Insight AUSTRALIA
Bookies fees risk inflating the
illegal market Fee hikes for bookies in Australia’s horse betting market threaten to boost illegal gambling, push players back offshore and may force companies to change their business models, experts say.
This article was first published by Asia Gambling Brief.
Victoria has changed its fee structure, while New South Wales has also proposed similar hikes, sparking concern others may follow suit and raising a furore among the nation’s bookmakers.
According to the Australian Wagering Council, racing accounted for 13.6 per cent of Australia’s total A$19bn ($17.8bn ) spend in the 2008 2009 period. A report by the The Victorian Commission for Liquor and Gambling Regulation for 2012 - 2013 estimated that the combined racing and sports betting take had risen to some 15 per cent of total spend.
Under the new fee structure for pari mutuel bets, bookmakers in Victoria will have to pay the higher of 1.5 per cent of turnover, or 15 per cent of gross revenue for 440 standard race meetings in
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Victoria. For the 45 group and listed meetings the charges rise to the higher of two percent of turnover, or 20 per cent of gross revenue, while for the 10 premium group one meetings, including the Melbourne Cup, the fees are increased to 2.5 per cent, or 30 per cent of gross revenue. For non - pari mutuel bets the fees rise to three per cent for premium meetings.
In Queensland, the proposed structure will see totalisator bets charged at 1.5 per cent of turnover for standard meetings and 2.0 per cent for premium meetings. Non totalisator bets will be charged at 2.5 per cent of turnover for standard and 3.5 per cent for premium. New South Wales may also follow suit.
According to Tabcorp, without mitigating
strategies the Queensland changes would have cut net profit after tax by $3m, while the Victoria hikes would have cost $4m.
Paddy Power has condemned the increase and has threatened to redirect promotional activity to sports betting and racing in other states.
A representative of the Australian Wagering Council (AWC) told AGB that “regular reviews of the product fees levied to bet on racing in Australia impact significantly on wagering service providers and the racing industry itself.”
The AWC believes that these fees will limit competitiveness and may drive punters towards either “illegal, unregulated starting price (SP), or offshore bookmakers.” They do not pay tax and
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