Something has got to happen to Australian racing

With parochial administrators, automatic ‘entitlement’ to taxpayer funds and little commercial discipline, racing is confusing ‘success’ with running too many races at too many places and broadcasting them all as if they were of equal importance. Potential opera singers, among many others, dream about the Australian racing industry — its access to public funds for lavish self-serving entertainment.

One might say “this can’t go on”.

I say that in this discussion paper — the first part “The Racing Revolution” is about a very different future for the Australian racing industry: the second part “The Revolutionary Context” explains why.

Australian racing — new beginning or sad end?

Time was when it would have been impossible to think of an international, Asian racing industry not centred on Australia. That time has passed. The high-quality presentation of racing broadcast into Australia from Hong Kong last December, and from Dubai in March, and more recent observation of first-class, racing marketing in Singapore, now casts Australian racing industry standards in a relatively poor light.

Who would have thought that 20 years ago?

Australian racing is now paying the debilitating price of dissipating its resources on feeding far too many horses, maintaining far too many racetracks and carrying unnecessarily duplicated administrative overheads in six States (and New Zealand).

Left unchanged, Australian racing, like New Zealand’s, will become a limited pre-training facility geared to a lucrative Asian racing circuit — and, the Ingham Boys will have their own jet float to deliver race-fit horses to Asia in good condition.

Australia still has a chance to get its racing industry back on a track that will be relevant to the future of racing in the global economy — but time is slipping away. Other countries have taken the ‘first mover’ advantage. Not every player will find a comfortably relevant chair in the global sun when the music stops.

This is no time for the continued substitution of nostalgic rural-racing nonsense for proper racing industry policy. Australia’s racing administrators are unfortunately a bit prone to making that substitution.

Racing is not automatically ‘entitled’ to anything

The racing industry stands on shifting, if not crumbling, foundations – primarily, Australians’ receding attachment to ‘having a bet’ coupled with the long-standing ‘entitlement’ of each State’s (separate) racing industry to substantial tax revenues collected from racing gambling in that state. The current ‘entitlement’ nationally, is some $600 million that is deducted from the punting public’s purse and given to the industry for distribution as prize-money.

There is of course no ‘entitlement’ of the racing industry to be given gambling tax revenues. That concept of ‘entitlement’ is a myth. And the nonsense of it is everywhere to be seen – it is racing, around the country.

Rather, ‘government’ (the community) is entitled to tax gambling and ‘government’ should then sensibly spend gambling tax revenue to benefit the community generally — not mindlessly, automatically on the racing industry.

Such sensible spending from the public purse would, of course, include buying both local and imported racing as input for TAB gambling – but, in the future, only limited quantities of quality racing will be bought on an open, global market.

State governments will be waking up — some quicker than others. The ‘alarm’ is ringing for them — let’s hope they don’t push the snooze button again.

Commercial reality is about to hit racing hard

The point about commercial reality can be more clearly appreciated by recognising that Australians would gamble with local TABs on properly marketed racing run in other countries without any need to maintain an extensive racing industry in Australia. And recognise the corollary also, that other countries would pay well for high quality racing from Australia.

Put more sharply, in most States the best (highest turnover) racing is already ‘imported’ from other States — and the further step to ‘importing’ and ‘exporting’ high-quality racing internationally is a short one. For most racing customers, races are run on a TV screen and actually “where” a race is run is not relevant, though the time of day is. For betting turnover, it is mainly important that customers have strong opinions about the likely outcome of a race — and preferably opinions that are soundly based in the familiar continuity of well-known, well-disclosed race form.

and, electoral imperatives change

What is remarkable is that some State governments continue to divert taxpayer funds to support a local racing industry most of which is no longer of material consequence in either the national scheme of things or even in their own State — except to those directly employed.

Apparently, the assessed electoral consequences of withdrawing funding from local racing is precluding sensible government decision making before the next ‘non-election’ year.

This situation cannot go on either. State governments will negotiate the retrenchment of redundant racing industry resources that are otherwise pointlessly draining their coffers and debilitating, not helping, the national racing industry. The quicker the better, one might say, because the global racing game is not standing still.

