The Future Is Coming Fast
It's not a death warrant but Tabcorp CEO, David Attenborough, is gloomy about the future of traditional tote business. He's not wrong, but the trend is reversible.
For the half year ending December 2011, Attenborough says Tabcorp revenue increased by 2.8%, which is really not an increase at all as inflation would swallow that up. Tote turnover was down between 5% and 7% in Victoria and NSW, he says, but that loss was offset by growth in fixed odds, Keno and Trackside business.
Let's first make the points that Keno is a lottery and Trackside is a poker machine with animals rather than lemons whizzing around. Neither has anything to do with punting, unless it is to divert customers away from the tote.
Fixed odds is a two-edged sword as it offers a real betting option at the same time as it helps destroy the integrity of normal tote business – ie by reducing turnover to less satisfactory levels. That matters little at most gallops meetings but it's dynamite in small pools. Having said that, it is always in the lap of the gods whether fixed odds are better than normal tote odds. Sometimes they are, sometimes they are not. In 2010/11 fixed odds accounted for only 1.2% of greyhound turnover but that may have increased since.
While all this has been going on, the proportions within tote business have been changing, too. Win betting has been declining and some of the exotic bets rising in importance. That trend could be helped along by a rise in uneducated gamblers and the loss of better punters to other options, including fixed odds itself.
Attenborough does not comment on this but the other major trend in wagering is the fall in market share for thoroughbred and harness racing and the rise in business for greyhounds and sports. Today, the latter two each account for about one dollar in every seven bet. (This ignores Betfair turnover, which is more or less unknown as the company refuses to supply the ARB Fact Book – the source of much of this information – or the public with that data. However, estimates suggest Betfair is responsible for about 2.5% of all turnover).
For greyhounds, some states have recorded small increases in betting turnover but they have also run more TAB races. Betting per meeting is therefore smaller than it used to be. Precise details about these changes are difficult to work out because greyhound authorities (and Tabcorp) fail to supply sufficient information in their annual reports. However, the trend is clear (and was confirmed in a recent media release by the outgoing GRNSW chairman).
(Note: the above statement may or may not be true of Victoria but its annual report is difficult or impossible to study in the author's otherwise reasonable computer system. GRV does not use the normal Acrobat programs to post it on the internet. Curiously, it uses Acrobat for a thousand other purposes).
On the other hand, greyhound authorities do offer a good deal of information about commission received and distributions made. This is all very fine and tells us how much everyone had in the till at the end of the year. But it does not tell us how the industry is travelling as a whole. What the customers are doing is therefore hard to work out from published information (the ARB's aside).
Since wagering turnover has already dropped from 50% to 10% of total gambling in the last 20 years or so, and is now barely covering inflation, this is a major worry.
Greyhound racing's only attempt to combat this downturn is, so to speak, to put more poker machines in the room. Non-TAB country meetings have been re-badged as TAB meetings and bottom level races for bad dogs added to the program in NSW, Victoria and SA, mostly courtesy of spare space on SKY2.
None of these are of interest to serious punters but they do attract mug gamblers passing by. The other two codes are little different.
Racing's future, and any prospect of growth, is now dependent on bad dogs and casual gamblers.
That's not a complete disaster, as cash of any sort is always welcome and there are lots of casual gamblers working the nearby pokies. But how do you know it will continue? What will the competition do? Sports betting is rocketing ahead and likely to grow exponentially for a few years at least (note how newspapers – always a reliable guide – are now giving substantial coverage to UK/European soccer, while TABs are likewise featuring multiple betting options for those matches).
The recent Optus legal victory on its near-live coverage of AFL matches is another illustration of how the electronic marketplace in changing. Telstra is about to see its $153 million investment in mobile phone streaming go down the drain (failing any change in federal laws). Downstream, huge TV contracts are potential loss-makers for those involved. And the AFL is said to be working towards an in-house TV production system for its matches.
Future changes in technology are unknown but are sure to come about in some shape or form. Will that affect how people view races or bet on them? Almost certainly. Risks are there already and they will increase unless racing's management plots a way around them.
Success will come to those who can see a few years ahead and plan their operations to take advantage of the way the outside world is changing and how customers react to those changes. Providing, of course, that racing first finds out who its customers are and what they need and want. Has it learnt its lesson from the fiasco that followed the arrival of NT bookies and Betfair?
Since racing has always lived in the past, rather than the present, there can be little hope it will ever regain its former leading position. Certainly, its current structure is not well placed to compete.
Major reform is the only answer, starting with national betting pools. One thing Mr Attenborough has forgotten is that bigger pools and more stable markets will immediately encourage more investment. Doubly so in greyhounds.
A note of interest – perspective sometimes helps. In about 1996 I was kindly invited to talk at a monthly stewards' meeting, mostly about how they were assessing form. At the end I suggested that stewards should be armed with a laptop, download all the form at the office and thereby be able to properly judge what was about to happen at the upcoming meeting. They thought that was a great joke and laughed their heads off. I wonder how they think today, as it's taken 15 years for that to become a reality? Incidentally, these are the same folk who used to police a ban on taking mobile phones on to the racecourse. Access to fixed phones was banned, too. State laws prohibited race broadcasters giving out pre-race odds.
Before that, seven radio stations, including the ABC, covered races in Sydney alone. Just after 5:30 pm on Saturdays trucks would scream to a halt outside newsagents across the city and dump off copies of the Sun or the Mirror containing results of the last race at Randwick in the stop press (it had the latest grade cricket scores, too). And 15,000 people packed into Harold Park every Saturday night. Many of today's racing folk will not know that, when Tabcorp's predecessor started off, winners did not get paid until the day following the meeting. Ah, those were the days.