Two Sensational Moves in One Sensational Week

This week there was sensational news. The first of these was that Racing Victoria has decided to impose a fee of 1.25% on turnover for the use of Victorian race fields. The interesting thing is that this only seems to apply to corporate online bookmakers and not the TABs or on course bookmakers.

The idea of a turnover tax is an old one and one that has up until now, gone out of favour. Bookmakers in NSW were so hard hit by turnover tax that many of them fled Interstate to get a better deal. It was this turnover tax regime that led to the rise of the Northern Territory and ACT based corporate bookmakers.

Turnover tax requires a payout regardless of whether the business makes a profit and this is where the issue of fairness comes in and this is before we even look at the issue of whether or not Racing Victoria actually owns the rights to race fields.

Our view is that race fields are simply publicly available information and we the public not only have a right to know what is running but we also have a right to bet with whomever we want and get the best price possible.

To put the issue in perspective, we looked at just one corporate bookmaking entity to see what the net effect would be.

There are credits available for such things as betting back (this is where the bets are laid back but only on the Victorian TAB), existing contributions to both the State government taxes and industry and so on but the net effect for just this one corporate we talked to was in the order of $300,000 -$400,000 per year and have no doubt. If this gets through, the NSW authority will be doing the same.

Now where do you think these huge sums of monies will be coming from? Will the companies bear the cost? We don't think so. One percent might not seem a lot but when added to all the other expenses, it can make or break the year's profits. There will be no choice but to slightly reduce dividends. When you think that those punters lucky enough to win are operating on less than 5% profit it is easy to see how that could drop by 20% to just 4% in future years if this deal goes through.

The second sensation is the move by Robert Nason, formerly of Racing Victoria, to TABCORP. Nason has been totally involved with such things as the TVN / Sky Channel split and as such has an intimate knowledge, or will have, of both side's reasoning and tactics. Some expect that this might see the end of the war between Racing Victoria and NSW and Skychannel, but we don't think so. If anything it could result in Racing Victoria getting their back up even more and believe me, the war is more about personalities than business because anybody with any sort of decent business brain would know that the war is destroying both Racing bodies' revenues and TABCORPs'.

Turnover for all industry players is down across the board while ever the punter cannot see their money go around. In the first few months, revenue was down over 7% and that's millions of dollars that is never coming back.

A similar situation exists with the NSW Government's refusal to allow the STAB and NSW TAB pools to merge. We hope this continues as a competitive situation between the TABS gives punters more opportunity to profit, especially when the corporates continue to pay better then the three main TABS. We calculate an advantage of 13% to the punter as compared to about 8% if the pools merge. In the meantime, Austote continues to grow and will become a force to be reckoned with as there is already an advantage of better then 10% across the board even before any punter bonuses come into play.