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Melbourne Cup bookies' tears runneth over? You bet they do


Melbourne Cup hopeful Prince Of Arran during trackwork at Werribee on
Thursday. Picture: AAP

*	exclusive


John Stensholt <https://www.theaustralian.com.au/author/John+Stensholt> 


Editor, The List

You would not bet on it.

Usually the Melbourne Cup carnival, which starts on Saturday, and spring
racing in general are when bookmakers are at the top of the game, making
huge profits from millions of bets by punters big and small.

This year, the bookies say they won't make money at all. In fact, they're
budgeting to lose money and, when pressed, admit they'd prefer punters put
their hard-earned on US basketball than have a Melbourne Cup wager.

The NBA made international headlines on Thursday when Australian superstar
Ben Simmons <https://www.theaustralian.com.au/search-results?q=ben+simmons+>
was involved in an on-court brawl in a game between his Philadelphia 76ers
and the Minnesota Timberwolves.

Better odds for US basketball . Australian Ben Simmons, rear centre, during
the on-court brawl in the NBA. Picture: AFP

But as local attention turns to Saturday's Derby Day and Tuesday's Melbourne
Cup, BetEasy chief executive Matt Tripp blames the drop-off in profits on an
increase in government regulation and taxes his corporate bookmakers and
their rivals are paying at a state level. In particular, he says, a
relatively new point-of-consumption tax said to cost bookies about $270m
annually is to blame for the previously -unheard-of situation.

"I can't believe I'm saying this but it is just too hard to make money this
year," Mr Tripp said. "I used to look forward to the spring carnival but now
I just want to get through it. It is not sustainable. Something needs to be
done."

While no one is going to feel sorry for a losing bookie, -especially given
just about all corporate bookmakers are now foreign-owned, there are big
implications for the racing industry.

Less betting, or "turnover" in racing vernacular, means less money paying
for the huge industry that is racing and the employment it creates. Falling
profits will lead to more mergers in the -wagering industry and less
competition - and therefore potentially worse prices - for punters.

Melbourne Racing Club chairman Peter Le Grand says: "The racing industry
makes its money off turnover so if that is suffering and profits are down
and that keeps going . then it is a disaster for racing".

One bookmaker says 75 per cent of new bets placed are on sports, such as the
NBA, AFL and NRL. "NBA is a sport that young people understand and there are
plenty of betting options for them," says one racing administrator. The
bookies also make more money on sports compared with racing given they are
more lightly taxed.

Chief Ironside takes a sand roll during a trackwork session at the Werribee
International Horse Centre in Werribee on Thursday.

It is a situation Dean Shannon, the CEO of Ladbrokes in Australia, can
understand. "I definitely want to see people betting on racing, I love
racing," he said. "But when you look at it, there are the overseas sports
that we pay less product fees on that are popular and more profitable for
us."

Mr Le Grand says a proper -assessment needs to be made at the end of the
spring carnival.

While turnover was down 20 per cent at the MRC's recent Caulfield Cup
carnival, it had been up 17 per cent the year -before. But he says racing
and government authorities have to be vigilant about shoring up racing's
popularity at a time when the sport has been hit by a series of scandals.

What seems certain is racing authorities and the corporate, or mostly
digital-only, bookmakers will combine forces to lobby state governments to
lessen the impact of point-of-consumption taxes - paid on bets taken in that
jurisdiction and adopted in every state and territory after being introduced
in South Australia in 2017.  (By the Treasurer "Turbo Tom", a politician
dumber than Hanson-Young, -LBL)

In Victoria there is an 8 per cent point-of-consumption tax, though Racing
Victoria also charges product fees, or fees payable to take bets on races in
those states, that are higher for big races. In NSW, the tax is 10 per cent
but fees charged by racing authorities can be lower.

Overall, it has led to bookmakers putting less focus on racing for its
customers, which in turn means fewer bets on the sport, which therefore
could hurt its funding.

Barni Evans, chief executive of Sportsbet, the biggest corporate bookmaker,
said: "The introduction of POC taxes, on top of the existing racefields and
product fees, is having a significant impact on bookmakers' profitability.
This has contributed to bookmakers -reducing marketing, which is -likely
impacting turnover on --various racing codes."

Mr Evans said Australian punters had "never had it so good" when it came to
the incentives and value they received from corporate bookmakers, such as
free bets or money-back offers.

"This has driven the vast majority of the increase in turnover on racing in
recent years," he said.

"If bookmakers can no longer afford to sustain the same marketing investment
because of increased tax, then turnover on racing may suffer.

"It's critical that governments and racing bodies have regard to this to
ensure the setting of tax rates provide for a sustainable -wagering sector
to support a healthy and -vibrant racing industry."

Sportsbet is understood to have cut its marketing spending by more than 10
per cent this year and earlier this year warned the taxes would see $100m
cut from its Australian profits.

While the Victorian and NSW governments are expected to re-examine their
respective tax rates there are not high expectations of a tweak. "It is
pretty hard to get governments to hand money back," one racing executive
said.

Chief Ironside walks back during trackwork at the Werribee International
Horse Centre in Werribee, Melbourne.

Tabcorp's managing director of wagering and media, Adam Rytenskild, said
consumer spending habits could also be a factor pushing turnover on racing
down. "The economy has been a bit soft and the results have been
bookie-friendly," he said.

He also sees a softening market for his bookmaker rivals as an -opportunity
for what is the country's biggest wagering outfit given it operates both the
traditional -retail tote betting and online digital wagering.

"I'm not interested in excuses and the market being tough, I want us to be
more innovative and our brand to be elevated more than any ever before," Mr
Rytenskild said.

Tabcorp, Mr Rytenskild said, provides more than $1bn in funding to racing
across Australia annually. But the popularity of Tabcorp's retail offering
is declining. Like other industries, more punters prefer to bet on their
phones rather than in a bricks-and-mortar outlet.

Tabcorp is the joint-venture partner of the Victorian racing -industry and
its biggest source of funding through its exclusive -licence to run retail
and tote betting in the state. But Racing Victoria's accounts for the past
financial year reveal a 6 per cent slump in revenue from parimutuel betting
turnover. One way Tabcorp is trying to arrest that is by having
notifications for its smartphone app enabled to send customers special
offers when they walk into a TAB venue or pub.

"We are looking at innovation of the tote and some new products," Mr
Rytenskild said.

Yet he also admits that American sports are increasingly popular with
Tabcorp customers. The company has moved to sign official wagering
partnership deals with the National Basketball -Association and National
Football League this year.

"As long as they are betting with the TAB and they are betting on whatever
they are interested in, then that is fine," he said. "Racing is part of our
DNA and is much bigger than sport at the moment."

A cursory glance at the big bookmakers' advertising campaigns shows how
important sport has become compared with racing, with plenty of big offers
for NBA markets and local leagues such as the AFL and NRL.

 

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