Poker rate

Will the price bubble burst?

NSW’s POC rate has risen from 10% to 15% for this financial year, meaning the bookmakers tax on all bets made by state customers at the time is further eating away at their bottom line, which is passed on on bettors.

It’s worse in Queensland and the ACT (20%), while South Australia and Western Australia (15%) will surely be joined by Victoria (10%) shortly.

Racing NSW boss Peter V’landys.Credit:Rhett Wyman

For an industry that reveled in COVID lockdowns as an isolated population turned to gambling on the run as a distraction, is the wheel about to turn?

There is enormous pressure on the cost of living with rising inflation and interest rates, just on the eve of the racing industry’s most important period with the spring carnivals in Sydney and Melbourne fast approaching.

Coupled with lower value in the betting markets, one of the most aggressive bookmakers in the industry, TopSport managing director Tristan Merlehan said the POC increases meant he had “tried to reduce the 30% turnover after spending millions trying to develop it”.

“Which company in the world is doing this, and how is it good for the industry? Unfortunately, the industry is turning into a poker machine,” he said.

“Every betting operator has a role to play in funding the NSW racing industry to ensure continued price increases and investment.”

Adam Rytenskild, CEO of Tabcorp

“Previously, a client who could have lost at 5%, who bet responsibly and well within his means, was a very good client from our point of view. You knew it was long lasting and they would be with you every week.

“Now someone who loses at 5% gets kicked out by many operators. Bettors are forced to lose 10% or more to be profitable from a trading standpoint. This is the epitome of irresponsible gambling.

But critics will point to recent half-year results from behemoths Sportsbet and Ladbrokes and ask: why all the fuss?

Profits at Sportsbet’s parent company Flutter continue to rise, and it said it could absorb the $125 million it would have to pay in consumption taxes for the 2023 financial year.

Sportsbet has also funded a new $6 million bonus for a series of sprints during Sydney’s Spring Carnival around Everest and the Nature Strip Stakes. They wouldn’t have hesitated twice to spend that money to get a foothold in Tabcorp’s traditional stronghold at Racing NSW.

London-based Entain said its net gaming revenue rose 19% to $304.3 million for the six months to June 30 compared to the same period last year.

With aggressive marketing campaigns, giant brands such as Sportsbet and Ladbrokes will still retain hundreds of thousands of recreational bettors, or “mug money” that will support their income.

Tabcorp chief executive Adam Rytenskild is unapologetic for his company’s lobbying for foreign rivals to pay higher POC taxes.

“Every betting operator has a role to play in funding the NSW racing industry to ensure continued price increases and infrastructure investment,” he said.

The Queensland point of consumption tax is 20%.

The Queensland point of consumption tax is 20%.

“We are truly proud to provide industry funding for the races we do while continuing to offer generous promotions to our customers. It is time for foreign operators to do the same.

“The proposed increase in the POC levy will ensure long-term sustainable funding certainty for the NSW racing industry – this is a good thing. Currently overseas online bookmakers pay half the betting fees and taxes as local TAB.

“Foreign-owned online betting operators should pay the same betting fees and taxes as the local TAB – that’s fair.”

Robbie Waterhouse says the changes could be a

Robbie Waterhouse says the changes could be a “disaster” in the long run.Credit:Nick Moire

But he faced a stern rebuke from Responsible Wagering Australia boss Justin Madden, who represents the digital bookmaking group and questioned Tabcorp’s ability “to drive growth and innovation”. He took particular aim at the Queensland Government’s POC stance.

“RWA members paid 51 cents on every dollar of revenue in taxes and fees last year, or more than $1.8 billion,” he said.

“Queensland’s tax hike decision is worse than short-sighted, it’s retrospective. Queensland and its racing industry are now on the verge of having the dubious honor of being the highest taxed and least competitive betting product in the world and are looking at a very big hit to their revenue due to the location of executing a proper process on how to achieve strong growth and returns for the future, they entered into an exclusive agreement with Tabcorp.

“South Australia pre-COVID shopping was collapsing under the weight of 15% consumption tax. SA racing had to cut prices, was losing top trainers and jockeys to other states, and the SA government was failing to meet revenue projections.

“Queensland now has that future ahead of it.”

The market will also have a new player next month when the Matt Tripp-led, News Corp-owned startup launches in time for the Footy Finals and Spring Carnival.

They will want to make a splash, but also want to profit from the launch. How they tangle with the POC and executive tax markets will be fascinating to watch, and who knows what the racing industry will look like in a few years?

In NSW’s defence, Shannon said “V’landys money management has been really good and product fees have been kept at a reasonable level”.

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But the pressure is mounting, and he pointed out that bookmakers will have no leverage but to increase withdrawal rates if taxes continue to rise.

I walked through the betting ring at Rosehill on Saturday and walked over to Robbie Waterhouse to ask if the latest price increases were funded by more government taxes.

“It will be a disaster for the race in the long run,” he said.

Only time will tell.