The brutal reality

States now collecting racing taxes without paying related racing production costs will soon be asked to pay for continued access to racing product ‘imported’ from other States (probably a “%” of audited turnover).

Good quality racing product will be ‘bought’ from everywhere in our time zone, and poor quality racing will not be bought, from anywhere. ‘Quality’ will be determined solely by the betting turnover guaranteed by suppliers. The value of an ‘imported’ racing product package will reflect the combined quality of the broadcast/telecast and the associated marketing back-up that supports and builds betting turnover. Most current Australian racing will not make the commercial ‘cut’.

but which cat will get the canary?

The total fees paid for good racing product will invariably exceed production costs. The owners of the racing product from one Australian State are about to make a lot of money — but perhaps the ‘owner’ will then be head-quartered in another State.

Racing as an Australian industry will prosper only in the States (and other Asian countries) that can run export-quality racing in our afternoon and evening time zone. Other players, like NZ, may supply well bred racing stock but not actual racing product, regularly. Even the conduct of totalisator operations may be concentrated in another country acting as agent for Australian States. (It may become compulsory to bet with ‘an overseas operator’) In this brutal global world, pre-post, fixed-odds TAB betting will be called wet-weather insurance by State Treasuries.

The whole racing business is up for grabs. There will be no more free lunches for dependent States.

For disbelievers, the rhetorical question is whether the people of Victoria will sensibly continue to pay the costs of running the best racing in Australia and still deliver such valuable product free of charge to other States and internationally?

Wait for this penny to drop — the interstate ‘war’ will be more fun to watch than the cat in the canary cage.

The Revolutionary context: The customers want ‘what’?

Last November, newly the ‘consumer representative’ for racing in NSW, I circulated comments about the racing industry and its off-course TAB customers. These comments reinforced remarks previously made to the National Gambling Inquiry and NSW’s,Temby Inquiry before that.

The still-relevant assessments included,

‘too much’ low-grade racing is overwhelming the print and broadcast media, sapping the quality of racing entertainment;

governments are over-funding bloated local racing industries that do not deliver value for money to the customers; and

a culture favouring industry insiders unfairly disadvantages TAB customers betting off-course.

The call to address these issues apparently fell on deaf ears.

Among other things,

advertising of very little value on the broadcast media still crowds out needed racing commentary;

the broadcast every five minutes of don’t-bet, low-grade races from ‘anywhere’, including New Zealand, compounds the evident disrespect for racing’s customers;

TAB customers betting off-course are still denied access to bookmaker betting fluctuations on-course;

the industry still does not coordinate the delivery in the print and broadcast media of adequate back-up information necessary for customers to properly enjoy their racing gambling; and

there is still no audit of the integrity of betting markets even though ‘insiders’ systematically benefit unfairly.

In short, racing’s leaders are not much interested in off-course TAB customers — and they won’t be until the industry is reformed.

this consumer reformer says , 05

, 05..some examples of ‘bad’ industry attitudes are beyond reasonable explanation. Consider a couple of things.

First, TAB Limited seems to be at ‘war’ with both the racing industry and the Government in NSW. The broadcast on TAB-owned, racing-radio of low-cost advertisements of limited appeal (and don’t-bet, low-grade racing) takes precedence over race-morning commentary likely to increase turnover (and tax take-out) on the better races later in the day. Given that, on Saturdays, racing-radio is all about promoting race betting, either the fair-trading authorities should proscribe this ‘other’ commercial advertising or the race clubs (or the government) should pay racing-radio separately not to run advertisements. As is, is not sensible — both the racing industry and the government probably lose more from ‘lost’ turnover than TAB gets for the advertisements. And the same goes for advertising crammed between race broadcasts to the exclusion of proper customer service in the afternoon. Warren Wilson — stop it, please.

