Punters enjoy a flutter at the Hastings racecourse during the Hawke's Bay summer festival. Photo / Duncan Brown
Punters enjoy a flutter at the Hastings racecourse during the Hawke's Bay summer festival. Photo / Duncan Brown
The future of the TAB and the way Kiwis bet on racing and sport is under the most in-depth investigation in its history. But those expecting quick changes or a wholesale outsourcing of the TAB's activities to overseas operators could be in for a shock.
The Racing Industry Transition Authority took over the running of what used to be known as the New Zealand Racing Board last week, the six-person RITA panel replacing the former NZRB executive on July 1, a change that will have gone largely unnoticed by most punters.
But RITA will now be charged with deciding the future path of the racing industry and which recommendations outlined in the Messara Report, released by Racing Minister Winston Peters last year, can and will be implemented. While there were initial calls for the Messara report to be implemented in its totality, that won't, and almost certainly legally can't, happen.
Several key recommendations around betting levies, race fields legislation and the formation of RITA have already been put in place and the Weekend Herald understands RITA met with the TAB's leaders this week to ask some hard questions.
The answers they glean about the TAB's performance, both in the marketplace and internally, will help with their eventual report to the Minister around any potential outsourcing of the TAB or the creation of joint ventures.
Outsourcing of the TAB was one of the hottest topics post the Messara report, especially as many in the racing industry are disappointed or angry at the TAB's performance, costs and returns to the industry.
Those returns would seem unlikely to grow this year although the exact funding figures for the new season are yet to be released.
There have been very vocal calls for the whole TAB business to be outsourced, which would mean a lot less costs but would result in the industry being controlled by an overseas betting agency.
As that conversation has matured the appetite for a total outsourcing has waned in many quarters as it has become more apparent while the licence to bet on New Zealand racing and sport could be granted for a set period of time, once the local TAB is dismantled, there would be no putting it back together again.
The thoroughbred code has been by far the biggest advocate for outsourcing but they failed to get their preferred nominated rep on RITA and the six-person panel now has a neutral look to it, whereas an NZTR rep would almost certainly be a vote for outsourcing.
Instead it looks more likely RITA would advise the Minister that rather than outsourcing the TAB as a whole, all and any joint ventures should be investigated and any future bidding process for betting rights should be open to all parties to increase competition and boost the price.
The Australian TAB, known as Tabcorp, are certain to bid for the licence and most other facets of the TAB's business, while Sportsbet, like Tabcorp, put forward an initial soft offer when outsourcing was first investigated by a committee from NZRB and the codes last year.
The Weekend Herald understands those initial offers, which were always going to be lowball, were of around $100 million for a 25-year licence, including broadcasting and digital media rights as well as the right to programme New Zealand race times.
While $4m a year doesn't sound a lot of money, the real benefit to the industry was seen as the cost savings.
Betting industry insiders suggest at least two other massive overseas bookmakers are investigating bidding for the New Zealand betting licence, one reason RITA will want any tendering process to start with a clean sheet of paper.
While that TAB entire package could still potentially be up for grabs for the right money, RITA's members are more likely to suggest to the Minister he protect the independence of New Zealand racing first and look at joint ventures to increase returns to the industry without dismantling the TAB.
That could mean protecting the likes of broadcasting and the times local meetings are programmed, inside a co-operative framework with Australia, which already takes place.
Complicating the matter is how any overseas operator who won the licence for betting on New Zealand racing and sport would meet retail obligations — running your local TAB or pub tab.
Retail outlets are expensive and nowhere near as profitable as ever-growing online gambling but are still seen as an important link between betting and the general public.
That is just another piece of a very complicated outsourcing or joint venture puzzle and one that RITA looks increasingly likely to start working on with a clean sheet of paper.
And if overseas examples are anything to go by, the process could take more than two years to complete if a major outsourcing, or more likely joint venture, was entered into.
WHAT THE CODES THINK
Mauro Barsi, chief executive, Greyhound Racing NZ:
Mauro Barsi.
"There is merit in investigating the outsource option, and we should definitely complete a proper due diligence process for the industry, one capable of clearly communicating the risks and rewards of such a major transaction for an iconic New Zealand owned business.
Outsourcing is, however, only one option of many. This type of choice is a once in a lifetime decision. Once outsourced it would be very difficult to return to the industry and while there may be substantial monetary rewards initially, there are also questions to be answered about commitments to ongoing investment, control of the racing calendar and the place for "industry good" in a more commercial environment.
Overall, we welcome the discussion and believe that the outcome of a robust process — whatever that might be — will be good for the industry."
Bernard Saundry, chief executive NZ Thoroughbred Racing:
Bernard Saundry.
"Outsourcing is not a true description of what we are attempting to achieve — in effect, the racing industry is seeking to partner with an international operator to run the TAB.
This would allow continued investment in the betting business to stay relevant and compete. We do not have the scale to compete successfully in a global betting and entertainment marketplace.
Improving returns to the 50,000 people involved in NZ racing is our priority. Partnering with an international operator will provide operational synergies, access to better technology and an improved customer experience for punters on and off the track while ensuring we can control our industry and its future."
Peter Jensen, chief executive, Harness Racing NZ:
Peter Jensen. Photo/ Race Images
"Our focus is on improving returns to our stakeholders and the key to this is growing distributions, in a meaningful way, from the wagering operator. We are agnostic on whether this is achieved through improved performance from the TAB or via an outsourcing or joint-venture arrangement with an off-shore operator. Punters in New Zealand now have many options in terms of who they choose to bet with so the focus must be on innovation, improving engagement and ensuring the local offer is competitive.
As an industry we cannot take a short-term view on this decision. While we need an immediate injection of new funding, what is equally important is that we are building a sustainable industry that our participants are able to invest with."
$400m dilemma for industry
It is the industry money maker nobody seems to be talking about and many punters won't want put in place.
But banning New Zealanders from betting with overseas agencies could be one of the quickest money makers for the struggling racing industry.
At present Kiwi punters enjoy some of the most liberal internet betting laws in the world and many, including those at the top of the three racing codes, bet not just with the TAB but with overseas bookmakers, most via the internet.
Latest estimates suggest more than $400 million a year is lost to overseas betting agencies and while the new point of consumption tax and race fields legislation will claw some profits back from that, if that $400m was bet with the New Zealand TAB, the returns to the local industry would be enormously higher.
Of course not all that $400m would bet here if the overseas options disappeared but put simply, if Kiwis could only bet with the TAB here, the racing and sports industries would make a lot more money. That would effectively give the TAB a monopoly on all racing and sports gambling conducted in New Zealand and has a second, hugely important benefit.
Officials from overseas agencies set to bid for a New Zealand betting licence have confirmed they would pay significantly more for those rights if they were a monopoly, which would translate to a much bigger up-front payment to the racing industry.
Of course, having only one bookmaker available to New Zealand punters could see them at the mercy of markets set to brutally high percentages but that could be tempered by rules around setting markets and even a punters' watchdog agency, who ensured markets and restrictions on winning punters were kept in line with overseas norms.
Closing New Zealand punting borders would require a legislative change and wouldn't be popular with the punters who currently enjoy a myriad of options. But it poses the question for punters: are you willing to cop less choice about where you bet if the whole industry profits?
