How the Territory pioneered a multi-billion dollar gambling industry - 15th November 2017

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Brandon Davies takes a win at the Fannie Bay racecourse — the birthplace of the NT’s lucrative gambling industry.

by ASHLEY MANICAROS

SMOKE-FILLED rooms in suburban shopping centres away from the trackside racing action were the birthplace of the Territory’s billion dollar gambling industry.

With heavy blinds, darkened windows and rarely a woman to be seen — men would gather on a Saturday afternoon to place their bets.

You could buy a beer even though they weren’t licensed venues.

Weekly wages were won and lost. After a good day you ate Chinese that night. It is a long way from the $16 billion gambling industry we have emanating out of the Northern Territory today.

One which is now under siege from southern states as they realise how the vision of others could mean revenue for them. An irony not lost on one of the prime architects of the industry, bookmaker Mark Read: “They had the option of setting this up and they didn’t.”

THE first steps towards sports betting and the eventual development of corporate bookmaking took place in the mid-1980s.

The Territory had already established itself a casino, and the betting shops there, while admittedly far less classy compared to Federal’s Don Hotel, were ahead of their time and setting the markets for the rest of Australia.

Bookmaking in the rest of Australia was a singular affair. Sole traders at tracks. The big players in the market were totalisers.

The real dollars were underground. However, in Darwin, a bookmaker by the name of Bryan Clark was anything but discreet. He would boldly stand at Gardens Oval, the city’s home of Australian rules, and offer odds on the local NT Football League game of the day, taking bets from spectators whether they be players, officials or the local coppers.

It was an open secret. A bit like the underground casinos during the 1970s in Sydney where denials of such establishments were countered by witnesses seeing roulette wheels being lifted with cranes into the third floor of buildings.

Pioneering Alice Springs bookmaker Terry Lillis

Bookie Mark Read in his high-flying heyday

Clark’s list of clientele was extensive enough that he would avoid breaching the rules through a network of tip offs, frustrating officials but also driving government action.

By the mid-to-late 1980s, enough was enough, and the Perron Country Liberal Government set about legitimising what Clark and others were doing. After all, he had been at it for up to five years unregulated.

In his book, Living on the Edge: The Story of Terry Lillis and Centrebet, Alice Springs bookmaker Terry Lillis, who held book at the Melbourne Cup at Flemington on Tuesday, describes those early days.

Lillis would be one of two to be issued sports betting licenses, leading to the change of the wagering landscape. A third player, and Australia’s largest bookmaker Mark Read, would go on to create the monolithic corporate bookmaking industry we see today.

“ ... the first steps began when Tony Franklin, a licensed, on course Darwin racing bookmaker, began taking bets on the Australian Football League games,” Lillis writes.

Franklin had the Stuart Park betting shop.

“He was in front of everybody in this respect. The only problem was taking bets on Victorian footy games was an unlicensed activity.

“But he was able to get away with it for several years without anyone taking much notice ... eventually Clark took over and it started to get a fair amount of publicity or perhaps notoriety. And I think at that point the Territory Government said: ‘Hang on, we’re gonna end up in the s**t again if we don’t do something’.”

In 1992, under the guise of then Chief Minister Marshall Perron and Treasurer Barry Coulter, who also happened to be the Racing Minister, two licenses were issued.

Lillis received one after badgering his local member, Alice Springs MLA Roger Vale, arguing the Berrimah Line, the invisible colloquial gap between Darwin and the Red Centre, should not further discriminate against him, especially given he was the largest bookmaker in the NT at that time. The other went to Clark.

Being based in Alice Springs determined the name of his sports betting company, and Centrebet was born. The name still operates today from the Territory.

AROUND this point, leading bookmaker Mark Read came on the radar of pollies Perron and Coulter.

It was 1995, before the mainstream birth of the internet. Read was a driven, established bookmaker and entrepreneur so he fitted nicely into how the Territory viewed itself.

Before he came to the NT he had already made a name for himself.

At the age of 26, at Flemington, he had held more than the tote on Derby Day. At the age of 30 he would tackle the single largest betting market in Australia, Sydney, where his list of clients would include the late media magnate Kerry Packer.

Packer himself was a regular to Darwin to gamble at the casino.

Read had just spent two years negotiating with the ACT Government on establishing a sportsbetting enterprise. The election of the ACT Carnell Government and a robust lobbying effort by local bookmakers had Read look elsewhere. “I recognised bookmaking was gone,” Read, now 67, said this week.

