Australian Sports Entertainment

Saturday, November 01, 2008

Betting's new dawn, by Dan Silkstone - The Age - 31st October 2008

The race to lure punters has been thrown wide open by new betting regulations and, as Dan Silkstone reports, debate rages about who will be the winners and the losers.

It is the race that stops a nation, reaches into its back pocket and removes $50. On Tuesday, Australia will go gambling crazy — the Melbourne Cup is the biggest punting day of the year by some considerable margin. And as the big race begins, they will jostle for position, fi ghting hard for a victory that will bring one of the richest purses in sport. Not the horses, that is. The bookies.

Victorian racing is in the grip of a gambling revolution as recent law changes have opened up a fl ood of new competition. The battle to sign up punters is getting bloody.

Since 2006, interstate and internet-based corporate bookmakers have been offering "tote odds" in Victoria — duplicating the prices of the monopoly tote operated by Tabcorp but offering a 5% bonus.

The corporates can do so because they pay far less back into racing than Tabcorp — less than 1% of turnover compared with the tote’s return of six cents in the dollar.

Racing authorities have warned that as the tote loses market share, a crisis looms for future race funding. The corporates say they are happy to contribute, as long as the price is fair.

But everything changed again only three weeks ago when the Victorian and NSW Governments suddenly lifted restrictions prohibiting corporate bookmakers from advertising in mainstream media and sponsoring races and events.

The result is a flood of money rushing into advertising as at least 10 companies fight for brand recognition, punters’ patronage and market share.

"Everyone right now is getting pretty ruthless competing for advertising space and exposure," says Centrebet’s Neil Evans.

"There’s a massive land grab on at the moment," agrees Andrew Twaits, chief executive of rival operator Betfair. There is big money at stake. Last year — a bad one for punting because of equine influenza — the Victorian and NSW TABs took $1.36 billion during Victoria’s spring racing carnival, more than $150 million of it on Cup Day alone.

The overall amount punted this year should be considerably higher, but most in the industry believe that a growing share will go to the interstate internetbased corporates.

Despite tough times, everyone expects a lucrative week.

"Betting is recession-proof — it’s often said, but I think it’s true," Evans says.

"In difficult times, people drink more and they bet more," Sportsbet’s Matt Tripp agrees.

"They seem to turn to the punt if the pressure is on."

All of the big corporate bookmakers have invested heavily in billboards, newspaper and other media advertisements, trying to convince punters used to betting at a pub or TAB to try the online experience.

"Competition is now furious, and where you have competition, you have got big money," Evans says.

"The gambling world has finally woken up."

"The corporates are thriving in the new environment but the TAB is struggling," says Tripp.

"They simply haven’t got the product that the corporates can offer and, with the advertising now, punters are being made aware of that."

Sportsbet alone turned over about $1 billion last year. This year, it is aiming for $1.5 billion.

Amid it all, racing authorities warn of calamity as the corporates strip revenue away from the tote — the source of more than 90% of racing’s funding.

Tabcorp’s Rob Nason says the tote’s market share has fallen from 95% in Victoria to about 72% in five years. The current advertising blitz is expected to worsen that situation.

Racing Victoria Ltd and the Victoria Racing Club have joined Tabcorp in calling on the State Government to enforce Victorian laws preventing interstate operators offering tote odds.

If, as seems likely, the state cannot do so, they want Racing Minister Rob Hulls to pressure the Federal Government to intervene.

"If the State Government doesn’t believe it has the capacity to regulate that, then we are suggesting the Federal Government get involved," Nason says.

Hulls said yesterday he was powerless to prevent tote odds being offered from interstate, but he would take the matter up with fellow racing minsters when they meet in Melbourne in December and would push for the matter to be referred to the Federal Government.

VRC chief Dale Monteith also wants the State Government to investigate the promotions being offered by some operators during the current orgy of advertising, saying that offers of up to $1000 in free bets in exchange for signing up were a nightmare for efforts aimed at curbing problem gambling.

"Some of those ads, the State Government needs to consider what is responsible gambling when people are offering free bets of up to $1000 for signing up an account," he said.

"They (interstate bookmakers) have got no knowledge of what responsible gambling is, and you only have to look at their ads to see that."

Hulls said he had asked his department to keep an eye on the advertising free-for-all as the Government prepared new guidelines to be implemented next year.

"I want to send a very clear message to bookmakers who want to advertise that it won’t be open slather. It will only be allowed if it is responsible," he said.

Tripp said a race for market share had started.

"It might come down to who has the deepest pockets," he said. "Since the gloves came off, we have spent $3 million and will probably spend $3 million more before the year is out."

The change is already happening. On Cox Plate day, Centrebet’s turnover was up by almost 20% on last year. For Tabcorp and its tote, the take was substantially down.

Centrebet alone expects to take about $2 million on the Melbourne Cup and $5 million for the day. The number of punters using this one site will be measured in the tens of thousands.

Betfair has less than 1% of the market, but expects, with the relaxing of advertising rules, to grab a 5% share in coming years. It is hoping for a turnover increase of about 30% this year.

"This (the advertising change) will help generate a lot of interest in the carnival, more than in previous years," Twaits says.

RVL chief Rob Hines says it is inevitable that the pressure on the tote will worsen. Monteith said the tote odds offered by the interstaters were obscene.

"We cannot survive off the back of fixed-odds betting . . . They are offering us about 0.66% of turnover whereas we are getting about 4.4% out of the tote," he said.

"If there is more inaction, we are going to see money siphoned out of the racing industry. It is happening now and the figures are not insignificant."

Hines says one solution is for the sport to make more money from television and other media rights, creating new products and selling them better.

"The AFL do a terrific job of bringing all the games into one package of media, which they then sell on," he said.

Tabcorp has responded within the past month by setting up its own Darwin-based offshoot, Luxbet, to replicate the interstate competitors’ model. Already, it has 7000 customers.

"Something like 95% of racing’s funding comes from the tote," Nason says.

"Unquestionably, we are expecting to have a significant loss of market share because we just cannot compete on price with someone who does not make the same contribution to the racing industry."

ALL BETS ARE ON

THE KEY PLAYERS

CENTREBET
BIG Darwin operator that offers odds on everything from elections to Olympics. The first agency to offer online betting in Australia (in 1996). Keen to sponsor sporting teams and race meetings to gain exposure.

TABCORP
GAMBLING giant privatised in 1994 and charged a licence fee for monopoly to run Victoria’s tote. Now competing with a range of interstate online operators who pay lower fees back to the industry. Contributes $300 million a year to racing industry.

SPORTSBET
DARWIN-BASED company run by bookmaker Matt Tripp that claims to be the biggest of the corporates with turnover of $1 billion last year.

BETFAIR
A DIFFERENT model, based in Tasmania, that allows punters to lay odds with each other, similar to a stock exchange. Also pioneering in-race betting.

LUXBET
NEW Darwin-based enterprise started by Tabcorp to compete with the interstate corporates. One month old and already has 7000 customers.

BETSTAR
NORTHERN Territory-based corporate owned by former Melbourne bookmakers Alan and Michael Eskander.

BETEZY
SMALLER, Darwin-based company offering betting on racing and other sports.

SPORTINGBET AUSTRALIA
DARWIN-BASED corporate online and phone bookmaker, an offshoot of the Britishbased company Sportingbet. Is regarded as one of the bigger operators, betting on racing, sports and politics.

(Credit: The Age)

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