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.
kv joef
Roar Guru
Thx Jason, had a v.quick look and the following is not to be taken as an endorsement :) . My first concern is that there doesn't seem to be a 'privacy statement'. Probably an oversight. i had forgotten about that app. It seems very similar to the TABpro things. At least they don’t want to charge $2500/year to use it. i'm generally not a supporter of 'hub' betting but that is just a personal preference as i'm old school but for the player with no privacy concerns it looks OK. Mind you, i didn't see the ‘exotic’ math the app uses being described anywhere but figure it just basic stuff so the ability to modify odds from a starting set is good. I'd support the WARNING of going gently for those unfamiliar with this style of betting, paying particular attention to the market-warnings it gives. TAB markets can sometimes offer very small total pools. A player should never bet more than max 1.5% (ie .015) of the final (projected) pool. the old 'Expert Betting' model allowed the user to just submit a final ‘text’ delimited sheet without alluding to the methodology. EG there are some who believe estimates (odds) to be dynamic i.e a horses winning estimate is not necessarily the same estimate for running second or for that matter running third :) . the RewardBet app probably provides a basic computation giving a more skilful way for the recreational player to bet but in its own formulation the official pricing/odds model is preserved. BUT it may certainly prove useful to a naive/newbie/recreational exotic gambler. It seems very easy to use and free is always a good price … but like any betting tool it can become disastrous in foolish or desperate hands and it certainly is not the panacea of mountainous riches. As for the official pricing models ... i'm all about messing them up :) .
Jason Cornell
Expert
Hi KV, Yes the high roller customer management is very secretive part of any wagering operation. Re smart device app - have a look at Reward Bet. Let me know what you think. Thanks for the kind review. Cheers, Jason
kv joef
Roar Guru
Great article Jason, The betting tax difference between Vic and NSW is a prob. Supposedly that will be sorted after the upcoming NSW election. Tabcorp has been very successful with 10% days in the past where the max pool take-out was 10% but they seemed to have disappeared. Not quite what you are suggesting I know … but I for one would welcome your initiative :) . The TABcorp are a most annoying organisation. they can’t seem to make up their mind as to what they are? I had a look at the TAB’s new (beta) website the other day and it looks good. I’m sure online users will be happy enough with its speed and obvious improvements… BUT … What has rankled me for some time is TABcorp’s withdrawal of their ‘expert’ betting service unless you are a ‘silver member’ or better (ie reaching a certain turnover). For those not familiar with the TAB Expert Betting Facility, it allowed a punter to submit 100s of bets in a few seconds. It is the style of betting the teams and larger players use. When available to all, it is boon for the small exotics player as technically, using the flexi-style bet, they could bet with the same authority as big players … betting the exotics to Odds, a Kelly formulation or whatever risk-management strategy a player might want to use. Smaller players are forced into box, stand-out, anchor, rover type bets that only advantage those who refine their bets to some degree of preciseness. 'Box' style bets cause small players to over-bet long-shots by default. A simple smart device app could make this facility available to most punters BUT, yes there is always a ‘BUT’, and in this case it is ... that it might remove some of the cream big betting/turnover ‘risk-managers’ crave and even more threatening = TAB outlet turnover may dwindle because gamblers will be using their smart devices to bet and not the pubtab outlet machines. In short, I think the TAB has moved away from its punting base, lapping after the high-rollers and that base has been swept up by the corporates. As for getting people to the tracks during off-carnival times … good luck with that. PS MAX I don’t do interviews … unless there is a Latina involved :) .
sheek
Roar Guru
Thanks Jason, Thoroughly educational read. Being an aesthetic lover of horse racing rather than a punter, I'm going to have to read your article several times over to fully digest & understand it! Cheers.
Jason Cornell
Expert
I believe Harness made a terrible long term mistake leaving Moonee Valley and Harold Park. Greyhounds after Monday night have a long way back re branding. Thoroughbreds - great opportunity to get some type of national bet. I have trademarked a Saturday Super 7 that I am trying to pitch.
Jason Cornell
Expert
Hi Andrew, I am a MRC member and fully agree with your comments. Great family day. Yet we cant get the audio right? Track resurfacing - ok Jason Kerr has that job - and a great job according to comments re the track - might get poached by Sydney. A few spare resources to address some issues. It was a G2 from Sydney and not shown on big screen. So what they wont show the Golden Slipper? Quick question if you were in the members bar. Was the TAB and EBT's still open post the last race? They had a problem with that with the AFL finals last year. Would you like to see more non raceday events at the MRC for your membership?
Salvatore Not I
Guest
Nice first article Jason. Amazing how all codes like to use specific data from the TAB to suggest turnover issues aren't true, when as you rightly point out the TAB's themselves are cannibalising their own tote product with fixed odds. In the two smaller codes the drop in Pari mutuel betting is alarming, but there has been significant increases in fixed odds. What the CEO's never disclose is whether the subsequent increase in fixed odds margin is enough to offset the decline in Pari mutuel hold. In harness racing it isn't but they will never disclose that, just paper it over with Harokd Park money or something similar. The greyhounds were the one code whom seemed to be getting things right until the Four Corners aimed up and did their best to inflict a mortal wound on the sport. You are spot on re the Hong Kong model. The player churn is greater which is what you want. For some reason the ignorant who seem to run the show in various jurisdictions seem to completely disregard models that work. Always stunning how the various codes shoot themselves in the foot in this regard. I give it 10 years before the real pain is felt via funding. Greyhounds will struggle to recover but will benefit from the demise of harness racing which is going the same way as bowls, golf clubs in some places, and other sports that seem locked in a 70's time warp.
andrew
Guest
Jason - I was at caul too and am a MRC member. the MRC are upgrading all their screens in may. in fairness - the priority in the last few months has been the track resurfacing. there is stuff about the new screens on their website. I think the MRC do a great job to get you on track. they had the cricket on all day for those interested and the regularly show the football. the members bar was open until the last in perth just after 8:30pm. a great day.
