rivals may have hope yet in new betting environment
- 19th November 2017
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could present an opportunity for the corporate bookmakers
regarding the looming point of consumption betting
tax. Justin McManus
were a few eyebrows raised when respected online bookmaker
Dean Shannon recently established Neds, adding another
name to an already crowded and intensely competitive
under the stewardship of Shannon, the former local
boss of Labrokes, Neds is understood to have had a
profitable first couple of months in business during
the Victorian spring racing carnival.
many race favourites got beaten, the carnival is said
to have been a bumper one for Tabcorp's TAB and its
Northern Territory-domiciled corporate bookmakers
like Sportsbet, CrownBet, Bet365, William Hill and
question is though, whether it is the last dance for
the corporates who it seems almost certainly will
soon have to cope with a merged giant in a combined
Tabcorp and Tatts Group, less advertising during live
sports on television to promote their wares and the
dreaded point of consumption tax about to sweep across
remains to be seen whether the corporate regulator
or CrownBet will have one last attempt to stymie the
Tabcorp and Tatts merger after the Australian Competition
Tribunal on Wednesday releases its reasons for decision
for giving the deal the green light.
other hurdle is the Tatts shareholder vote on the
deal on November 30. While activist shareholder Sandon
Capital has been a voluble opponent of the deal, arguing
Tabcorp is getting a very good asset in the Tatts
lotteries business, there are enough big shareholders
who own stock in both companies that are in favour
of the transaction to make a favourable vote likely.
if and when Tabcorp and Tatts combine, a company with
retail betting shop licences across every state and
territory and substantial digital wagering business
will be created. It will be one with, including lotteries,
annual revenue of $5 billion and pre-tax earnings
of about $1 billion.
that is not imposing enough for the corporate bookies
who have made great inroads into Tabcorp and
Tatts' market share in the past decade then
there is the looming issue of the point of consumption
tax to deal with.
Australia has already introduced a 15 per cent tax
on wagering by its citizens, and Western Australia
will introduce the same measure on January 1. SportsBet
has said the WA tax would cut its profits by $12 million
as the state accounts for 11 per cent of its business.
looks likely other states will follow suit with a
meeting of the Council on Federal Financial Relations
in late October ending with an agreement for them
to work on harmonisation of the tax across the country.
having the states working on the point of consumption
tax could provide the corporates with an opportunity,
given each jurisdiction will have to consider their
own interests, which could result in different levels
of the tax in different states.
Victoria, where the racing industry is primarily funded
via a joint venture arrangement with Tabcorp. But
the corporate bookies are also an increasingly important
source of revenue. Lobbying is taking place there
for it to impose a different tax rate than others.
Victoria's 2017 financial report, lodged with the
corporate regulator on October 31, showed the state
received $186 million in 2017 from the joint venture,
down from $192 million in the previous year. Race
fields fees, derived from charging online bookmakers
a combination of either a percentage of turnover or
of gross revenue, was $157 million in 2017 compared
with $139 million the year before and $85 million
other words, Victoria's revenue it gets from corporate
bookies is surging, and funding from Tabcorp, which
flows from traditional parimutuel or tote betting,
large race fields fees increase helped Racing Victoria
to distribute substantially more to its race clubs
in 2017 than the previous year on the way to a $9.2
million profit and have enough money in the bank to
get $60 million set aside to be managed by Evans &
Partners in a "future fund".
it could be argued if Victoria introduces a point
of consumption tax that wipes out all of the profit
of the corporates it would be putting a huge amount
of revenue at risk unless it suddenly gets
a big increase from its joint venture arrangement
the joint venture does not expire until 2025, so it
is not so surprising chairman Brian Kruger has said
he wants to extend the licence early remember,
Tatts will not be a Tabcorp bidding competitor if
the two merge and hopefully tweak the conditions.
the point of consumption tax the state introduces
will also be crucial. It could be low enough for the
corporates to keep making decent profits, sending
money to the racing industry and stay competitive
with Tabcorp in the process.
Australian Financial Review)