In Melbourne and Sydney they had started privatising the totalisators — the equal distribution of pools among punters.

“TAB Corp and TAB Limited were protected species and they were set up as an oligopoly. To make them even more attractive they were given rights to gaming and slot machines,” Read said.

“The bookmakers on the track were completely corralled and restricted to the point where they had to do everything themselves, from write the ticket to change the board odds. So I went to the NT and met Coulter — minister for all things — a remarkable can-do person.

“My business plan revealed numbers they could not get their mind around. I gave them a guarantee I could attract business just from my own client base. I’d been bookmaking for 25 years anyway.

“I was unique in that I would take bets and have bets. I was a trader through the totaliser system — in New South Wales I put $30 million a year through and the jockey club got 10 per cent of that.

“It was a major opportunity for the Darwin Turf Club and they had the position where they could pocket a percentage of whatever was done on the tote.” Read’s International All Sports started operating in Darwin in December of 1995. He brought 12 staff, 12 computers and his wife Shari to town.

They would operate from the Laurels Bar dance floor at the Fannie Bay racetrack seven days a week, packing and unpacking their equipment everyday due to the night-time functions.

Eventually they got their own administration area at Fannie Bay, but it was a far cry from the salubrious surroundings of the Brett Dixon building now. It was the starting point and not the end game.

The end game was the corporatisation of bookmakers — a move which would grow the industry and the revenue opportunities for the minnow NT. In the first year, IAS turned over $25 million. Within three years they were doing $150 million.

IAS was issued the first corporate license in 1996. By 1999, Read had taken his bookmaking business public. “By corporatising you then had people like Terry Lillis — one of the greatest entrepreneurs I have ever encountered — pioneering the industry and putting Alice Springs on the map,” Read said.

“You also had Clark who was a colourful racing identity.”

And then came the internet.

“When we went to Darwin there was no communications. We may as well have been in Afghanistan,” Read said. He recruited from around the world to sell the need on investing in fibre optic to the racetrack. Once again, it was Coulter who could see the potential for the NT.

“I was besotted by the internet but it took another five years for it to pay for itself,” Read admits. “The marketplace wasn’t ready for it and the banks weren’t ready for it.”

There was no public financial clearance systems to deal with e-commerce in Australia.

THE internet turned the wagering world on its head, exploding turnover.

In IAS’s case alone, it went from $200 million to $1 billion in just three years to 2004. Read employed 180 people — 120 of those in the Rialto Building in Melbourne, the remainder in Darwin to meet licensing requirements. With success came greater obstacles as the totalisers, not dissimilar to the objections being raised now, started to be put in place and pressure governments.

“Kerry Packer had been a friend of mine and bet with me since the mid-70s and I was basically using his platforms to get our message out there,” Read recalls. “He owned Sky Channel and I would advertise on the channel Read’s Ratings.

“When Kerry sold Sky Channel to TAB Corp they barred me. Free trade between states — they don’t give a f**k. All TAB Corp and TAB Limited wanted was to destroy everything coming out of the Territory.

“Doing business in the Territory was a nightmare. The cost of running a business. The cost of employing your staff. They had the option of setting this up and they didn’t.”

Far from its smoke-filled backrooms the industry has grown to an almost unimaginable size.

Last year the Territory received $5.5 million in tax from corporate bookmakers and expect similar receipts in 2017-18.

But while that figure looks small, it is the employment and other government revenue which makes them vital to the region. Corporate bookmakers employ more than 380 Territory staff and provide more than $42 million in broader economic benefits including taxes, sponsorships, product fees, rent and Aboriginal employment programs.

Bookmaking turnover has increased from $3.6 billion in 2006-07 to $16.1 billion in 2016-17.

States are now talking about putting in place a point of sale gambling tax. WA is talking about a 10 per cent tax. Read said more taxation would damage the industry.

“When they want to attack the bookmakers in the Territory what they are doing is attacking the golden goose,” he said. “They think by attacking that they will get more turnover for themselves. But they won’t because they won’t compete — you won’t see the TAB’s giving away anything.

“Corporate bookmaking has created huge rivers of wealth in sponsorship and promotion. The corporate bookmakers are the only ones educating new punters. There would be no growth without the corporate bookmaking industry.”

(NT News)