FEATURE: The sustainability of racing wagering in Australia explored via new paper

Excellent critique Tristan, strong paper Greg and i disagree (that's a surprise :) ) with stuff here and there but well worth the read addressing a very complex situation.

I think the trackside figures quoted is 'revenue' not 'net income'. Stand to be corrected? translated to last FY = NSW trackside revenue was 44m (14% of total) and VIC 27m (10% of total) Tabcorp TOTAL returned to the racing industry was 263m to NSW and 246m to VIC. Tabcorp are focusing on rolling out their gaming product (casino type venues) and Trackside will probably only become a smaller player. As I understood the original Trackside agreement 10% (max) of revenues going back to the game. When first promoted to the relevant state governments in 2010? this was to see projected revenues grow to $230m 2014/15 - it hasn't and probably won't happen. Bottomline = V'landys deal to sell back NSW Trackside% for $110m on the surface looks OK ... at least 20 years upfront without the sword of Damocles (ban/limits/disincentives on pokies) hanging over RacingNSW's head. ASX Tabcorp final report ... http://www.asx.com.au/asxpdf/20150813/pdf/430gwgvdshkl7h.pdf

Your sentiment 'Backburners' about "Punting should be made easy" was one of the features behind www.rewardbet.com invention of course. Having just spent two days with the highest levels of management of the tote industry from here and overseas - it is a message I've been trying to push through - but unfortunately some still think that punter's want more and more options around bet types. We have 15 plus already ... how much more complicated do they need to make it? It is also very frustrating to see that the so called 'product managers' whom are charged with these tasks - aren't even punters themselves in many cases. Go figure. Contact me directly via RewardBet if you want to have a chat ...

I am a recreational punter and believe a dying breed, being gradually masked by the smart operator. The betting industry is doomed as it has created a multiple choice market that frustrates and confuses the average punter. I punt for enjoyment and relaxation and wager on multiples trying to jag that big double, treble and even more, the thrill of the ride. Punting should be made easy, just as Keno/Lotto, that is why the first Tuesday in November is a betting bonanza. I had no trouble in turning over a free $70.00 bet on Flamberg in the Goodwood Hcp. however, I had to input additional time that was intrusive. People want an experience/reward for an acceptable outlay with minimal input. Until the industry can supply this adventure then it cannot complete with other avenues.

Greg. Will be reading it again but in general a very good paper that highlights the Wagering Landscape or 'ecosystem' as you put it, very well. Pari Mutuel wagering is clearly an inefficient tool within which to fund an industry in this day and age. In jurisdictions like HK and Japan as you mention, they have the perfect storm of all tote betting. Australian wagering has changed forever, but the remenants of that battle seem to linger, with little thought often applied by racing administrators to not overtaxing innovation, ensuring that such niche operators like Betfair aren't gouged to the point of pulling the plug, and that they need to get out of their heads the following: using RFL as a weapon to destroy corporates margins just will hasten racings demise in the long term. Racing only needs to look as far as Harness Racing as a microcosm of what could happen to racing if left neglected and unwilling to really embrace change - both wagering, and other areas of involvement, and the impact of a failure of managing the integrity of the product has dire consequences to betting turnover and general participation in the sport. Whilst racing will never fall as far from grace as harness racing has, there are some very good lessons to be learnt: from the impact of smaller and ever dwindling betting pools, to non-existent on track betting rings - once the biggest attraction for on course attendance - and the glow on benefits they brought to those in attendance - like becoming owners and the like. Yes everyone has a smartphone these days, but people still like to go to the gallops to feel the vibrancy of a betting ring, comparing prices etc. Harness Racing lost that 15 years ago and has been in steady decline since. There are no easy solutions with the challenges of sports betting and the fight for the gambling dollar. However one final point that needs consideration too and I have never heard it mentioned anywhere by anyone before: every week u pick up a paper, you read about skyrocketing housing prices, rents, food in supermarkets. You get articles on how expensive Australia is to live. All very true to those of us paying a mortgage or supporting a family. The pressure on disposable income is probably at all time highs. It is this same disposable income that is the one used for betting, used for investing in the product itself ( horse / dog ownership) and all the bells and whistles that go with it. This is a huge challenge to the betting industry and therefore requires aspects like integrity to be at the utmost levels in all codes because otherwise people / punters will simply go 'why bother'. Those with compulsive natures will keep ticking over, but many people I know don't bet - don't own - don't participate anymore, because they can't be bothered to see their hard earned under-ever-increasing-pressure disposable income be disposed of, in something they view that has major integrity concerns. Recent newspaper coverage confirms as much.

