Steve Moran

Steve Offers His Brief History Of The World – That Is, The Racing World In Victoria, In His Time

They were governed, for the most part, by wise and statesman like older men whose livelihood’s were not dependant on the sport as it was then known – although they may have had a hand in the breeding game.

Then, as an English scribe recently observed, racing was ‘generally better off when left in the hands of the toffs’ and the motivation was predominantly to foster great racing and to breed a better animal rather than to do so to primarily maximise commercial gain.

Ok, that might be a slightly romantic recall of the time but the people believed.

One of those elder statesman was a man named Chester Manifold who was chairman of the Victoria Racing Club (VRC) and chiefly responsible for the introduction of the TAB (Totalisator Agency Board) in Victoria in 1961.

This made the people very happy. They could conveniently have a bet, be guaranteed to get paid and a good chunk of that money came back to the industry.

But the punters weren’t nearly as happy as race club officials and state government treasurers as it soon became apparent that the TAB, with it’s off track outlets, was nothing short of a genius idea and a veritable cash cow which ploughed money into state coffers and returned huge sums (at a rate of between four and ten cents in the dollar) to the industry.

The downside, of course, was that betting off-course became very convenient and everybody running the show ‘dropped the ball’. And who could blame them? Through the late 1970’s and 1980’s I vividly remember race club bosses (then called secretaries, not chief executive officers) being asked whether they were concerned with what began as minor falls in attendance. “Oh don’t worry about that,’ they said, ‘look at these TAB off course turnover figures….”

They were awash with money and it would have taken an administrator with an extraordinary sense of vision to foresee the growing army of stay at home punters, how the betting landscape would change and how their traditional Saturday rivals – football and cricket – would reinvent themselves.

And, in those good ‘ol days, overheads were limited. The VRC secretary, his racing manager, an accountant, a couple of junior clerks, the tea lady and the work experience kid ran racing in the entire state. And generally did a damn fine job.

Then, for some strange reason; and under some pressure from the Labor state government against the backdrop of a perceived need for ‘independence’, the VRC relinquished it’s control and the monolithic and expensive RVL was created.

The VRC should never have rolled over but I’ll concede that’s easy to say with hindsight.

And, ironically, that state of a truly independent governing body has never quite been achieved in the eyes of many of the populace. A view certainly expressed by ex-Premier Jeff Kennett after David Moodie replaced Rob Roulston as the chair of RVL. Kennett tweeted: “Governments seem to have given up on good and appropriate governance in RV.’’

The happy people were starting to feel a little agitated but little did they know how much more things would change.

They were still coming to terms with the privatisation of the Victorian TAB in 1994 which happened under the rule of the aforementioned Kennett who has frequently said that he regrets having allowed, indeed if not encouraged, that to happen.

The newly created entity was to take over the NSW TAB in 2004 and that gave them a real bonus, perhaps even the upper hand, as the NSW TAB had acquired Sky Channel in 1998. And they wanted to make some money from betting and race vision and they had shareholders to answer to.

By this stage everything was getting really weird, like when mum and dad stay together for the sake of kids, and the people were confused and unhappy. Jealousies emerged. Fights broke out.

Nowadays there’s something called a joint venture which I think is supposed to be some kind of peace-keeping force. This joint venture is almost perversely symbiotic. TABcorp needs Victorian racing, Victorian racing needs TABcorp. The JV is outlined, as follows, on RVL’s own racing.com website – you know the one, it’s sponsored by Crownbet!

“Tabcorp Holdings Limited commenced a 50/50 Joint Venture with the Victorian Racing Industry (VRI) in August 2012.

“The Joint Venture agreement between Tabcorp and the Victorian Racing Industry – comprising of Racing Victoria, Harness Racing Victoria and Greyhound Racing Victoria – provides revenue for the industry and continues a long and successful relationship that has operated since 1994.

The agreement is underpinned by a 12-year wagering licence – titled the Victorian Wagering and Betting Licence – which was awarded to Tabcorp by the Victorian Government in July 2011.”

Yes that appears on the website which is sponsored by a rival wagering operator and several others sponsor major races with various Victorian race clubs. Seems a bit like ‘I love you darling and we’re 50-50 no matter what, but do you mind I if sleep around just a little bit.’ And, unsaid, I’ve got half an eye on taking 100 per cent to myself If only I get hold of that damn wagering license when it comes around.

Of course there’s arguments about growing the pie, and expanding the wagering opportunities by providing vision and the like to those other operators.

But you might wonder whether that’s simply facilitating a migration of TAB customers to alternative betting outlets. That would seem more likely than the proposition that the other operators are creating legions of new racing fans and/or getting droves of their committed sports bettors to bet on racing.

