Racing: NZ safe... for the moment

New Zealand will, for the next two years, be insulated from the type of massive percentage drops in stakemoney for features races like the AJC announced on Thursday.

But hold the phone on what may happen beyond that.

New Zealand's racing industry will at least have the back-up of the $3 million per year Winston Peters found for each of three years for major designated races.

The first year of that is about to finish and the 2009-10 and 2010-11 seasons will also be underwritten.

New Zealand racing has already been told by the Government that beyond that point there is no chance of the money stream continuing.

The double whammy will come if betting turnover levels continue to be affected by the economy.

Sydney's announced stakes drops have little to do with betting turnover levels as such.

It is where that betting is done that is badly affecting Australia.

New Zealand's TAB has a total monopoly whereas Australia battles with corporate bookmakers who contribute little or nothing back to racing because they are based in states that allow tax havens.

Australia also faces the even greater problem of leakage from the international giant Betfair.

It allows punters to both back horses and "lay" them - betting them to lose by playing bookmaker.

Although racing precincts around the world hate to admit it, Betfair is a magical product and its response reflects that.

It is in its infancy in terms of appeal in New Zealand compared with Australia, but that will change.

Because of the situation, Australian betting across the board in terms of tax back to the industry, returns just 4.5 per cent, compared with New Zealand's 8.5 per cent.

That will change when Betfair becomes more popular here.

Every move to make Betfair illegal around the world to stop the erosion of betting turnover has been unsuccessful.

Inevitably, overall stakes will decrease in New Zealand, The Racing Board paid $140 million to the industry for the current season and that will drop to $119 for next season.

The prediction for the following season is $125 million.