Thanks. That's some serious coin. Mate, if I'd bet on every "great tip" I'd got in a TAB I'd have been homeless years ago! -- Comment from The Roar's iPhone app.

Tabcorp made $100m from Trackside last FY, nearly double that of Luxbet

Hi Allanthus, Re: Trackside - this may blow your mind .. but around half a billion dollars is wagered through it per year across NSW/VIC and Tabcorp makes a nice earner - $80+ million (you can look up their annual report where it is broken out). I used to agree with you re "dice on legs" as we call it in the industry - but you learn as you age ... and Trackside or Virtual Racing (and Sports) is a VERY important stepping-stone when it comes from moving Gaming customers (pokie players, keno, etc) over to Real Racing. So if you think of Trackside of a "try before you buy" for some gaming (pokie) players whom the racing industry would be much better off having betting on horses instead of poker machines - I think we can all learn to appreciate the role it plays in expanding the wagering opportunities and new player engagement (if only it was easier for those players to use). Next time you see someone playing Trackside? Maybe give them your best tip for the day and see if you can win them over to also appreciate Real racing as well!

Tristan/Greg thanks for putting this thought provoking material up. I agree with Nathan and Haradasun that significant improvements won't come by addressing wagering alone. For me at least, the better the product the more interested I get, the more I will bet. But of course the matter is massively complex, with so may stakeholders having conflicting objectives. As a matter of interest, how much is Trackside worth to the TAB? I hate it with a passion, it devalues and demeans real racing, but I guess proves the point that for many, this discussion isn't so much about racing but about how best to part people from their money.

Hi Haradasun, Yes - certainly this paper is addressing at opening up the options for new punters and maximising industry revenue from current (and lapsed punters) including professionals. There are so many people that come across the opportunity to bet on racing that actually miss-out, due to the availability of more exciting and potentially less challenging options. Females represent over 50% of the potential players, but less than 8% bet on racing. Many reasons why - including the lack of good education on how to bet (again as it is complex). Why do so many play poker machines when they are guaranteed to lose in the long term? It's for the entertainment and engagement and other reasons - if racing was better priced then it would be a much more attractive option, even if you knew nothing about it (which is the case with gaming). Interesting comment re Black Caviar - a few years ago we were showing the concept to industry when BC was all the rage. The industry missed a once-in-a-generational chance to capture some of those punters turning out at the racetrack and turn them into potential racing punters. Of course BC's odds were always prohibitive - the idea we showed them was RewardBet with its 'promotional levels' turned on. There would be a big Black and Salmon button on the front of the betting terminals (self-service) at the races; pressing it would take you straight to BC's race. It would automatically choose, of course!, BC as a banker for win; you would have to choose a few horses to come 2nd and 3rd. As it was a promotion - you'd also go 'into a draw' to win a trip to Ascot to see BC race. Some of those 'new' punters would have hit 1st (of course) 2nd and 3rd - they would start to learn that this racing betting isn't that hard and some of them would be turned into more regular race punters. That's the power of an easier interface, good marketing and seeing opportunities to increase the potential future betting funnel.

