,000 bet, the odds could be reduced to $3.50. The bookmaker may restrict or decline the bet from the professional punter, so the majority of their customers get a fair deal, rather than get short-changed with worse odds.”

This statement is an insult to the intellect of all Australian punters.

My response to this statement is as follows –

The bookies the AWC represent feel they can go against rules that have been in place for over a century for on-course bookmakers. On-course bookies are obligated to bet all comers to ensure a fair marketplace for all. Australia’s leading racing regulators and politicians have installed and maintained this practice for all of time.

AWC bookmakers don’t feel they should offer the same fair conditions. It is fortunate for AWC bookies that they found a tax friendly government and supportive regulator in the NT that allows them to behave like this.

All bookmakers represented by the Wagering Council already have the odds in their favour. By banning the minority of Australian punters who are smart enough or lucky enough to beat the percentage already against them, means that the majority of punters who lose, will only ever be able to lose. As soon as they become winners they will be banned. All losing punters aspire to win, that’s why the industry exists. That’s why people continue to bet. No one is betting to lose.

AWC’s example of a pro asking for $20k/$5k bet is unrealistic. It is in no way a reflection of how the industry works. Further, all I am asking is for all punters to be bet to win a minimum of $1k.

That bet would be $1k/$250 at the odds they describe, some 5% of the wager they use as an example. This would have no impact on the bookies books liability. I am not asking to win $20k, just to win $1k. I feel that is a fair request, no one expects or wants to put a bookmaker out of business.

Also, if bookies were to lay $20k/$5k in a bet from a pro and be forced to shorten the odds to $3.50, wouldn’t the bookie then push the odds of other horses out creating value for recreational punters on other horses? Or would they just leave all other horses the same price and have even more percentage in their favour? I think they would push the other horses out. That is how bookmaking works. Punters love fixed price markets because they move all the time. It’s all part of the fun of fixed price bookmaker betting.

Maybe the AWC should say this –

“The bookmakers we represent only want to bet losers and whilst the regulations we are bound by allow us to do this we will continue to conduct our business in this manner. If you are not happy with the regulations, talk to the Northern Territory Racing Commission (NTRC).”

At least no one would be able to argue with them then.

The Regulator

I have talked to the NT Government (who oversee the toothless regulator, NTRC) on many occasions and on many levels and got nowhere. The Minster for Business in the NT is the Honourable David Tollner. He has the power to change legislation. He has responded to me via email once when he told me to take my concerns to the NTRC. I did that and they knocked me back. In fact after my submission they my made it easier for bookies to pick and choose their clientele.

Mr Tollner also advised me that there were plenty of alternate betting operators available to me. To that I say – If BP is selling petrol 20 cents cheaper than Caltex, as a consumer don’t I have right to shop at BP? Not to mention I am subjected to their endless advertising during my quality time with friends and family watching horseracing or sport in general on TV.

The Northern Territory Racing Commission has a series of "objects" under the Racing and Betting Act - "fairness" being one of them.

The Northern Territory Racing Commission has a series of “objects” under the Racing and Betting Act – “fairness” being one of them.

After Mr Tollner and the NTRC knocked me back I put the story to the media. Three significant media organisations picked up the story. I thought this media attention warranted me re-engaging with Mr Tollner and requesting a phone conversation to discuss the issue. I did this in writing. His office acknowledged receipt of my request and said they would be in touch. A month has now past and I have not heard from Mr Tollner.

Aside from the banning punters issue you have to query the revenue corporate bookies in the NT actually raise for Mr Tollner’s government – especially if you are a resident relying on tax revenue to help improve basic amenities such as hospitals and schools.

The NT-based bookies have paid a pittance in tax to the State Government since the first bookie, Centrebet, opened for business in 1992.

Amazingly as their turnover grew, the NT Government saw fit in 2010 to reduce their turnover tax. Admittedly, they reduced their tax in the face of competition from Tasmania trying to lure the bookmakers down to the Apple Isle. Tasmania offered bookies a deal where their turnover tax would be capped at $258,000. The NT Govt. shot back with a cap of $250,000. They all stayed.

