Tabcorp managing director Ross Wilson has grown obscenely rich on the back of the world’s biggest privatisation giveaway. But he wants more and he will apparently stop at nothing to attack those who stand in his way.
Tabcorp managing director Ross Wilson has been doing this since the state-owned TAB was floated on the cheap by the Kennett/Stockdale government in 1994. His reward so far? $30 million plus in salary, options and perks, and counting.
During those seven years, shareholders have seen stock rise from the absurdly low float price of $2.25, to $9, generating more than $2 billion in capital profits. And the company has returned them $2.69 in fully franked dividends.
Yes, shareholders have already recouped their investment in cash – plus 20%. The biggest and fastest dividend rake-in for lucky shareholders in any major privatisation anywhere in the world.
And with the gambling industry proving recession-proof, no wonder Ross Wilson was upbeat at Thursday’s Tabcorp AGM at the Carlton Crest Hotel, Albert Park, talking record turnover and double-digit profit growth going forward.
Last year was another solid earner for shareholders, and with revenues growing strongly in the first quarter of the new financial year, Wilson could declare: “I confidently predict we should be able to achieve double-digit profit growth this year.”
But that’s not enough for Ross, whose personal stake in an industry that has ripped tens of millions from problem gamblers and their families, is enormous. He has paid off his $6.72 million interest free loan, putting him $30 million in front on his options gifted to him by the board.
He wants more, for himself and for Tabcorp, and he blames the state government and the wowsers for getting in the way of his ambitions, and even causing a fall in gambling profits.
Not satisfied with government licences and legislated monopolies and duopolies that make running his gambling empire a breeze, he launched into the state government’s very modest gambling reforms, implemented this year: “Most of these policies are designed to reduce value from our products,” he told shareholders.
The company had witnessed “a very energetic anti-gambling campaign, 05which said if you gamble, you also beat your wife and goodness knows what else.” He claimed this, along with the Bracks government’s regulatory changes to the industry, had caused revenue in the second and third quarters to “fall in a hole”.
Funnily enough, for all his bravado, Ross seems uncomfortable with his product.
He took time out today to give the audience a slide show of a few of the upmarket venues hosting his company’s gambling machines making sure to emphasise their facilities; bars, restaurants, nightclubs, tastefully decorated “gaming areas”.
And then came the crunch. Looking sternly at the audience, as if searching for the anti-gambling campaigners hidden in the crowd, he complained: “These are not gambling venues. They’re venues that present to the public a fantastic offer. It’s very upsetting no one ever talks about that.”
So there you have it. Tabcorp is not a gambling company. Which comes as a surprise when you consider these results, as outlined by Wilson and Tabcorp chairman Mike Robinson:
* An after tax profit of $187 million for the year to July 2001, up 7.4%;
* Wagering profits up 10%; gaming profits up 8.1%;
* An increase in profit margins from 9.7% to 13.8% since floating;
* A boom in new forms of gambling booming: Tabcorp introduced a racing simulation video game, Trackside, into TABs a couple of years ago for punters not satisfied with wall-to-wall thoroughbred, harness and greyhound racing. Revenue rose 500% this year.
* Revenue from Tabcorp’s fixed odds sports betting shop, Sportsbet, up 10%.
* The Sydney Star City Casino is starting to turn around, despite high rollers blowing the house out of the water. Big punters took 30% more from the tables than budgeted for, an event that prompted Tabcorp to pull Star City out of the international rebate business, where high rollers get huge bonuses and feebies just for turning up.
None of which stopped Ross from letting go with his solid whinge. “If you read the press you’d imagine we did nothing for problem gambling. That is categorically, absolutely, not true.”
This is what he thought of the government’s reforms: “They implement policies with hardly any result. In fact most of these policies are designed to reduce value from our products.”
The policies such as the $1200 tax placed on pokies by the Bracks government this year – were aimed at “making our products so unattractive no one wants to use them”
“It’s like putting vinegar in alcohol to stop alcoholism. People will still drink alcohol.”
This is how the annual report put it: “(Tabcorp’s) performance was adversely affected by a number of regulatory changes in Victoria, including restricted trading hours, the introduction of regional caps on gaming machines as well as changes to the approval process for new venues and applications for additional gaming machines.”
And: “It also experienced a considerable amount of negative publicity in the media which increased negative sentiment by some members of the public towards the economic entity’s gaming products.”
Wilson’s comments are the kind of outburst that only serves to underline the rapacious nature of this industry. The “hole” he talks of comprises the company’s second and third quarter gaming revenue figures, which grew 4.1% and 2.6% on the previous year. He compared this with a 9% rise in the first quarter.
So Tabcorp’s phenomenal growth has been diluted for a couple of quarters, 05
Let’s put this in perspective.
The three major gambling licence holders in Victoria – Tattersalls, Tabcorp and Crown – are together enjoying capital profits of about $5 billion on their investment in the government licences.
These whining rent seekers have made massive profits pouring misery onto ordinary Victorians.
Reasonable reform proposals, designed to share the wealth more evenly and reduce the numbers of problem gamblers and their terrible effect on society, have been opposed at every turn by these rapacious behemoths.
During this year, Tabcorp tried to encourage a letter writing campaign by their shareholders and lobbied hard in public and behind the scenes in a successful effort to reduce the levy from the original $4000 per machine proposed by Treasurer Brumby, based on the recommendations of the Harvey report on business taxation.
Trouble is, outside the hard core campaigners like Rev Tim Costello, the anti-gambling cause has been seen as the domain of the wowsers. Terry Lane has referred to poker machines and the like as a tax on stupidity inferring that punters who put their money into slot machines deserve everything they get.
But this industry is geared to mercilessly sucking the last dollar out of the pockets of tens of thousands of people who cannot afford to throw their money into slot machines, or into the wagering tills.
A Crikey spy in the industy has told us how Tabcorp and Tattersalls deliberately target addicted punters who can least afford to keep playing these devious Aristocrat poker machines. Thi
s marketing man with a conscience has explained to Crikey just how insidious Victoria’s poker machine companies are when it comes to wooing problem gamblers to their machines.
His words make chilling reading, and render a hypocritical joke Wilson’s pious words about industry codes of practice and his company “categorically, absolutely” helping tackle problem gambling.
Says our spy: “The category known as Desperate Optimists were the highest spenders of all segments and the most out of control in their behaviour. There were 5 or 6 segments with the total audience representing about 40% of Victorians but it was the DOs we targeted the most.
“The DO’s were high in value but small in number – making them very attractive as a target because management and marketing expenses to contact them directly should be small relative to their spend on the pokies.
“We implemented several strategies that were designed to ensnare the Desperate Optimists. The “Pareto Principle” is that 80% of your customers are responsible for only 20% of the spend and vice versa – so focus the majority of the spend on the smaller groups that will pay off.
“For this reason, we actively targeted those customers that gambled in higher multiples (in terms of spend and frequency of visits) than the average with the idea of increasing our revenues in the most cost efficient way – maximum return for minimum spend.
“For the Desperate Optimists, we wanted to make them feel as comfortable as possible in the venues so they never had to leave. We aimed to ‘protect’ their spend by making them special VIP members and providing all kinds of free meals and drinks to keep them – regardless of their reckless spend levels. The strategies were aimed to maximise return with absolutely no regard for the welfare of the prospect of this campaign.”
But for Ross Wilson, it’s business as usual. We can only hope that November 10 brings us a Federal Parliament better able to withstand the massive lobbying power of the likes of the Wilsons and the Packers and the Tattersalls.
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