As mentioned in Thursday’s article Tabcorp released their annual report for the 2014-15 financial year on Thursday.
Given the financial year for Tabcorp ended on the 30th of June, it is frustrating that we will still have to wait up to five months for the Australian racing clubs and jurisdictions to release their annual reports.
The sport’s biggest contributor – in terms of money – is reporting so much earlier than the clubs and jurisdictions. Questions need to be asked why this is the case – with electronic records, outdated extended delays for reviewing performances don’t take long.
However, rather than sitting and waiting for the reports to be released we can glean some relevant information from the Tabcorp report.
Based on the results tabled both New South Wales and Victoria should be looking at some largely positive figures, that’s if you can decipher the figures.
Throughout the report two key indicators are repeatedly mentioned, turnover and revenue. As defined by the report “turnover is the amount wagered by customers” while revenue is “turnover minus player return”. In simple terms, turnover is calculated before winnings are paid out, while revenue is calculated after winnings are paid out.
Tabcorp does not break down turnover by state or product, only by betting channel, but they do break revenue down by both state and product to give a clearer indication of what products and states are contributing most heavily to Tabcorp’s revenue.
Reading the report, it is clear that all major products are trending upwards, with total revenue increasing by 6.9 per cent on the previous financial year.
During the 2014-15 financial year sports betting grew more quickly than racing but total revenue from racing still dwarfs that of sports betting. Trackside and Luxbet were the next fastest growing products behind sports betting.
The most positive numbers for the racing industry are the returns delivered to the racing industry, totalling $773 million.
However, dig a little deeper into this figure and you’ll find that the returns derived from Tabcorp’s media channels – domestic and international – are down 5.3 per cent on the previous year. This figure represents the total Tabcorp pays the racing industry to broadcast all races. As such, the fall in this category can probably be attributed to the media rights dispute in Victoria.
Interestingly, the report does not disclose a total turnover figure, however by adding up the different turnover figures you will find that Tabcorp generated total wagering turnover of $12.35 billion.
The analysis does show the continued shift from Tab retail to digital channels with a 17.8 per cent increase in wagering through digital platforms such as mobile and web.
The other notable aspect of the turnover data is the decline in Totaliser betting, a fall of 2.1 per cent, and the dramatic increase in fixed odds betting, increasing by 33 per cent.
Trackside continues its trend of growth, operating on a business model that has a very low cost base.
The stance of Hong Kong Jockey Club CEO Winfried Englebrecht is clear – the Hong Kong jurisdiction would not be introducing “cartoon races” because it detracts from betting on real racing.
While these concerns are legitimate, the allure of a Trackside-like product will likely be too great for Tatts in Queensland as Racing Queensland stares down the barrel of a $28 million loss this coming financial year.
The revenues from Trackside are split between Tabcorp and Racing Victoria, with the two groups holding a 50-50 stake in the venture.
Racing New Souths Wales no longer owns a stake in Trackside after selling off its 17 per cent share in 2011 for $150 million, which was used to fund the new grandstand at Randwick. Racing in NSW aren’t receiving anything ongoing from what we know.
Interestingly, Crown Resort also released their annual report on Thursday. The report featured the first details about the Crown Wagering division’s first six months of operations. The Crown Wagering division includes corporate betting agency Crownbet and Betfair.
The report featured mixed results for the Crown enterprises, with the Wagering division reporting revenues of $89.9 million but an operating loss of $16 million. The report cited significant start up costs, a competitive market and marketing activities, primarily a sponsorship agreement with the AFL, for the loss.
One of the pillars of CrownBet’s growth is the ability to align itself with the Crown Signature loyalty program. This represents an opportunity to market the new venture to existing Crown customers.
In related news, Tabcorp revealed the Tab Rewards program now features over 300,000 members.
The two reports allow us to directly compare Tabcorp’s corporate bookmaker, Luxbet, to Crownbet. Luxbet reported revenues of $53.1 million from a turnover of $735.9 million. Crownbet did not disclose turnover nor its return to the racing industry.
Going forward I believe including contributions to the industry in the annual report, as Tabcorp did on Thursday, will be a positive PR move and more will follow Tabcorp’s lead.
In the meantime, I will continue to enquire as to how much the major bookmakers are contributing to the industry.
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