It's certainly a very thought-provoking discussion paper with many valuable insights into wagering, of which I broadly agree. I do think there is a barrier to betting on racing and that the betting options have become more complicated over time, not less although some bet types have more or less disappeared. "Concession" betting was nearly dead when I was growing up, but I've always thought it was a more attractive option for the recreational punter and somewhat surprised it hasn't made a resurgence. I have to agree with Haradasun that the wagering systems for racing don't exist in a bubble, but in a deliberately manufactured environment of wall-to-wall racing. For a punter at the TAB, or even watching on Sky Racing 1, the racing is relentless and giving the impression that you are expected to punt all the time. This doesn't work as well for markets and exchanges, whether they be Betfair or good old-fashioned betting rings, when a time frame of several minutes of betting activity enables prices to fluctuate and people to get a price. Administrators need to think a little more about how they package racing so that what is shown to the recreational punter is integrated with the wagering product on offer. Take the Scoop 6 in the UK. It exists mainly because Channel Four cover two hours of racing, so it essentially covers the racing being broadcast. Channel 78 has a great opportunity to make similar packages, rather than broadcasting whole meetings it can, for instance, have an hour of programming of four trot or greyhound races and introduce a special quaddie a couple of nights a week. The racing will be high quality and owners will enjoy bragging if their greyhound or pacer is "on the TV". A bit more spacing of races allows presenters to talk both about the racing and how to bet. Essentially, yes, the system of wagering needs reform and this discussion paper covers this brilliantly, but racing administrators have a lot of unscrambling the egg to do as well.

There were a lot more people there “back in the day” for a number of reasons, including minimal off-course tv coverage and a lack of alternative betting options. But you are right with the rewards for breeders. It seems everybody at committee level at the clubs is a breeder of some form. We have Messara in NSW running things and Moodie in Victoria. Of course these committee men are going to push their own interests. And that means more racing, which means more horses, which means more breeding. G1 races for mares only are there to benefit breeders. Racing is a business and the punter is the consumer, but they make decisions that keep alienating the consumer, not attracting them. Maybe the answer is less is more, and only have racing on 3-4 days a week.

I will have to have a proper read. My initial comment is that he is looking at the systems of wagering and has not addressed the unerlying product. Generally if people like horse racing they will learn how to put a bet on surely. The reality is that (in NSW anyway) muppets are driving racing into the ground with poor management and further the quality of racing is diminishing, as the rewards for breeding are too high. You don't have to look too far back in history to see footage of crowds at the track cheering on champion horses. Australians still love a champion horses. It doesn't help when they get retired too early. Secondly it doesnt help when you build a stand devoid of atmosphere. It's a shame that we will never get to hear the roar that greeted Black Caviar in the TJ smith at Randwick. Thirdly I think racing has a bit of an image problem in NSW. People associate racing with old men sitting in tabs betting away, because that is pretty much what racing is geared too and the sport has actively driven anyone else away from it. Wall to wall sky coverage of the next in moe doesnt evoke any imagery. Some decent marketing and promotion might go some way of fixing this. I remember the hit the gg spot advertising campaign and definitely there were a LOT more people at the track then.

I wonder if the racing industry has connected the dots that turnover is down because they fought to have bookmakers pay tax on turnover

Hi Pedro, You are spot on re Owners ... and the return to owners (prizemoney compared to outlays) isn't very favourable compared to some other jurisdictions (most notably Japan). The path to ownership is often via punting .. a love for the sport grows over-time and then the logical next step for many (it is hoped) is to become an owner. The more money that can be moved to prize-money which is 80%+ sourced from wagering turnover, the better for everyone. However, we need to increase the number of participants (as the paper states) in order to maximise that opportunity for the future.

I agree that punters are important in funding racing but I also think owners are equally important and often overlooked. In terms of catering to the punter and increasing the return to the industry there are two simple things I suggest. Firstly the race clubs should run their own betting exchange. This should have happened at least a decade ago but given Betfair has such significant first mover advantage it may never happen. Given the quality of racing administration, particularly in NSW and QLD, I'm pretty sure we wont be seeing such innovation any time soon. Secondly there should be a requirement that all corporate bookmakers (including tote fixed odds) are obliged to accept bets to lose up to the same amount as rails bookmakers.

Might take awhile to get through War and Peace you have here Greg/Tristan but will endeavour to take a look tonight!