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On February 5, industry giant Tabcorp released its Half Year financial results. On the surface, it contained good news for the racing industry: revenues were up 4.3%, year-on-year. Yet the devil in the detail reveals a disturbing long-term trend for the funding of racing.
Fixed odds punting was up 33%, while Tote bets were down 2.5%. What does this mean for the industry?
Australian punters have been wooed to fixed odds wagering – especially with the aggressive advertising and competition from corporate bookmakers.
Tabcorp has attempted to respond to this competition – yet to the detriment of tote/parimutuel. This matters, because this has some long term issues for the funding of racing, with more dollars per bet being returned via the tote compared to the fixed odds offering.
In Australia, we don’t see Tabcorp nor Tatts offering real innovation in the tote offering. We haven’t seen take out rates, new bet types or innovative marketing and advertising campaigns. And it is here that the totes have the advantage, especially for exotic bets that rely on big pools, such as quinellas, trifectas, first fours and quaddies.
A little know fact is that corporate bookmakers, in the small print, have a maximum $50,000 dividend on exotic bets such as first fours. I bet extensively via first fours, and you’d have to be dirty if you had 5% of a $100,000 first-four dividend with a corporate only to find that your payout was halved. But that’s the same as the broadcast three totes, and when you have large discrepancies the totes are just handing over business to to the corporates. A national tote is a no brainer but has so many issues to make it a reality.
Hong Kong and the Hong Kong Jockey Club is seen as the world leader and referenced with regards to a successful all tote environment. In Hong Kong, I was on the team that introduced the 10% rebate. For those not following, let me explain:
If you have a $10,000 HKD (approx AUD$1,650) win, place, quinella or quinella place (duet) bet and it loses – you receive a 10% rebate. That’s $1,000 HKD. And guess what happens – that rebate gets reinvested. It’s little wonder that the last race in Hong Kong pool size is by far and away the biggest on the card.
I would like to see Tabcorp take up a 10% rebate and or similar innovations such as packaging up “discounts” for quinellas, trifectas and first fours.
The Victorian TAB arm now commingles with Hong Kong – meaning punting pools are shared. It is interesting to see the differences in wagering behaviour between Australians and the punters in Hong Kong.
Hong Kong punters favour the quinella and quinella place (duet) pools as the major invested bet types. The quinella pool for race 10 yesterday at Sha Tin was just over AUD$11 million dollars. These pool sizes provide tremendous liquidity and the opportunity for larger players to get set which encourages turnover.
That sort of pool is unheard of in Australia – even the 2014 Melbourne Cup received just $1.5m in the quinella pool in NSW.
Its interesting to note that no date has been given for the introduction of commingling into NSW. You have to wonder if our recent state vs state politics is at work for this delay.
Tabcorp’s media and international division was up 5.8% with only the early introduction of Hong Kong commingling – and therefore this figure will be much larger at the full year results.
You have to ask the question of why Racing NSW and Racing Victoria also don’t report half year results in conjunction with its major revenue provider. If we are to learn anything from the TVN closure it is that racing should look to improve its transparency and financial disclosure.
Over the coming months I will attempt to ask these tough questions to the leaders of Racing in Australia with hopefully publish some exclusive and in depth interviews here on Three Wide No Cover.
Robbie Waterhouse now writes in the Sydney Morning Herald and he laments that administrators seemed to have given up on “on course” punters, and I could not agree more.
The bookmaking rings are deserted and the value is online – but even more disturbing is scant regard or respect for the customer on track.
I was on track at Caulfield on Saturday and it was a great family atmosphere with dedicated family facilities and activities. But to watch Sydney races you had to move inside as the races were not displayed on the not-so-big screen. Caulfield needs a big screen upgrade!
Moving inside, the Sydney races would start without commentary, sometimes even 20 seconds into the race. The coordination of vision and sound is an obvious requirement and a basic one that needs to be addressed.
It’s too easy for the customer to stay at his favourite pub or at home on the lounge, but race day attendance is vital to the survival of the sport and the development of new customers.
Next month sees the closure of TVN on March 15th, which will come the day after what could be the most exciting racing showcase with the top sprinters in the Newmarket Handicap. We’ll also see the return of Melbourne Cup winner Protectionist to Flemington for the Australian Cup, with a possible match up against impressive Sydney winner Contributor.
Get to the fence and look for cover!
Jason Cornell is Chief Executive of The Cup Club, founder of Ownerforaday, First Fourologist and previously worked for the Hong Kong Jockey Club.
Three Wide No Cover will be a monthly insight into the business and industry of thoroughbred racing.
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