This tax concession meant the NT Government went from receiving $11.3 million in 2009 in tax to a paltry $2.35 million in 2012. In the same period the bookies turnover grew by $1 billion from $4.7 billion to $5.7 billion. Yep, that’s right, grew by a billion to $5.7 billion.

Governments allow gambling as it produces revenue for them and creates jobs within the allowed gambling industry. They usually take their fair whack, but the income the NT Government receives off $5.7 billion of bookmaker’s turnover seems a little light. Territorians are being massively short changed, not to mention the rest of Australia who are seeing potential revenue for their state governments leaked up to the NT.

To put it into context, the NT lotteries turnover was $50 million in 2011/2012, the NT Government. saw fit to tax that turnover some $15.8 million. The bookies turned over $5.7 billion and payed $2.35 million in turnover tax. I’ll let the numbers speak for themselves.

The only possible argument I can see that NT bookies and NT Government can use to defend the tiny tax the bookies pay is that they pay race fields fees to all racings peak bodies, and pay GST to the Federal Government. But none of this revenue goes directly to the NT Government.

They could claim the industry creates jobs. The bookies employ 300 people in the NT. Every job in Australia is valuable but 300 is not exactly an amount that would cripple NT if the industry upped and left for Tasmania.  They used to employ a lot more than 300 people but the bookies have moved a lot of their infrastructures, and therefore jobs, to Melbourne and Sydney. I guess there is more fun to be had in Sydney and Melbourne.

NT bookmakers paid nothing by way of turnover tax to Australia’s peak racing bodies up until 2012 when forced to by the High Court. Peter V’Landys, Racing NSW CEO, fought hard for the turnover tax model he thought was right for the industry and won. I emailed him asking for his opinion on the issue. This was his response –

Thank you for seeking my input on this matter.

Racing NSW does consider this to be a very important issue and is fully appreciative of your views on this matter.

I was surprised and disappointed that the Northern Territory Government recently introduced a ruling that corporate bookmakers are not required to accept bets to a minimum amount and could further close the accounts of anyone they chose.  Unfortunately, Racing NSW has no control over the regulatory requirements that the Northern Territory imposes upon wagering operators licensed in its jurisdiction. 

I agree with you that it does seem incongruous that, in this day and age of responsible gambling, successful punters can be shut out.  It is unfair not only on the punters but also means that the wagering operators that operate in New South Wales and other States that are quite properly required to bet minimum amounts are at a disadvantage.  In my view, the fairest approach would be for all States and Territories in Australia to have the same minimum bet requirements and wagering operators not have the ability to close an account, or restrict its operation, simply because a punter is too successful.  That would ensure that the punters are given a fair go and that there is equality for the wagering operators”.

Having arguably Australia’s most prominent racing administrator take time to give me his thoughts on behalf of Racing NSW makes me feel the principles of what I am campaigning for are right.

NT bookies are 80% owned by European companies. They are bringing their business model to our shores and dictating to us on how to run our industry. Just ask any expert on the UK racing industry if the model has worked for the betterment of UK racing. Don’t be surprised if the term “dire straits” is used to describe the UK industry.

These European companies have paid huge amounts of money through company acquisitions and big advertising spends to get access to the Aussie market. I feel they have massively overestimated the viability of the Australian marketplace.

Sure we love a punt, but we have a population of 23 million not 500 million like in Europe. The market was pretty established and set before they came. I do not wish failure in business on anyone but I think some of these organisations are going to go back to Europe lighter in the pocket and with their tail between their legs.

Mind you, when Ladbrokes, the biggest bookie in the world, opens for business here and some punters are not even allowed to open an account with them because one of their industry experienced bookmakers has recognised their name (yep, that happened to me), it is hard to have much sympathy for them if they fail. They’re a $2.7 billion company though, I’m sure they will be okay no matter how their down under experience turns out for them.

TABCORP take a stand

Interestingly Tabcorp has taken aim at the corporates in the NT recently. Tabcorp CEO David Attenborough, during his annual address said this:

I would now like to address the issue of wagering regulation.

