The Inquiry – Behind The Scenes

(Part One appeared yesterday)

The future of the parliamentary Inquiry into greyhound racing is going to rest on the efforts of several working parties and the eventual decisions of the NSW government. All this will take another six months to a year, maybe more as the exercise runs into the shakedown period prior to the mandated 5-year review of GRNSW structures and operations.

Regardless of all that, please note that the discussions have been constrained a little too much.

First, the dollars. Specifically, reports generally falling under the heading of “economic analysis” of the industry are not really that at all. The work that has been done is directed to what might happen if one or two numbers were changed – for example, tax rates – and everything else remained the same.

The Treasury and its consultant (PwC) have done some sensitivity testing, which is a far cry from delving into the efficiency and effectiveness of the existing system. It does no more than guess at the likely costs and benefits of possible tax changes, assuming that nothing else changes. This is useful in a narrow sense but does not address the major challenge; is the industry best served by continuing under the current rules and its antiquated management structure? Or is there a better way to skin the cat?

What we need to know is whether or not GRNSW and its predecessors have been attracting and spending money in the best way. Are its people productive? Do its investments generate dividends? For example, in the last several years amounts ranging from $0.5 million to several millions each have gone into (re)building tracks at Newcastle, Gosford, Richmond and Dapto. The first two needed alterations within months of opening due to faulty placement of boxes. Badly designed turns created disruptions, and still do. The other two were completely re-built but the result is virtually no different to what was there before – ie faults remained, again related to turns and, in Dapto’s case, a crammed start for its main 520m trip. The money was wasted.

You could also ask if GRNSW investments into breeding subsidies or distance racing subsidies are producing any results, or if that cash could have been better spent elsewhere. Every state has breeding subsidies now but none has ever demonstrated that they do much good.

Second, reacting to the Inquiry’s findings, GRNSW is now to embark on a track improvement program, headed by a new Track Manager (yet to be appointed). But how will it be possible for that to work when no-one in this country has sufficient knowledge and expertise to do the job? The subject has never been studied properly so we are only guessing at which thing does what.

By definition, this will be a wasted investment. To succeed, it must be preceded by a nationwide independent scientific study of all the ingredients that go into designing and building racetracks. Only then will reliable parameters be developed.

Nevertheless, anything good that ever happens in this area can only benefit future betting turnover. It’s a worthwhile target.

Third, a big variable will be the nature of the betting market. It has already changed radically several times, and will surely do so again. Just look how we got here.

In the early 1960s, governments started launching offcourse TABs all around the country to combat the illegal SP gambling that was going on. By the 1990s most had sold these off to private investors with not only exclusive rights but also with a string of regulations which prevented oncourse bookmakers from competing on equal terms. That device ensured state Treasurers got bigger bucks for their sale than might have been the case with more competitive structures in mind. They were supported by the leading thoroughbred clubs who, at that stage, were also the “Principal Clubs” in each state and the forerunners to today’s supposedly independent racing authorities.

Consequently, it was not long before bookmakers rebelled at these artificial constraints and started moving to the more sympathetic jurisdiction of the Northern Territory and going online. Despite the belligerent opposition of virtually all racing authorities and TABs, they prospered with the support of long-suffering punters who welcomed the more convenient service.

Soon after, Tasmania “legalised” betting exchanges (Betfair) against the wishes of other states and its own TAB, which was still government-owned at the time.

Today, you can see that the TABs, having failed to stop the newcomers, have actually joined them in offering similar products. Tabcorp opened its own NT “bookie” operation – Luxbet – and then introduced Fixed Odds betting, which in turn was copied by the NT companies. Fixed Odds, as such, did not fall under the original state laws limiting average takeouts to 16%, so they can now charge anything they like, and do.

In a panic, the WA Racing Minister, urged on by the racing codes, banned Betfair operations in that state only to see the High Court invalidate the new law.

Following perceived poor practices, Racing NSW recently came to agreement with the NT bookies to guarantee full access to any punter investing up to a defined minimum figure. Previously they had been accepted or rejected willy nilly, according to the operator’s wishes.

Meantime, overseas based online operators are trying to cash in on the surge, theoretically contrary to Australian law, and so diverting trade that would otherwise go to local operators and thereby contribute fees to local racing. Of course, more fool those customers who dive in without a lifejacket.

What a mess! Yet it all started because of the greed and short-sightedness of state Treasurers, cheered on by the arrogance of tradition-bound racing clubs and authorities, including GRNSW when under the control of Professor Percy Allan, a non-racing person and a former public servant who is still on the review panel for the selection of members of the state board.

These were all blindingly poor business decisions, often prompted by individuals that would not dream of doing such things in their day jobs. Well, they would not be able to do so because of trade practice laws banning such practices.

So much for the competence of the committees of state racing authorities. Their desire to ignore what was going on in the world around them, and to disregard their customers, has been breathtaking. The nearest parallel would be the spate of cargo cults that spread around the Pacific islands following WW11, in the hope of seeing cargo ships disgorge wonderful cargos at their doorsteps.

The modern version of that is the habit of clubs and authorities to sit back and wait for commissions to arrive after punters around the country have had a bet on dogs they don’t know, running at tracks they have barely heard of. And gambling on a Swedish trotter or the New York gallops hardly bears thinking about. Of course, hope springs eternal but it is not much to base your future on.

That’s why the “economic analysis” you read about so far is largely irrelevant. It’s very pretty but it will not tell you much about the big picture.

More importantly, this history shows why existing racing structures have had their day. Major reform is the only answer, and the only hope for more prosperous futures. The starting point is to remember that racing is not a sport; it’s a business which needs to be managed by businessmen.

Past Discussion

  1. Amen to most of the points in this article,however, don’t hold your breath waiting for any to be enacted.It beggars belief  that in this day of computer design that a professional team can’t be put together to design greyhound racing tracks that work.Just as people like  Ben Lexen and aircraft designers tested out their models  before spending the big money what’s wrong with testing out the viability of designs of proposed racing tracks.Maybe you wouldn’t have the farce of what happened when Mandurah was redesigned and months later after racing commenced’ the middle distance was found to be measured wrongly!

  2. Amen to most of the points in this article,however, don’t hold your breath waiting for any to be enacted.It beggars belief  that in this day of computer design that a professional team can’t be put together to design greyhound racing tracks that work.Just as people like  Ben Lexen and aircraft designers tested out their models  before spending the big money what’s wrong with testing out the viability of designs of proposed racing tracks.Maybe you wouldn’t have the farce of what happened when Mandurah was redesigned and months later after racing commenced’ the middle distance was found to be measured wrongly!