TAB racing profits help shareholders, not the industry
HOW good a job is Tabcorp doing? We covered some aspects of this subject last week but space prevented us commenting on the international situation.
As you all know, Tabcorp is hell-bent on giving Australians the benefit of racing in all three codes on all continents. Well, greyhounds are limited to New Zealand but that's a start.
The big question is who does this help? After all, the state governments set up TABs for two reasons: to provide a service to the racing industry and to eliminate illegal SP bookies in the pub or on the street corner. I would suggest they got one and a half right. SP bookmaking is pretty well gone now while Tabcorp, later followed by Ubet, has given millions of Australians easy access to wagering. Simultaneously, governments got higher tax revenue (for schools, hospitals and more police on the beat, as the saying goes).
Stage Two of the TAB upward march included sell-offs to private firms (except in WA) and live SKY pictures from the late 1980s, resulting in even bigger turnover for some lucky raceclubs. But that jump quickly flattened out. The improvements were one-offs.
Noting gaps in the marketplace, Stage Three saw the birth of online bookies from the mid-1990s and their steady growth in the following decade, despite trenchant opposition from governments and traditional racing authorities (neither of whom are very good at assessing business trends). It also saw sports betting emerge as a growth field.
In Stage Four, just a few years back, the previous Tabcorp CEO announced that wagering on racing was a “mature” market and so pushed the company into casinos and the like. That had mixed benefits but Tabcorp was still worried about the incursions from NT wagering operators and had to do something for its shareholders. Eventually, casinos were split off into a different company.
Dubious benefits
Still looking for fresh revenue, Stage Five has been the last cab off the rank with the SKY/Tabcorp coverage of international racing in all three codes, often trumpeted as a magical advance for Aussie fans. But is it?
New Zealand is a no-brainer as in all three codes there is a high degree of interchange of runners, owners, trainers, jockeys and so on. It's the seventh state, so to speak.
Elsewhere, the position is murky. Hong Kong and Singapore are moderately interesting as they occasionally include Australian horses and always some Australian jockeys. But seldom would local punters know much about form or track peculiarities.
Only a tiny fraction of English racing would be of interest here – eg when runners include Takeover Target, Choisir, Black Caviar and the like. Otherwise most racing is after midnight (our time) and might as well be on another planet. America is no better while South African racing is of interest only to hear the peculiar racecallers and watch their jockeys ride as though on a carousel (and SA bans greyhound racing, too). The trots in Europe, un-hoppled and with chasing stewards screaming through a megaphone to get horses breaking stride off the track, are just plain peculiar.
Basically, these deals are best common-rated with the Trackside computerised option for poker machine addicts. Form, tracks and probable end prices are no more obvious than the local Mystery bet. They are farcical in wagering terms yet they have one significant influence – they steal from Australian racing.
Tabcorp will point out that a cut of the commission ends up with the respective Australian code but that is small beer. What is expensive is that the overseas races are frequently stuffed into an already crowded Australian calendar. Consequently, whatever is bet on the overseas racing reduces the likelihood of gamblers patronising local races. The existing Australian clientele is finite, at least in the medium term, and has only so many dollars to invest and so many minutes to do it. On top of that, Tabcorp gimmicks like Mystery bets on the “Next Up” will go randomly to a local or an overseas race.
The outcome is smaller local pools. From race to race, the gallops may not notice the difference but greyhounds will, doubly so as they are too small to start with.
Note that Tabcorp further twists the knife by allowing the foreign administration to influence the commission rates – invariably higher than those applying here – pushing more bet types into the 20% to 25% deduction bracket. It is doubtful if many gamblers know that.
Consequently the only people to benefit locally are Tabcorp shareholders who gain their usual share of a higher turnover figure, providing that actually occurs. Whether it does is highly arguable. Watch, for instance, how turnover for a given race continues to escalate whenever there is a delay in a parallel race. Gamblers are attuned to action, any action.
There is some value in coverage of special overseas races in much the same way as overseas cricket or tennis matches are broadcast. But to do it day after day is not only unhelpful to Australian races but also boring. You might as well watch the lemons on the poker machine as they make just as much sense.
In other words, some Tabcorp policy and practices are a long way from “providing a service to the racing industry”. Their prime objective is to make profits, not to promote the local industry. For a public listed company that is understandable, of course. More than that, its directors would be failing in their duty were they not to maximise their returns. The interests of local racing run a distant second.
Re-Setting the Rules
However, consider how those TABs got the gig. Governments offered exclusive access to the off-course market, then made rules which hampered on-course bookmakers and allowed TABs higher commission levels than are applied in any other gambling venture, whether for casinos, pokies or two-up. To boot, the same governments have permitted Tabcorp to set its own prices and conditions for non-tote style products such as Fixed Odds betting. The latter effectively competes directly with on-course bookmakers who are not allowed the same access to customers.
Wagering competition is now superficial at best so the chances of customers getting a better deal now rest entirely with the formation of a national betting pool where the operator with the best prices (lowest takeouts) and best service will win the day. This means state governments have to grasp the nettle, change the rules and give customers a fair go. Only they can overrule TAB boards, just as they skated around national competition policy when they first gave TABs licenses to coin money.
Why is it that they can't fathom that they could then get a slice of a bigger pie?