Wagering in Australia is currently regulated on a state-by-state basis. Tabcorp has long held the view that a consistent and national approach to wagering regulation is necessary. Not only is it in the public interest, it is also in the interests of the Australian racing industry and sporting codes, and will deliver a better outcome for government.

In the 2013 financial year Tabcorp returned more than $725 million to the Australian racing industry through wagering and contributions from our Media and International business.

The regulatory regime for corporate bookmakers licensed in the Northern Territory is very different to the states’ framework. These differences have driven the increased activity of the Northern Territory licensed corporate bookmakers, who do not have the same licence commitments that Tabcorp does. Indeed, up to eight cents in every dollar spent with the TAB on a totalizator bet goes to the racing industry. This compares with only 1 to 2 cents in the dollar for bets placed with corporate bookmakers licensed in the Northern Territory.

In the 2012 financial year, wagering taxes collected in the low-tax Northern Territory regime were a little over $2 million, despite more than $5.7 billion in turnover attributable to the Northern Territory licensed corporate bookmakers. In the same period, Tabcorp paid $292 million in state wagering taxes in NSW and Victoria on turnover of $10.8 billion, a proportion which is 77 times greater. Given one of the primary aims of licensing gambling products is to return a fair share of the proceeds to the community, the Northern Territory is grossly under taxing its licensed corporate bookmakers.

I would also like to talk about tote odds products offered by corporate bookmakers licensed in the Northern Territory. These are products derived off our totalizator dividends. In simple terms, totalizator dividends are calculated taking into account Tab’s funding commitments to support the racing industry.. The low level of racing product fees and taxes paid by the Northern Territory-licensed corporate bookmakers, combined with the fact that they don’t have obligations to share revenue derived on tote odds betting products with the industry, enables them to offer enhanced tote dividends to punters. Over the medium to long term this regulatory difference will undermine racing industry funding”.

I agree with Mr. Attenborough completely on all counts. His comments will cannibalise Luxbet (Tabcorp owned) a bit, but Luxbet’s plight is insignificant when compared to funding that the TAB provide to racing. The TAB needs to be allowed to protect this revenue. Without tote revenue staying at about 75% of the wagering market the industry in its present form isn’t sustainable.

I also agree that corporates should not be allowed to bet tote odds. It won’t help me or other punters, getting best tote plus 5% is great, but it is not the corporate bookies product to bet on. The TAB administers and promotes their tote odds at their own expense, so why should NT bookies just be allowed to copy them? It really is the TAB’s intellectual property.

Mr. Attenborough never addressed the issue of NT bookies banning punters. That’s because Tabcorp are right into it as well. Luxbet get rid of winners and now the Tab’s own fixed odds section go to great lengths to weed out winners. Surely Tabcorp has a responsibility above all others in the industry to give punters a chance to win?

The Future

I think you will find the Federal Government will step in soon and announce nationwide regulation of the horseracing gambling industry. The economics of the situation will be too compelling for the Government to ignore.

Hopefully the Federal Government will address punters being banned at the same time.

If they need something to compare it to they could ask the Australian Stock Exchange. The ASX appoint market makers like Macquarie Bank to their derivatives market. Market makers are bookmakers of the financial markets. Market makers are obliged to transact with any investor who wishes to place a derivative trade with them. If they refused someone’s custom, they would be hauled before ASIC and be in serious trouble. It all sounds familiar, right? Right up until the bit about being hauled before the industry regulator.

I have a phone conversation scheduled with Independent Senator, Nick Xenophon in early December. It will be interesting to get his thoughts and hopefully get the ball rolling for change. Not just change so punters can’t be banned but also change so that racings revenue is protected so racing can continue to grow and prosper.

We have the best industry in the world; let’s keep it that way. The rest of the world are welcome to get involved but on our terms, not theirs. Because the way racing has been run in this country for all of time has led to the vibrant, rewarding industry we all love. Of course we can always improve and keep learning, which goes without saying.

Maybe this is a rant or maybe I’ve hit the nail on then head. All feedback (positive or negative) is welcome below.

Cheers

Richard Irvine