High Court Race Fields Decision To Start Industry Reform?

There’s nothing like a bit of corporate spin to make the world go round. Especially in racing where, viewed from one angle, it is little more than a long line of tipsters, all anxious to grab a piece of whatever punting you are doing.

Champion Profits is a tipster. For $97 a month (or $400 upwards for a day’s instruction) they will put you on the road to success. Better value is what you should be chasing, and so on, and we will show you how to get it. Well, good luck to them, too.

But Champion Profits is run by two highly skilled Betfair types, or so they tell us. Its main man, Scott Woodward, has just sent out a media release warning all and sundry about the dire fate that will hit the industry if the High Court tomorrow rules in favour of the Racing NSW bid to wrap up its 1.5% turnover-based race fields fee. Woodward warns it will lead to horrible losses, even closures, in the corporate bookie ranks and to the rebirth of illegal bookies. Racing will be the loser. All said with a straight face.

Well, everyone is entitled to their opinions but they would carry more weight if they attached some facts to their stories.

Without doubt, NT bookies (or corporate bookies, as they are oddly titled) and Betfair have provided a huge boost to the wellbeing of racing. It had been in a moribund state as short vision and tradition-bound policies hampered development and diverted the racing establishment’s gaze from what was happening in the real world.

That’s starting to change – albeit slowly – as the supply side of wagering (TABs, bookies and Betfair) tries to convince the demand side (punters and the public) to take a bigger interest. It has not happened yet, as growth amongst the newcomers is really doing no more than filling the gaps left by the oldtimers. Despite all the hype, total turnover is static at best (wagering on racing went up by only 2.5% in 2010/11, or less than the rate of inflation), and genuine punters harder to find. Or, as analysts IBISWorld reports (SMH 20 Mar): “Sports betting is the only form of gambling other than casinos that has been increasing in popularity”.

Meantime, NT bookies obviously have latched on to a winner, as evidenced by the stream of takeover offers they are getting from European companies. That gives the impression that a modest increase in costs can be handled fairly easily.

Yet all this misses the key point. Racing is funded by two groups – punters and owners. But without owners there would be no races and no punters, or bookies for that matter (something the Productivity Commission failed to address properly in the wagering section of its report on problem gambling). And studies show that those owners are flat out getting an average of 50% of their money back. Most of them are in the business for love, not profits. Coming out in front would be a windfall.

In turn, maintaining or increasing that 50% is a function of prize money which is supplied by raceclubs, helped by state racing authorities. Where do they get it? From betting commissions, racefield fees and the like. But it has not been enough to boost prize money sufficiently and to properly maintain facilities (hence Randwick’s new $180 million grandstand is being financed by a government grant, with help from Tabcorp’s Trackside, while greyhound authorities have more than once noted declines in the standard of major assets).

Long term viability of the racing industry therefore depends on the operating side getting a bigger cut of the action. If it does not come from racefield fees then it will have to come from somewhere else. Some clubs are furiously trying to diversify – into motels, for example – or selling off land (the ATC in Sydney) but in practice they are playing catch-up and not really getting ahead of the game.

Certainly, the very structure of the raceclub as we know it must come under scrutiny, too. Innovation and reform are clearly necessary to enable them to compete strongly in a more challenging world. You can’t expect a 50 to 100 years old system to work forever.

Oh, by the way, Betfair is now launching a bigger bid to get into the bookmaking sector, no doubt with some help from Champion Profits. That move alone tends to water down Woodward’s cries of anguish. Yes, Betfair still intends to make the betting exchange its prime business but it wants to compete directly with other operators for a bigger slice of the pie. Which is also why Tabcorp set up its bookmaking operation (Luxbet) in the NT. Competition is great, isn’t it? Except in retail TAB operations. Ah well, you can’t have everything. Or can you?

This column will be astonished if RNSW does not win at least its basic 1.5% argument. Legal technicalities aside, a loss would amount to the tail wagging the dog. Whether you like your local authority or not, it is in charge. Any reasonable decision has to be respected or the sport will descend into chaos. But, one way or another, tomorrows’s High Court verdict will cause consternation in the industry, so get ready for it.

Probably the more critical aspect of the whole subject is how that authority is made accountable to the public and the industry, but that’s a matter for another day.

Either way, more funds must flow from betting to racing operations.