bigboydan
08-21-2003, 02:25 AM
Wagering: On the nose
By James Thomson
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The rapid rise of corporate bookmakers and internet betting exchanges is threatening Aus-tralia's $8 billion thoroughbred racing industry. Corporate bookmakers and betting exchanges already account for about $2 billion of Aus-tralia's $10 billion annual wagering turnover, up from $780 million three years ago.
'Unlike registered TABs (Totalisator agency Boards), which return 3-4% of their annual turnover to the thoroughbred racing industry, corporate bookmakers and betting exchanges pay no fees for using its horse races. The industry, now struggling to maintain its share of the gambling dollar (see graph), is missing out on $60-80 million in product fees each year (based on a turnover of $2 billion for corporate bookmakers and betting exchanges).
The chief executive of Racing Victoria, Neville Fielke, says the proportion of punters betting with the corporate bookmakers and betting exchanges could increase to a point where the racing industry's funding will dry up, putting at risk an industry that employs 249,000 people and generates total spending of almost $8 billion a year.
Instead of banning the freeloaders, Fielke wants to welcome them and make them pay to use racing's product. "Racing must fundamentally reorganise its business model," Fielke says. "The content creators need to have more say," he says.
Fielke's plan is sure to attract opposition from Australia's TABs, which pay big money to the states and the racing industry to maintain their monopoly. They see the corporate bookmakers and betting exchanges, which offer punters better odds because their costs do not include product fees, as rogue operators who must be stopped.
But Fielke argues that prohibition does not work; Australia's long tradition of illegal SP (starting-price) bookmaking is proof. A potential solution is to force every betting agency - particularly the corporate bookmakers - to take out a licence in each state where they intend to bet on horse racing. The agencies would have to pay a product fee to that state's thoroughbred racing industry.
The proposal would mean an increase in the TABs' costs. At present, a gentlemen's agreement exists between the states that means, for
example, that any money wagered on a horse race in one state stays in that state, regardless of where the race is run. Under Fielke's proposal, TAB Limited, which is licensed in NSW and pays just one set of product fees to that state's thoroughbred industry, could be faced with seven new sets of fees, and competition from the newly licensed operators.
Fielke concedes that this arrangement could increase the TABs' costs, but could also help protect its earnings and monopolies. He says the racing industry could charge a peppercorn turnover fee on the money wagered in the TABs' retail outlets and a commercial rate on internet and telephone betting turnover. What the TABs lose in costs they would gain in turnover, because they could compete equally with the corporate bookmakers and betting exchanges.
Fielke, who admits that his idea will need refinement, has the support of the Australian Racing Board (ARB), which is pushing for a consistent national regulatory framework under which all betting agencies would pay product fees. The executive officer of the ARB, Andrew Harding, says the gentlemen's agreement has been made obsolete by the effects of technology. "The Australian wagering market is going through the next stage of its evolution. The challenge for racing is to create a framework that is Australia-wide," Harding says.
Michael Piggott, the executive general manager of wagering at Victoria's TAB operator, Tabcorp, agrees that the racing industry must find a way to better protect its product. But he says a stricter licensing regime may not solve the problem, because the "pirates" who are stealing content will find ways to stay outside the proposed framework and continue to take bets.
Piggott says the industry must get tougher on the outsiders by forcing them to pay product fees and by pursuing them for theft of intellectual property, rather than relying on the states to use the licensing weapon.
Whatever the solution, Fielke is in a good position to force change. Tabcorp's gambling licences from the Victorian Government will be reviewed in the next 18 months, providing a chance to evaluate the 20-year outlook for the industry. The Victorian Government depends heavily on gaming taxes (they make up 15% of total tax revenue), so Fielke will find a sympathetic ear.
By James Thomson
Print article | Email to a friend
The rapid rise of corporate bookmakers and internet betting exchanges is threatening Aus-tralia's $8 billion thoroughbred racing industry. Corporate bookmakers and betting exchanges already account for about $2 billion of Aus-tralia's $10 billion annual wagering turnover, up from $780 million three years ago.
'Unlike registered TABs (Totalisator agency Boards), which return 3-4% of their annual turnover to the thoroughbred racing industry, corporate bookmakers and betting exchanges pay no fees for using its horse races. The industry, now struggling to maintain its share of the gambling dollar (see graph), is missing out on $60-80 million in product fees each year (based on a turnover of $2 billion for corporate bookmakers and betting exchanges).
The chief executive of Racing Victoria, Neville Fielke, says the proportion of punters betting with the corporate bookmakers and betting exchanges could increase to a point where the racing industry's funding will dry up, putting at risk an industry that employs 249,000 people and generates total spending of almost $8 billion a year.
Instead of banning the freeloaders, Fielke wants to welcome them and make them pay to use racing's product. "Racing must fundamentally reorganise its business model," Fielke says. "The content creators need to have more say," he says.
Fielke's plan is sure to attract opposition from Australia's TABs, which pay big money to the states and the racing industry to maintain their monopoly. They see the corporate bookmakers and betting exchanges, which offer punters better odds because their costs do not include product fees, as rogue operators who must be stopped.
But Fielke argues that prohibition does not work; Australia's long tradition of illegal SP (starting-price) bookmaking is proof. A potential solution is to force every betting agency - particularly the corporate bookmakers - to take out a licence in each state where they intend to bet on horse racing. The agencies would have to pay a product fee to that state's thoroughbred racing industry.
The proposal would mean an increase in the TABs' costs. At present, a gentlemen's agreement exists between the states that means, for
example, that any money wagered on a horse race in one state stays in that state, regardless of where the race is run. Under Fielke's proposal, TAB Limited, which is licensed in NSW and pays just one set of product fees to that state's thoroughbred industry, could be faced with seven new sets of fees, and competition from the newly licensed operators.
Fielke concedes that this arrangement could increase the TABs' costs, but could also help protect its earnings and monopolies. He says the racing industry could charge a peppercorn turnover fee on the money wagered in the TABs' retail outlets and a commercial rate on internet and telephone betting turnover. What the TABs lose in costs they would gain in turnover, because they could compete equally with the corporate bookmakers and betting exchanges.
Fielke, who admits that his idea will need refinement, has the support of the Australian Racing Board (ARB), which is pushing for a consistent national regulatory framework under which all betting agencies would pay product fees. The executive officer of the ARB, Andrew Harding, says the gentlemen's agreement has been made obsolete by the effects of technology. "The Australian wagering market is going through the next stage of its evolution. The challenge for racing is to create a framework that is Australia-wide," Harding says.
Michael Piggott, the executive general manager of wagering at Victoria's TAB operator, Tabcorp, agrees that the racing industry must find a way to better protect its product. But he says a stricter licensing regime may not solve the problem, because the "pirates" who are stealing content will find ways to stay outside the proposed framework and continue to take bets.
Piggott says the industry must get tougher on the outsiders by forcing them to pay product fees and by pursuing them for theft of intellectual property, rather than relying on the states to use the licensing weapon.
Whatever the solution, Fielke is in a good position to force change. Tabcorp's gambling licences from the Victorian Government will be reviewed in the next 18 months, providing a chance to evaluate the 20-year outlook for the industry. The Victorian Government depends heavily on gaming taxes (they make up 15% of total tax revenue), so Fielke will find a sympathetic ear.