That would seem to me to be a dangerous strategy given the return to the industry is so much greater from the TAB even if, along the way, some of the important people in Victoria decided they really didn’t like TABcorp.

Those alternative operators now include a raft of corporate bookmakers who are perfectly entitled to operate in our free enterprise economy but surely we need to be mindful of the bitter lesson of the prize money experience in the UK.

They also include Betfair which originated in the UK where the bookmakers have always had a stronghold – politically and financially – and where the tote or TAB was virtually non-existent. Therein lies the only flaw with Betfair which is otherwise simply brilliant and the greatest stroke of genius since the advent of the TAB. Had Betfair originated in Australia, there’s no doubt they would have factored in a greater return to the industry…. and then been flawless.

Many of the unhappy people are now left to wonder why RVL does not entirely embrace this so called joint venture if around 74 per cent of Racing Victoria’s revenue comes via the TAB (TABcorp). They wonder if this will decline, whether a ‘bigger pie’ will generate the same returns?

It’s going to have to be a mightily bigger pie and racing.com’s free to air TV platform is going to have generate a new audience beyond imagining. Personally, I’d spend the money on major daily newspaper space and prime time TV advertising and/or content.

The following is the state of play as the TAB sees it.

  1. On a Victorian thoroughbred race, the industry will get more than $10 from every $100 bet with the Victorian TAB. From corporate bookmakers this is substantially less and depends on whether it is a standard, group and listed or premier meeting, but in the case of most routine meetings it would be $1.50 for every $100 bet.  
  2. The Victorian racing industry would get between $6 and $7 from every $100 bet with the Victorian TAB on sport such as AFL but nothing if that bet was placed with a corporate bookmaker.
  3. The Victorian racing industry would get around $9 from every $100 bet with the Victorian TAB on interstate racing but nothing from a corporate bookmaker.
  4. If a Victorian TAB customer opened an account with a corporate bookmaker, the industry would get zero if they went on to bet on sport or interstate racing and would also get substantially less from every dollar they bet on Victorian racing.

Even a failed economics student like me would see those numbers as quite a compelling argument for supporting this JV unless someone can explain, convince me. otherwise.

The recent release of the RVL annual report appears to acknowledge there may be a problem but leaves the industry’s most fundamental question – long term funding – largely unanswered. Especially in terms of income projections over the 10, 20 or even 50 years against the backdrop of our dramatically changed wagering landscape.

The report notes, in almost glib fashion, a decline in TAB revenue. It reads: “Changes to race fields policy have enabled us to capitalise on positive performance within the corporate bookmaking sector and to gain revenue growth of $10,500,000, but unfortunately, this was insufficient to offset a decline of $12,600,000 of revenue from the Tabcorp Joint Venture. As complex wagering market forces continue to dramatically evolve, Racing Victoria needs to respond and position itself to ensure we gain value from the national and international customer base.”

Bloody oath they need to respond and provide some direction. Victoria, understandably, lacks some defined leadership right at the moment with an outgoing CEO and an interim chairman.

It is, however, incumbent on whomever (hopefully soon) assumes those roles to provide some reassurance.

The problem, as I see it, is that while the wagering pie may be growing; the percentage return from every dollar invested with corporate bookmakers or exchanges will never be as great as it is from the TAB.

Of course, TABcorp’s responsibility is to its shareholders and as the fundamental drivers of more and more racing (read betting opportunities) and its long time control of the racing clock has not/will not have everyone deliriously happy but the return to the game remains impossible to ignore.

The RVL report goes on to say: “By securing a dedicated channel, the sport has been granted a unique and unprecedented opportunity to attract new audiences in homes across Australia.” How many?

And: “The reach of digital streaming of our broadcasts is rapidly expanding and places the sport on a sound footing to meet the demands of racing fans and engage with them at all levels.” How many and to what financial advantage?

And: “The financial strategy we have developed and followed has again delivered an incredibly robust balance sheet in a challenging environment, with cash balances of almost $75m at year end.”

What are they going to do it with that money, the people might be entitled to wonder? Save it for a rainy day as, I kid you not, the racing minister Martin Pakula suggested in a recent radio interview. Admittledly the question caught him off guard. What’s the ‘rainy day’ they’re worried about?

Maybe it has something to do with the ramblings above all of which some of the people might consider a touch simplistic. Don’t know. But many of the people are just asking and looking’ for an answer.

DISCLAIMER: Steve Moran derives some casual income from the TABcorp owned Sky Sports Radio.