by Brian de Lore
Published 2 August 2019
Australians are the best gamblers in the world. It can’t be disputed – using the 2016-17 figures they bet $23.87 billion on racing alone. Add to that $10.1 billion on sports betting and a whopping $174.6 billion on gaming (pokies and casinos) and it’s easy to understand why the Aussies are the undisputed world champs.
In total, Australians bet a staggering $208.6 million in the 2016-17 season which equates to more than $11,000 per capita for every person over the age of 18. These figures come from the 34th edition of Australian Gambling Statistics which hasn’t yet posted stats for the 2017-18 season.
The relevance in the figures to New Zealand is the $23.87 billion bet on racing because although Australians betting on New Zealand thoroughbred racing accounts for a paltry 2.4 percent of turnover, it still amounts to $572.8 million. That’s the figure that racefields or as RITA renamed it – Betting Information Use Charge (BIUC) – would be applicable for the levy if it was up and running.
Let’s suppose the rate was set at 2.5 percent – a not unreasonable figure when compared to the equivalents in both Victoria and New South Wales. The annual collect from that would amount to $14.3 million or a weekly income of $275,000 – that’s what the racing industry is currently missing out on even though the legislation became law on July 1st and the New Zealand industry is now entitled to collect it.
Last week in this blog, the question was raised of the failure to set the rates, and why the agreements (even interim agreements) were not in place to collect the new revenue streams in time for July 1st. After all, the legislation went through under urgency, and everyone knew well in advance that racefields and the POC (Point of Consumption) levy were two of the most critical components in the Messara Report’s ultimate goal of doubling prizemoney and turning the industry around.
The codes and RITA should have collectively worked with DIA to set interim rates and agreements that could have been in place by July 1st. The three codes and RITA are all desperate for cash and possessed the capability to set interim rates and agreements and could have locked themselves into a vault, ordered pizzas, and not emerged before the job was complete.
That’s the racefields side of things; the other side is Point Of Consumption levies which is the act of applying fees on overseas betting operators when residents of New Zealand use their services to place bets on New Zealand racing.
A few years ago a working group estimated that around $400 million was bet by New Zealand residents on racing and sports with overseas betting operators. Realistically, no one knows the true extent of Kiwis deserting the NZ TAB in favour of Tabcorp, Sportsbet, Crownbet, etc., but the anecdotal evidence suggests it has increased substantially in the four years since the release of that report.
Using the old figure as an example, the $400,000 million would generate an income of around $8 million annually. That figure equates to $150,000 every week, and when added to the racefields calculation, the industry is probably missing out on $425,000 per week.
In last week’s chat with RITA Chairperson Dean Mckenzie the question of urgency on these matters came up, and he responded thus: “We are going as fast as we can go to get that done – absolutely we are.
“I give you my personal guarantee that we have done everything we can – we have shortened timeframes as best we can; we have work going on in the voluntary agreement space.
“We have a workstream going of which there are two elements to it – the voluntary stream and there’s a clause in the legislation that enables us to grandfather-in the agreement. So, we are working as hard as we can on those voluntary agreements with the legislation coming into effect, and we have also got and have significant work going on in the regulatory framework so that we have the second part of the legislation ready to go by the end of the year.
“The goal is to hit the New Year with the regulations all in place, and we think that’s an achievable goal – we are utilising all the specialists we can to get it done.”
Having suggested the rates and forms and agreements posted on the Racing NSW and Racing.com websites could truncate the process and work-load, McKenzie was in partial agreement:
“We are attempting to cherry-pick the best of all the template frameworks that currently exists,” he said, “and are utilising all the specialists we can to ensure that it’s done as efficiently and as quickly as possible.
“The regulations have to be in place by the end of the year to enable formal processes to start from the next calendar year.
“The key for this is that there is a process you have to go through to put the regulations in place – we have no influence on that. And all we can do is do what we are doing, and that’s why we have put all our resources into it – and don’t forget, the betting duty has already been collected.”
The betting duty to which McKenzie refers is the repeal of the $13.9 million annual figure which Minister Peters negotiated with Treasury and announced in the budget to return to the industry gradually over three years – $4 million coming back in this financial year.
On stakes money which a year ago after the release of the Messara Report many in racing had hoped to see double in the new season, McKenzie put a sobering correction on those thoughts:
He said: “We have retained existing funding to the codes for this season, which needs putting into a positive light. There are going to challenges to us committing to that, but we have committed to it.”
The challenges that McKenzie refers to could only mean that at present the money isn’t in place, but they will find it. It’s hard to interpret that remark any differently, but everyone knows that a reduction of stakes money would be a demoralising blow for everyone concerned.
Another season has rolled over, and racing hasn’t seen anything like the radical reform it envisaged or, at the very least, hoped for after Messara delivered his Review of New Zealand to the Minister of Racing just over 12 months ago.
If you took a simple helicopter view of the progress one year on, you could safely say the majority of racing stakeholders, participants, enthusiasts or whatever you want to call them, will be disappointed.
The helicopter view defines the overview of the overall management of the business. The management of the business is the barometer for progress. The progress over the 12 months has been minimal, but RITA has existed for only one month
So far, the only tactile addition to racing’s depleted finances is a portion of the repealed annual betting duty of $13.9 million or just $4 million for the first-year portion. RITA has been awaiting delivery of the Performance and Efficiency Audit which should now be in hand, and which should have a bearing on the restructuring of the administration and a reduction in costs.
It’s been BAU for the first month, but with a full analysis of the audit, the industry will hopefully see RITA spring into stride.
