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The five stories set to shape Australian wagering in 2023

Wagering is the backbone of Australian racing and the industry is facing a pivotal next 12 months.

Australian racing is facing a period of change. (Photo by Getty Images)

The wagering industry is a complex mechanism for collecting and distributing the racing industry’s wealth. This year is shaping as a time of change for that industry. So what are the stories that will make the biggest impact on how wagering and the thoroughbred industry intersect?

1. The Victorian TAB licence

August 2024 has long been circled on calendars as the time when the current 12-year joint venture agreement between the Victorian government and Tabcorp ends. But the future of parimutuel/retail wagering in Victoria is likely to be determined in 2023. The tender for the new licence closed in August and now that the Andrews Labor Government has successfully negotiated the November election, it should be only a matter of weeks or months until its strategy is confirmed.

Why it is especially important for the broader wagering industry is the signals it sends. Should the incumbent, Tabcorp, retain the deal, then it would be seen as a setback for the broader aims of the corporate bookmakers which have challenged Tabcorp’s business model over the last decade or so. But should the licence change hands, or indeed, be offered on a non-exclusive basis, it would change the Australian betting landscape forever and place severe pressure onto Tabcorp as a business.

BetR looked poised to swoop in and claim the WA licence last year, a move which would have given the new player considerable momentum going into the Victorian process. But a sudden change of heart from the McGowan Labor government in WA saw the deal taken off the table at the last moment. It was an indication that while the value of parimutuel/retail wagering licences has diminished significantly, they carry considerable political weight.

There may be more significant financial deals struck in 2023 in the Australian wagering industry, but in terms of symbolism and a possible move from the old world to the new, the Victorian decision will be fascinating.

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Tabcorp's 12-year joint venture with the Victorian government is expiring. (Photo by Getty)

2. BetR’s possible takeover of PointsBet… then the world

Writing this column 12 months ago would have likely just included the name ‘Matt Tripp’. At that point, we all knew that the wagering megastar, who built and sold Sportsbet and Crownbet, and made a fortune selling them, would be back with another wagering offering. We also knew he had been working with Newscorp, Australia’s largest media company, who have long harboured ambitions in the corporate wagering space.

That it took until October for the ducks to line up in a row and for BetR to be launched was perhaps the surprising part, but Tripp and his team wasted no time making their mark. The $101 Melbourne Cup promotion will be studied by marketing students for years to come as a model of brand promotion and customer acquisition. It came with considerable risk – and brought regulator scrutiny, see later – but all with the reward of up to 300,000 new users and headlines around the biggest race of the year.

BetR’s acquisitions look to be far more corporate in flavour in 2023, and first on its shopping list was the Australian arm of PointsBet. Tripp and o already had one shot at PointsBet, reportedly offering $220 million for the Australian customer base back in June. The latest offer, confirmed over the Christmas-New Year period, values PointsBet Australian business at a higher premium.

The significance of a PointsBet acquisition lies in the growing share of market BetR will achieve and the technological and product development it can glean. The share-of-market may still be dwarfed by that achieved by Tripp’s former home, Sportsbet, but it is another step up the ladder for a company which has made rapid progress in little more than three months. It is also unlikely to be the only major acquisition the ambitious and well-funded outfit is likely to make in 2023. Previous form tells us that Tripp’s companies don’t stand still for long. 

3. The politics of gambling

The bunfight over pre-commitment technology and cashless cards for poker machines during the current New South Wales state election campaign tells us how explosive politics and gambling can be when they come into contact. Liberal Premier Domenic Perrottet is being pressured by industry lobby groups over his stance to impose mandatory pre-commitment on the state’s pokies, while the Labor opposition is being pressured from the other side for not supporting the reform.

The significance to the broader wagering industry is that this has all arisen, not to address problem gambling, but because of concerns about money laundering. The massive scandal involving the country’s casinos and their willingness to become a vehicle for funds of dubious provenance, particularly from overseas, has placed the spotlight on how money is sourced.

It doesn’t take a genius to figure out that the booming thoroughbred wagering industry of recent years might also come under the microscope of regulators and end up on the political football field. Indeed, Sportsbet and Bet365 are currently under audit by AUSTRAC’s anti-money laundering team.

As the casino industry found out, and the pokies industry is finding out, it is hard to control the narrative when the political spotlight is shone into every nook and cranny of your business. It is questionable whether every aspect of the racing/wagering industry would stand up well to such a stern public investigation.

4. Taxation

In many ways, taxation has been the saving grace for gambling when it comes to the aforementioned issues. The flow of wagering revenue has proven a godsend for state governments and kept regulation to a minimum. But when the government don’t get what they see as the right cut, the wagering industry soon finds out. 

There is no better case than the Point Of Consumption Tax (POCT) which has been implemented in every state and territory over the past five years. Unhappy that a Northern Territory licensing loophole meant they were missing out on taxing corporate bookmakers, the states found a way of taxing them according to where customers were based.

Initially introduced at between five and ten percent of net wagering revenue, the states soon discovered they could get far more out without substantially impacting demand. The POCT rate, depending on which state you live in, is now 15-20 per cent and reaping far more revenue than governments could have hoped for.

The change that it is making, and why it is such a significant story is in the way money is being distributed from the wagering to the racing industry. The landmark race fields fees case won by Racing NSW in 2009 saw governments cut out as the middleman when it came to industry funding, with money passing effectively straight from the corporate wagering industry to the racing industry.

Racing NSW boss Peter V'Landys. (Photo by Getty Images)

POCT is ‘changing the plumbing’ back to the old model, with the bookmakers now taxed, and the governments passing that money on.

But while the payment is imposed upon the bookmakers, the cost is pushed onto the punters through reduced margins. At some point, that becomes a disincentive to wager, which will then impact turnover, which then flows onto funding and taxation. It is this pain point which appears most vulnerable during a time where there is a broader cost of living crisis.

How does that create headlines? Let’s not forget Newscorp, who led a major campaign to prevent the introduction of Point Of Consumption Tax, which it labelled a ‘Punters Tax’ in 2018, is a significant shareholder in BetR, while other media companies benefit greatly from the marketing and advertising budgets of the country’s biggest corporate bookmakers.

5. Advertising and promotion

Gambling advertising has walked a precipitous line between promotion and saturation for much of the past 15 years in Australia. On a broader level, the advertising of gambling is on the nose of the Australian public as it courts a too close relationship to the sports which families watch. Regulation brought to heel some of the in-game promotion of odds in major sports, but the constant exposure of children to gambling ads, particularly through online methods, is becoming a major social concern.

Racing has been given a free pass in this area, as it is seen as a much more gambling focussed medium, but in a time where the industry is forced to defend its social licence more than ever, and the volume and style of gambling advertising makes it hard to sell racing as a family friendly sport. There is a very valid argument to prosecute that the racing industry has surrendered control over its marketing to the wagering industry and that has skewed the way racing is promoted in Australia.

The second aspect of this, likely to attract attention, will be the other promotion methods used by bookmakers. BetR’s $101 Melbourne Cup and $21 Cox Plate promotions are the centre of investigations by New South Wales Liquor and Gaming, regulators asking whether the vastly inflated odds represented improper inducements for people to gamble.              

The boundaries in this promotions area are still being made, and often being pushed by a wagering industry more desperate than ever to find new customers. But each new promotion and the subsequent reaction by regulators, are likely to create plenty of discussion and headlines.

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