By Bren O'Brien
The prospect of a national Tote pool by the end of next year could provide some relief from the growing headwinds faced by the wagering and broader thoroughbred industry.
Tabcorp has confirmed it is working with a variety of stakeholders including the state-based Principal Racing Authorities (PRAs), in a bid to smooth the path for all three national totalisator pools to be merged.
While not confirming what the timeline involved would be, a statement from Australia's biggest wagering provider indicated the desirability to find a way to deliver a solution which could arrest the decline in pari-mutuel wagering in Australia.
“A national pool would provide deeper, more liquid betting products for customers,” a statement from Tabcorp said. “This would strengthen the competitiveness of the tote to address the national decline in pari-mutuel betting, which in turn would enhance the long-term sustainability of racing industry funding.
“A national pool would provide deeper, more liquid betting products for customers." - Tabcorp statement
“Combined pooling requires agreement from a range of stakeholders. We are committed to working through the process with all parties.”
Tabcorp, which manages the tote pools in Victoria and New South Wales, and recently completed the takeover of Tatts, bringing together Queensland, South Australia, Tasmania and the Northern Territory, is now in a position to deliver on the long-held ambition to create an Australian-wide super pool.
Bigger pari-mutuel pools across the board would enhance the desirability of them as a betting option for larger punters, providing greater liquidity.
That would arrest the decade-long decline in tote wagering in Australia, which is currently tracking at around 6 per cent per year, despite a significant boost in wagering turnover on Australian racing in the same time, with a huge growth in fixed odds betting.
Changing times
The funding model for thoroughbred racing has changed significantly since a variety of legislative changes in the late 2000s paved the way for substantial growth in corporate bookmakers.
Five years ago, Racing Victoria reported that 62 per cent of its wagering revenue, or $211 million, was derived from its joint venture with Tabcorp, which is driven primarily by pari-mutuel wagering.
For 2018/19, that amount had dropped to $176 million, and for the first time in the current funding arrangement, less than half (48.4 per cent) of overall wagering revenue derived.
There has been a huge lift in prizemoney in the two main racing states over the past few years
While Racing NSW's funding model differs, it has reported a similar change in landscape.
The decline has been more than offset by the contribution of corporate bookmakers, primarily through race fields fees.
The resultant 'rivers of gold' have led to huge lifts in prizemoney in the two main racing states over the past few years and that in turn has flowed through to confidence in the broader thoroughbred industry, with important indicators, such as sale averages and stallion fees, trending near historic highs.
Corporate bookmakers face headwinds
But the seemingly unending growth of the corporate bookmaker market has hit a snag in the form of greater regulatory costs and burdens.
The imposition of Point of Consumption Taxes by state governments across Australia has put greater pressure on margins at wagering companies, who have also had to contend with greater restrictions on incentives to attract new and existing customers.
There has also been substantial consolidation of wagering providers, with many of the major players either being merged or acquired by global wagering behemoths.
The imposition of Point of Consumption Taxes by state governments across Australia has put greater pressure on margins at wagering companies
The upshot of that has been felt by day-to-day punters, in terms of a price point, with betting percentages offered by bookmakers increasing, making it harder for punters to make a profit.
That, and a confluence of other factors, have had an ongoing impact on wagering turnover this spring. Caulfield Cup day betting turnover was down 24.6 per cent in Victoria on last spring, Cox Plate Day was down 12 per cent and Melbourne Cup Day down six per cent.
While racing bodies' current funding agreements do protect them from such fluctuations in turnover, the trend does threaten their long-term future funding models. They have become increasingly reliant on that revenue since the decline of pari-mutuel betting.
Last financial year revenue collected from race fields legislation contributed $130 million of total wagering revenue of $205 million for Racing NSW and $188 million of $364 million for Racing Victoria.
Opportunity presents for Tabcorp
The situation has a number of implications for Tabcorp, including an opportunity to re-invigorate its pari-mutuel product.
Bigger pools from a national approach would provide both liquidity and better price certainty while giving the Tote product a price-point advantage as it can operate at smaller margins.
It also allows Tabcorp to effectively put an end to the 'best tote' markets which have proven extremely popular with corporate bookmakers, as there would be one single tote market across Australia, excluding WA, which is in the process of privatising its TAB.
A national tote may assist in finding solutions to the challenges faced by the thoroughbred industry
Strategically, it also shapes well for Tabcorp, with its wagering licence in Victoria, and the resultant joint venture, up for renegotiation in 2024.
As it stands, it holds retail exclusivity in NSW until 2033 and a licence until 2097, a licence in Queensland until 2098, retail exclusivity in SA until 2032 and an overall licence until 2100, licences in Tasmania and the ACT to expire in 2062 and 2064 and Northern Territory until 2035.
While a national tote is unlikely to be a silver bullet which will deliver ongoing funding certainty, it will at last foster a national approach to finding solutions to the challenges faced by the thoroughbred industry. That is a necessity in the current environment, where the entire industry finds itself under increasing public scrutiny.
