‘‘Leakage’’ to Australian bookmakers a concern

02:49 PM 06 Jul 2014 NZST
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Leakage to Australian bookmakers a concern
Leakage to Australian bookmakers a concern
The former banker who has just resigned as head of the Racing Board has proposed the Government introduce laws to help stem ‘‘leakage’’ to Australian  bookmakers.
 
New Zealand does not officially have a competitive bookmaking market with the TAB, owned by the NZRB, a statutory monopoly. But plenty of Kiwi punters place bets online with overseas bookies. How much is unknown but it’s estimated as high as $300 million to $400m a year.

 NZRB chief executive Chris Bayliss resigned last week after two years in the job but prior to his resignation Bayliss said the TAB had been working with the Government on amending legislation so that overseas bookmakers using New Zealand product, racing or sport, would have to be licensed here. Part of the licensing requirement would be to pay GST and also the levies that the TAB has to pay. The TAB’s overseas rivals can offer better odds because they don’t incur these costs.

The State of Origin rugby league game on May 28 highlighted the differences.
 
The TAB odds offered on Queensland to win were 2.70 (ie $2.70 back for every $1 bet), compared to 3.00 at Sportsbet, and 3.15 at Centrebet, both Australian betting websites.

That’s unfair competition said  Bayliss, especially as the TAB has a large retail store base to operate,  versus  online-only overseas bookmakers.

 Bayliss said around 80 per cent of the money is flowing into betting companies like Sportsbet and Centrebet, domiciled in Australia’s Northern Territories.

He believed their chief executives would comply with new laws. ‘‘All we can do is have the legislation, and make the large corporates aware that it exists. I think the large corporates will embrace it.’’

Previously some had suggested following the Australian example of a 1.5 per cent ‘‘product fee’’ on bets taken on New Zealand sports by overseas bookmakers, assuming they could be forced to pay. But for an organisation that makes a profit of $140m, 1.5 per cent of $300m is a ‘‘rounding error’’.
 
Bayliss wanted to level the playing field so Kiwis won’t get better odds overseas. ‘‘If Kiwis no longer want to bet with overseas bookmakers because the odds aren’t better.. . ’’ Bayliss mused. ‘‘My net profit is 10 per cent. $30m is a game-changer.’’

The racing industry misguidedly believed that Government should build a digital wall around New Zealand, and start blocking overseas web-betting services, as well as following the likes of Hong Kong, making it illegal for banks and credit card companies to process payments to overseas bookmakers.

Not all of the leakage is to do with the better odds. TAB has been slow to adapt. It has only just started streaming events online, and finally launched a functioning smartphone betting app to cash in on the football World Cup.
 
‘‘Licensed bookmakers’ betting patterns could be more easily scrutinised if they were licensed’’, Bayliss said.
 
Bayliss said he had ‘‘ongoing dialogue’’ with Racing Minister Nathan Guy and he expected progress on the issue in the next 12 to 18 months. But the minister wouldn’t be drawn on whether Baylis’s proposal will get the nod. ‘‘Leakage is an important issue for the local racing industry and I’ve been discussing it with industry leaders,’’ Guy said. ‘‘It’s a complicated issue and will take some time to work up some options.’’
 
By Rob Stock
 
Reprinted with permission of The Sunday Star Times
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