‘The industry is turning into a poker machine’: Is prizemoney bubble set to burst?

NSW’s POC rate was lifted from 10 to 15 per cent for this financial year, meaning the levy on bookmakers for all bets made by customers in the state at the time is eating further into their bottom line, which is passed on to punters.

It’s worse in Queensland and the ACT (20 per cent), while South Australia and Western Australia (15 per cent) will surely be joined by Victoria (10 per cent) imminently.

Racing NSW boss Peter V’landys.Credit:Rhett Wyman

For an industry which revelled in the COVID lockdowns as a population in isolation turned to gambling on racing as a distraction, is the wheel about to turn?

There’s enormous pressure on the cost of living with rising inflation and interest rates, right on the eve of the racing industry’s most important period with spring carnivals in Sydney and Melbourne fast approaching.

Coupled with less value in betting markets, one of the industry’s most aggressive bookmakers, TopSport chief executive Tristan Merlehan, says the POC increases meant he’s “tried to cut turnover back by 30 per cent after spending millions trying to grow it”.

“What business in the world does that, and how is that good for the industry? Unfortunately, the industry is turning into a poker machine,” he said.

‘Every wagering operator has a role to play in funding the NSW racing industry to ensure ongoing prizemoney increases and investment.’

Tabcorp CEO Adam Rytenskild

“Previously a customer that might have lost at five per cent, who was betting responsibly and well within their means, was a really good customer from our point of view. You knew that was sustainable and they’d be with you every week.

“Now someone that’s losing at five per cent is getting shown the door by many operators. Punters are forced to lose at 10 per cent or more to be profitable from a business point of view. It’s the epitome of irresponsible gambling.”

But critics will point to the recent half-yearly results of behemoths Sportsbet and Ladbrokes and ask: what is all the fuss about?

Sportsbet’s parent company Flutter’s profits keep rising, and it said it could absorb the $125 million it is forecast to pay in point of consumption taxes for the 2023 financial year.

Sportsbet has also funded a new $6 million bonus for a sprint series during Sydney’s spring carnival to revolve around The Everest and the Nature Strip Stakes. They wouldn’t have blinked twice about spending that money to get a toehold into the traditional Tabcorp stronghold at Racing NSW.

The London-based Entain said its net gaming revenue rose 19 per cent to $304.3 million for the six months to June 30 compared to the same period last year.

With aggressive marketing campaigns, the giant brands such as Sportsbet and Ladbrokes will still retain hundreds of thousands of recreational punters, or “mug money” which will underpin their revenue.

Tabcorp chief executive Adam Rytenskild is unapologetic about his company’s lobbying for their foreign-owned rivals to pay greater POC taxes.

“Every wagering operator has a role to play in funding the NSW racing industry to ensure ongoing prizemoney increases and investment in infrastructure,” he said.

Queensland’s point of consumption tax is a whopping 20 per cent.

Queensland’s point of consumption tax is a whopping 20 per cent.

“We’re really proud to provide the funding to the racing industry that we do while continuing to provide generous promotions to our customers. It’s time foreign-owned operators did the same.

“The proposed increase to the POC tax will ensure sustainable long-term funding certainty for the NSW racing industry – that’s a good thing. Currently, foreign owned online bookmakers pay half the wagering fees and taxes as the local TAB.

“Foreign-owned online wagering operators should pay the same wagering fees and taxes as the local TAB – that is fair.”

Robbie Waterhouse says the changes could be a ‘disaster’ in the long term.

Robbie Waterhouse says the changes could be a ‘disaster’ in the long term.Credit:Nick Moir

But it copped a stern rebuke from Responsible Wagering Australia boss Justin Madden, who represents the digital bookmaking group and questioned Tabcorp’s ability “to drive growth and innovation”. He took particular aim at the Queensland government’s POC stance.

“RWA’s members paid 51 cents in every $1 of revenue in taxes and fees last year, that was more than $1.8 billion,” he said.

“Queensland’s tax hike decision is worse than short-sighted, it is rear-sighted. Queensland and its racing industry are now set to have the dubious honour of the highest taxed and least competitive wagering product in the world and are staring down the barrel of a very significant hit to their turnover because of instead of running a proper process on how to get strong growth and returns for the future, they did an exclusive backroom deal with Tabcorp.

“Pre-COVID South Australian racing was collapsing under the weight of 15 per cent point of consumption tax. SA racing had to slash prizemoney, was losing top trainers and jockeys to other states and the SA government was failing to meet revenue projections.

“Queensland now has that future to look forward to.”

The market will also have a new player next month when the Matt Tripp-driven, News Corp-owned start-up launches in time for the footy finals and spring carnival.

They’ll want to make a splash, but also make a profit from launch. How they tangle with the POC impost and frame markets will be fascinating to watch, and who knows what the racing industry will be like in a couple of years?

To the defence of NSW, Shannon said V’landys’ “money management has been really good and product fees have been kept at a reasonable level”.

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But the pressure is building, and he stressed bookmakers will have no other lever to pull but to increase takeout rates if taxes keep increasing.

I walked through the betting ring at Rosehill on Saturday and wandered up to Robbie Waterhouse to ask about the latest prizemoney increases being funded by more government taxes.

“This will be a disaster for racing in the long term,” he said.

Only time will tell.

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