The following is an extract from the CEO's Note that appeared in the recent edition of the monthly HRNSW industry magazine which may contain broader points of interest.
In recent weeks I have received an increasing number of questions relating to turnover on our product.
For a long period of time the barometer for wagering has been the volume of money in the NSW TAB win pool.
This has changed and continues to evolve.
It has changed predominantly for two reasons; the first is the seismic shift to fixed odds which doesn't show up in the pari-mutuel pool and the second is the migration to corporate bookmakers and betting exchanges.
The fixed odds offering (through Tabcorp) has been a revelation. On one level the huge explosion in racing content as a result of Sky 2 resulted in diminishing average pari-mutuel pools because the same volume of money was being spread across more races. As a result large bets were having a greater influence on tote prices creating wild fluctuations, especially on the minor codes. Punters can now lock in their price and it is becoming a growing customer preference.
To provide the necessary perspective, fixed odds currently represents 30% of the total turnover on NSW harness racing through the NSW TAB. As fixed odds is essentially a win and place offering the impact on the pari-mutuel win pool is unmistakable.
When analysing the wagering landscape further, two-thirds of turnover on NSW harness racing is through the various totes with NSW being the largest contributor at just under 50%. VicTab follows with approximately 23%. Those figures are inclusive of both pari-mutuel and fixed odds betting.
The remaining one-third is wagered through Betfair and corporate bookmakers.
Sportsbet is clearly the largest of our corporate bookmakers and, combined with Betfair, generates more than 40% of the turnover on NSW harness racing from this sector. Sportingbet and Centrebet, although separate entities, are owned by the same company and are responsible for a further 18-20% of turnover.
Although much smaller in terms of total betting (on NSW harness), a couple of the newer players in the market such as Bet365 and Ladbrokes (AKA Bookmaker) are producing very strong growth in their year on year figures.
Since the finalisation of the Race Fields litigation HRNSW has initiated regular meetings with our wagering partners.
These occur on two levels. Firstly through the finance department to ensure compliance and secondly though me to discuss strategy.
In recent meetings with executives from Betfair and Sportsbet, both were extremely positive about our product and how pivotal it is to their overall business.
So while some sectors continue to talk down our industry, the message I'm receiving from our leading wagering partners is very different.
It is an absolute fact that, strictly speaking, returns to the NSW racing industry from the NSW TAB are higher per dollar than from corporate bookmakers and Betfair, however the argument is much more complex and one that has largely become irrelevant.
Race Fields fees are 1.5% of all turnover which increases to 2% for our premium meetings.
To tie this data together, what does the original "vital" NSW TAB win pool KPI referred to at the start now represent?
You can apply a general rule of thumb that whatever money is in the NSW TAB pari-mutuel win pool equates to approximately 10% of the total turnover on the race across all of our licensed wagering operators.
So, for example, if the NSW TAB pari-mutuel win pool is $20,000 on a particular race then it's likely that around $200,000 has been bet in total and potentially more in the case of exotic pool jackpots. These numbers don't even include the New Zealand TAB and other international operators.
To illustrate the point with a live example, at the recent Miracle Mile meeting, $501,000 was invested into the NSW TAB pari-mutuel win pools across the 10 races, which historically would be considered disappointing, but when compared to the total wagered across all bet types and operators of $5.6 million it represents only 8.9%.
For the record, our highest grossing turnover meeting across all wagering operators since collating such data was the Inter Dominion in March where $9 million was invested.