Second, racing industry leaders spoke to Senators in the Federal Parliament on 4 May supporting submissions to exempt race betting from the ban on internet gambling. Bob Charley, Chairman of the Australian Racing Board, described the ARB as “the peak administrative body for thoroughbred horseracing in Australia”. Subsequently, Bob Charley said some things that though they may be true in a sense, they are nonetheless sharply at odds with the main thrust of appropriate public policy, as advocated in this discussion paper.

Bob Charley said,

22 000 races are held in Australia each year mainly in rural areas. Racing employs some 100 000 people mainly in rural areas in an agribusiness, mainstay of the regional Australian economy. He then acknowledged “the dependence of this large industry on wagering” and the (corollary) dependence on “the owner and the punter” — especially the TAB punter that, he said, pays the taxes from which some 70% of the racing industry’s total revenue is ‘provided’ by State governments. His words suggest he believed the racing industry was ‘entitled’ to this revenue and quite possibly even more, to finance the 100 000 people and 400 clubs producing 22 000 races each year. (Bob Charley did not say, state government should sensibly spend all tax revenue wisely in the general community interest without giving automatic ‘entitlements’ to taxpayer funds — but I do, see above)

Bob Charley also spoke to his primary brief in favour of internet racing gambling (‘wagering’) as offered by TABs, and against other internet gambling (‘gaming’), as offered by online casinos. He said, using the now ‘loaded’ words, “we must distinguish between gaming and wagering”, unmindful of the intellectual Everest confronting anyone seeking to unravel the probabilities in the ‘outcomes’ in any of the 22 000 ‘wagering’ events, bar about 2000 at most. Even if that unraveling were done, it is then difficult to ‘win’ when the racing-house ‘take’ averages 16% from the customers’ money up front. (I do not further address the self evident ‘non sequitur’ in Bob Charley’s ‘evidence’ — save for the comment that ‘gambling is gambling’ whether packaged on baize tables or green grass.)

The good thing, however, about Bob Charley’s evidence is that we know who is still responsible for the parlous situation in which the Australian racing industry finds itself.

How did the Australian racing industry get lost?

The Australian racing industry is in disarray. Some racing administrations are apparently so preoccupied with local ‘survival’ issues it leaves them little time if any to look after the paying TAB customers.

The coupling, in the state parishes, of profit-driven TABs and meek official bodies, directed by administrators of non-profit organisations, was never likely to be a successful mating. And they haven’t been mates, have they? Rather, industry governance is confused and destabilised pending the resolution of the power plays within states — and the power plays may soon spill over state boundaries.

Along the way, TABs have given banks an object lesson in the policy mechanics of cost-cutting, branch closures and other cut-backs to customer services — and the don’t-talk-back substitution of alternative over-the-counter facilities and compulsory synthetic technology for the poorer and less courageous punters. The Australian ‘Burglars’ Association stands in awe of the TABs — ain’t that something.

Now imagine what would have happened to the number of race clubs, racetracks and racehorses if the TABs were in charge. Very encouraging thoughts.

“bugger the customers”

Not surprisingly, still the customers of ‘racing’ are entitled to the usual protections of the ‘fair-trading’ laws. Clearly unfair treatment of TAB customers that would not be tolerated by any other national retail business, is legitimised as ‘fair’ in the racing industry.

State racing administrators (and State Treasurers) would silently lament the real decline in betting turnover — one State even runs advertisements warning in Orwellian tones, the consequences for customers betting with ‘an overseas operator’.

These guys may not understand the why, when and how– but they can feel that a revolution is coming.

End Piece

Modern technology has changed the dominant racing industry paradigm.

It may be ‘nice’ for rural communities to have a local racing industry but, it won’t be either necessary or likely to be preferred to alternative subsidies for more useful local, rural industries. Redundant elements of local racing industries will be identified and bought out. Then, the taxes collected from racing will be spent more sensibly on different things — possibly including higher prize-money for first class racing.

Don’t even bother to think about lower deductions from the TAB betting pool — the best we can hope for is that these taxes may be spent more wisely.

Peter Mair: [email protected]

(Peter Mair represents consumers on RIPAC in the regulatory framework for racing in NSW)