MAX
Guest
Hi Jason, Your experience at the coal face and an easy informative read will benefit Roarers. There is only one thing wrong. Monthly may be half rations if your first is any indication. I would like you to interview kv joef, a master analyst. May your returns exceed your outlays, regardless of your positioning in the run. Best regards MAX .
Geoff Parkes
Expert
Yes, it has to be the right race, field not too small or big. I use a roving banker but instead of having it for 4th I rove it for 3rd and 2nd and double up for 1st. A bit trickier to put on, but that way I'm backing myself with my top pick, if it comes 4th then so be it but if it wins I get a better return. If something is really short then I pass on the race, even if i like something to beat it, it kills the value if it runs anywhere in the 4. But on the other hand races with a false favourite are like gold.
Jason Cornell
Expert
aaah a fellow FirstFourologist . Major rules - pick adequately sized pools - jackpots are fantastic. Have confidence in your own ability - disregard the win odds - this is the market to win - you want it in the FF. Big on roving bankers.
Geoff Parkes
Expert
Hi Jason, thanks for the article and nice to have you on board! I too bet almost exclusively in first fours, which can be fraught with danger and lead to a few barren spells, but when you get it right, particularly if a shortie misses the placings, then the rewards can be very satisfying indeed. Will be keen to hear about your system/rules at some point.
Bondy
Guest
I no longer attend feature race meets but attend the odd provincial meet .I find the peace of being at home more comfortable ,punters want to be relaxed not in a stressed environment and armed to the teeth with form and bet SP .
Will Sinclair
Roar Guru
Not sure who'd you'd interview Jason, but I'd love someone in power to talk about race scheduling and the likelihood (probably none) of getting a reduction in Group One races (we have 76 or so now right?) and a national approach to scheduling so that the best horses race each other more often.
Jason Cornell
Expert
James, I cannot for the life of me understand the beer queues at Randwick. Its as if the serving staff are working in slow motion and the queues certainly detract from the surrounding areas. Jason
Haradasun
Roar Rookie
The biggest shame for me is the lack of atmosphere on course. It sent the hairs on the back of my neck on end when the crowd roared as Black Caviar ran down a gallant Hay List. Sadly we will never get that again at Randwick. There is a huge disconnect between grandstand seating (of which there are only 8 rows or so) way way up in the atmosphere (sorry) and the ground level, with the coffin like atmosphere of the chairmans lounge in between. There is a huge allocation of seating for the chairman's club only, which is constantly empty. It just doesn't work. When they desgined the theatre of the horse they had scant regard for local conditions. It is a complete logistical failure I agree. That you also have to scan out through one terminal to get from the members to the theatre of the horse is another ridiculous failing. Jason, I would love to hear Darren Pearce's comments on the initiatives they are putting in place to rectify the current failings of the grandstand design. All I hear these days are grumblings from just about 100% of the members I come across and deafening silence from the board and club in general. Bear in mind they will be starting works on Rosehill this year. Let's get some proper feedback on the proposed changes before they completely stuff that up too.
Jason Cornell
Expert
Bondy, Good comments. Re traditional habits I would have loved to buy the UK Tote. Uk punters not exposed to any exotic bets - quinella, trifecta etc. But they love the Pick 6 and it gets national attention when it jackpots. Same as the propensity of VIC punters to have a quaddie v NSW. I personally love First Fours and am working on setting up a business called FirstFourology The totes have the advantage re the exotics and should spend a lot more marketing focus on this. Do you go to the track and back with the on track bookies? I used to love that as a kid at the Nowra races and the joy of getting a point over - certainly is what hooked me. Didn't help my career advisor at school was a bookie! Hope you like the monthly article - send to your friends. Jason
Jason Cornell
Expert
Hi Will, Yes the Randwick refurbishment seemed to lack some logical thinking. Royal Ascot stuffed up the sight lines in year 1 and had to rip them up. The ATC is a bit cash strapped to make the changes that i think a required. Theatre of the Horse? I either get sunburnt or wet! Who would you like to see me interview? Jason
Bondy
Guest
What's difficult is to try to train punters away from their traditional habits I'm not into duets and quaddies and dont want freebies either, SP all day for me . I do agree or concede the punters on course should derive some benefit for actually showing up that off course punters dont receive, perhaps and extra half point per race they wager in . Interesting when Tvn winds up it will be unfortunate just as the big features are on and its primed for the FTA's to maximise on their grief . Racing consumers " proper people " will be the poorer for Tvn's loss, racing will now go to FTA's and Celebrity Chef tipsters ... Enjoyed the article Jason ....
Haradasun
Roar Rookie
Couldnt agree more with a lack of on course amenity at randwick. Poor access to the mounting yard, sound and vision are out of synch on screens, there is a bar queue obstructing entrace to the ring, expensive and poor food for what its worth, poor track surface, limited interstate bookies from where it used to be, you shouldnt be allowed to drink in the ring ala vrc. You could go on. It is atrocious mis management.