PRESS RELEASE
27th October 27, 2008
Sportsbet would like to highlight the misconceptions that surround the newspaper article that
appeared on page 1 of The Sunday Age on 26 October 2008 titled “Jobs ‘risk’ as punters ditch
TAB”.
Comparisons leveled by Tabcorp between themselves and corporate bookmakers which focus on
the amount contributed back to the Victorian racing industry based on every dollar or $100
dollars of turnover is very misleading. The only figure that is important is the amount of income
that a wagering service provider earns from a customer, and then the relative proportion of that
income that is then shared with the industry stakeholders.
Tabcorp’s approach to seek government and regulatory protection from competition is naive for a
publicly listed entity; demands such as “Tabcorp... insisting that the Government and the
industry’s governing body, Racing Victoria Limited, demand a bigger return on the money bet on
Victorian racing with interstate bookies.” is clearly anti-competitive government lobbying.
Tabcorp’s demands that “Bookmaker’s and Betting Exchanges must contribute on turnover” fails
to recognise the differing business models between wagering service providers which affects each
operator’s gross profit margins, and conveniently ignores Tabcorp’s substantial 17.8% takeout.
This is by far bigger than any other competing wagering service provider by a factor of at least
300%.
Claims that a decline in Tabcorp wagering turnover, as leakage to other wagering service
providers, will somehow affect prize-money, owners, breeders or others within the Victorian
racing industry are false and misleading. The only impact of any such decline will be on
Tabcorp, it’s profitability, it’s share price and it’s employees jobs;
Tabcorp states that it “...is losing bets worth about $40 million a year to Northern Territory-based
corporate bookies.” Under Sportsbet’s situation where it is authorised to publish Victorian
thoroughbred race fields, any transfer of wagering income from Tabcorp to Sportsbet, in this
respect, results in no change in funding to the Victorian racing industry under current
arrangements;
Mr. Nason is quoted as stating, “...by not acting to stop wagering funds from flowing out of the
state, the Government is “allowing the golden goose to be killed.” In context of the facts which
have been outlined, this statement is a propaganda, a complete fallacy, and to use the analogy, the
golden goose lost it’s shine a long time ago;
Tabcorp has sought to fight its competition not by competing and offering their customer’s a
better quality service, better odds, or infrastructure, but through political lobbying, and thuggish
threats of litigation to those who may choose to align themselves with an alternative wagering
entity;
Tabcorp remains heavily dependent on its costly capital intensive retail network of venues across
Victoria to feed its revenue base, in contrast to the 21st century alternative mediums such as the
internet and telephone; It seeks to penalise it’s shareholders and customers by supporting this
inefficient aging infrastructure;
Despite Tabcorp running out of excuses why their business continues to stumble, such as its near
flat wagering growth in 2007 blamed on last years Equine Influenza, Tabcorp is unable to explain
why its wagering turnover on Caulfield Cup in 2008 fell $300,000 in 2008 versus 2007;
Sportsbet CEO Matt Tripp said “Tabcorp must accept that competition in the Australian wagering
market has arrived, it’s here now, and Tabcorp customers have a range of highly competitive
alternatives, delivering better odds, customer service and infrastructure.”
End:
About Sportsbet Pty Ltd
Sportsbet accepts wagers on Australian and International Horse racing, Harness racing and
Greyhounds as well as Australian and international sporting, political and entertainment events.
238 (Sport).
Contact:
Matthew Tripp CEO, Sportsbet Pty Ltd 0412 593 636 matt@sportsbet.com.au
Background - Australian Wagering Market
The Australian wagering market is comprised of 4 types of industry participants, jointly
described as wagering service providers, that being:
o
Totaliser Agency Board’s (“TAB”) or totalisers;
o
Corporate Bookmakers;
o
Betting Exchanges;
o
On-course rails bookmakers;
Background – Tabcorp Ltd
The Victorian wagering marketplace has historically comprised multiple sole proprietor
licensed on-course rails bookmakers and a single corporate off-course totaliser; This has
been the situation for a considerable period of time;
Tabcorp Ltd (“Tabcorp”) was a formerly Victorian state owned wagering monopoly
called the Victorian Totaliser Agency Board, and was privatised in 1994;
Various Victorian legislation has been in place pre-dating the privatisation of Tabcorp
which provided the organisation with a monopoly license in Victoria with respect to
totaliser betting, particularly offcourse; This same legislation also prohibited any
wagering service providers not licensed by Victorian regulators from advertising their
services in Victoria;
Tabcorp Ltd has for over 14 years now been an ASX publicly licensed corporate entity
whose overriding obligation is to maximise its return to its shareholder base, as is the
situation with any other publicly listed entity;
None of the Victorian laws that applied to protecting Taborp’s exclusivity whilst it was a
state owned institution have been formally repealed even to date; As such, Tabcorp has
received substantial benefits in the Victorian marketplace, particularly in that it has been
shielded from any form of competition;
Tabcorp has historically relied predominantly on its retail network of 2,700 agencies,
pubs and clubs to feed its wagering business, however now also offers telephone and
internet betting as betting conduits.
