The respective $30 million prizemoney announcements of New South Wales and Victoria this week have garnered plenty of headlines, but arguably the most significant news when it comes to the future commercial prosperity of Australian racing came out of Queensland on Monday.
The prizemoney wars between the two major states have been fodder for the media masses ever since Racing New South Wales upended the spring status quo by announcing the formation of The Everest. Parochialism and self-interest has reigned thereafter.
But as influential a figure as Racing NSW supremo Peter V’landys is, the future of thoroughbred racing relies on much more than one man, and the loyalty, or spite, he generates.
Australian prizemoney levels have more than doubled in the past decade, providing a level of return to owners the envy of the world, and while the high-quality product put on by the racing bodies has played its role, the major driver is the favourable commercial environment when it comes to the deals with wagering operators.
Racing NSW fought and won the key race fields legal battle a decade ago and the rest of Australia’s jurisdictions have reaped the rewards, with the decade-long boom in corporate wagering driving increasing returns, and in turn powering prizemoney.
The one casualty of this boom has been the role of the TAB, and the parimutuel funding model which has previously commercially powered the racing industry for 50 years. Put simply, the joint venture agreements struck between the various state bodies and Tabcorp have become much less valuable.
To put that in context, in 2010/11, Victoria’s industry received 80 per cent of its revenue, $202 million, from the Tabcorp joint venture. In 2020/21, that contribution has plummeted to 38.3 per cent, or around $150 million.
Corporate wagering behemoths such as Sportsbet and Entain have grown out of this landscape and become a major source of funding for all the state racing bodies. It would be a case of everybody wins, if it wasn’t for the state governments, who found the Northern Territory registered corporate bookmakers were beyond their tax reach.
Enter the Point Of Consumption Tax. Introduced gradually across all Australian states and territories in the past five years, it is designed to tax corporate bookmakers based on where their customer is based. It has proven a very useful way for state governments to retrieve control of the money which had previously been flowing directly to racing bodies through race fields fees.