Tabcorp achieved $1.188 billion in wagering on racing and sporting events through their
internet business and $987m of wagering on racing and sporting events through their
phone business in FY08;
The Tabcorp retail network today however remains the predominant betting channel, and
is responsible for $6.853 billion or 76% of their total wagering turnover in FY08 of
$9.028 billion.
Tabcorp operates “...at no financial risk...”with gross profit margins of approximately
17.8% in FY08, ie. 17.8 cents in every dollar bet with Tabcorp is lost by punters. From
this, Tabcorp contributes approximately 5 cents in every wagering dollar, or 28% of their
gross profit to the Victorian racing industry;
Tabcorp’s wagering turnover has been stagnant over the past 3 years, with little or
negative growth ($9.028b FY08, $9.114b FY07, 8.739b FY06), despite a growing
Australian wagering market place;
Tabcorp’s share price on the ASX has fallen in the past 12 months from a high of $15.75
to a low of $6.53 more recently, a 58% decline;
Background - Sportsbet and Corporate Bookmakers
Sportsbet.com.au is Australia’s largest licensed corporate Sports Bookmaker by the
Government of the Northern Territory of Australia, licensed to conduct its business
throughout Australia and internationally;
Sportsbet is a privately owned Australian company, headed by Matthew Tripp, the Chief
Executive Officer;
Sportsbet offers its services via the internet and the telephone, there are no retail outlets;
There are 12 corporate bookmakers licensed by the Government of the Northern
Territory;
Sportsbet is authorised to publish Victorian thoroughbred race fields by Racing Victoria
Limited, Victorian harness race fields by Harness Racing Victoria and Victorian
greyhound race fields by Greyhound racing Victoria;
Sportsbet offers fixed odds betting, without the benefits of a fixed guaranteed gross profit
margin as is the case in a risk free totaliser environment, and consequently generates a
very low and variable gross profit margin;
Sportsbet’s gross profit margin on Victorian thoroughbred racing for FY08 was 2.8%; ie.
2.8 cents of every dollar spent with Sportsbet on Victorian thoroughbred racing was lost
by punters;
Sportsbet returns 1% of its turnover on Victorian thoroughbred racing to Racing Victoria
Limited by means of a turnover tax, since its introduction on 1 September 2006 by Robert
Nason, then Chief Executive Officer of Racing Victoria Ltd (now managing director of
Tabcorp Ltd);
Tabcorp was the key driver behind the push for race field legislation in Victoria;
35% of Sportsbet’s gross profit on Victorian thoroughbred racing is returned directly to
the Victorian racing industry;
Background – Victorian Racing Industry
Historically, the funding model for the Victorian racing industry has relied predominantly
on an unincorporated joint venture agreement between Tabcorp and VicRacing Pty Ltd.
The principal activity of the joint venture is the organisation, promotion and development
of wagering and gaming within the State of Victoria.
Tabcorp “...provides 90% of the funding behind the state’s horse, harness and greyhound
racing...” industry through a combination of its wagering and gaming (pokie machine)
revenues;
Due to the monopoly license granted to Tabcorp in Victoria and the highly restrictive
state government legislation, historically, the Victorian racing industry has not been able
to leverage off any alternative funding model to Tabcorp;
The near complete reliance on Tabcorp as the historical sole provider for funding to the
Victorian racing industry pre 1 September 2006 has distorted the current perception of
new entrants to the Victorian wagering industry amongst industry participants, including
but not limited to racing administrators, horse owners, trainers and others;
Betfair versus the Western Australian Government
Betfair is a betting exchange licensed by the Government of Tasmania to operate
throughout Australia and internationally;
The Government of Western Australia in 2007 banned betting exchanges and sought to
control the use and publication of Western Australian race fields;
Betfair challenged these laws as being unconstitutional; basing this argument on the
provision in the Commonwealth Constitution stating that inter-state trade must be free;
The High Court held that the ban enacted by the Western Australian Government acted as
discriminatory and protectionist burdens on interstate trade and therefore directly
contravened that section of the Constitution which provides for absolute freedom of
interstate trade and commerce.
The outcome of this decision has resulted in significant ramifications for the Australian
wagering industry, particularly for licensed interstate wagering service providers in
Australia which provide telephone and internet services which are accessible from
anywhere in the world and have no geographical limitations;
NEWS 
