poundforpound

Now the sh#t hits the fan

45 posts in this topic

I am fairly neutral politically, but that does come across as a rather hypocritical and disingenuous release. National did nothing for the Racing Industry over many years and foisted a string of pretty useless Ministers onto the industry. I would say that sports such as Football and Basketball do bloody well out of the TAB; hardly any of the betting on those sports is generated by the local competitions.

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I would have thought that sports actually do quite well overall.

Firstly they have no costs, the racing industry have paid for, set up and run everything to supply money to the various sporting codes. The second thing to remember that 90% of sporting bets are on overseas events not NZ sports. American Basketball and European Football for example attracts huge betting interest and NZ Basketball and NZ Football must do very well out of that getting funds at no cost and not really being involved in attracting turnover domestically. Tennis, golf, darts etc the same thing.

I believe sports betting on games actually played in NZ would only be small fraction of sports turnover.

 

 

 

  

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I have never belonged to a political party and never will. I prepared and presented submissions  to the select committee on the Racing Bill in 2003. The only person on the Committee who had any idea as to what was going on was Sue Bradford who told me afterwards that she had a couple of broodmares. The National Party have had an abysmal record of non-support for Racing typified by their most recent Ministers but even worse by the political hacks they they have foisted on the Racing Board like the current Chairperson.

The current spokesperson, if that is what she is, probably doesn't  know where her closest TAB is..

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This industry will pay a high price for their political naivety 

The Industry has and is paying a high price for Nationals naivety for their appointments of Glenda Hughes and John Allen, two individuals lacking any racing or wagering experience and knowledge when it was most needed. Both of these appointments challenged and downplayed the report by Deloittes on why the Industry couldn't sustain a new betting platform budgeted to be $30 million which subsequently blew out to be millions more. Not one of the promised areas of extra generated income from the new betting platform has come to fruition. Many  customers have stopped betting locally due to poor service and a betting platform which is not performing.   Political naivety has helped to escalate the problems the Industry faces today.  When your $30 million in overdraft, have sold your assets and your major organisation providing revenue is run by management with poor skills wouldn't you want to see a Bill rushing through for changes to try and stop the leaking? On paper the NZRB is in liquidation. 

The $#@% will hit the fan when Australia turn around and start charging a fee to NZRB for taking betting on their sports. How will the Industry be able to pay to Australia and NZ a code like Rugby League when about 90% of betting is done on the NRL. 

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5 hours ago, rdytdy said:

 

I would have thought that sports actually do quite well overall.

Firstly they have no costs, the racing industry have paid for, set up and run everything to supply money to the various sporting codes. The second thing to remember that 90% of sporting bets are on overseas events not NZ sports. American Basketball and European Football for example attracts huge betting interest and NZ Basketball and NZ Football must do very well out of that getting funds at no cost and not really being involved in attracting turnover domestically. Tennis, golf, darts etc the same thing.

I believe sports betting on games actually played in NZ would only be small fraction of sports turnover. 

 

 

 

  

The previous two Football World Cups each attracted NZ TAB betting of over $30M

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Why does it matter if you bet on Racing in NZ or abroad ?

Surely the profit from a racing bet should go to racing regardless of the jurisdiction providing the races / event.

Extending that logic if you bet on rugby, basketball or boxing it shouldn’t matter where the event was hosted, the proceeds should go to that code / sports domestic administrators .

 

 

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What hit the fan?

A patsy release from National to show their annoyance at Winston using all of his political nous and ensuring that changes to the Racing Act proceed without delay.

Help me understand what the funding changes will be to sports as, despite the headline grabber, it’s not quantified. Funny that.....

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13 minutes ago, Eclipsed said:

What hit the fan?

A patsy release from National to show their annoyance at Winston using all of his political nous and ensuring that changes to the Racing Act proceed without delay.

Help me understand what the funding changes will be to sports as, despite the headline grabber, it’s not quantified. Funny that.....

Simple really......Nikki is saying that sports are currently on fixed fee deals with the TAB....but the Nats think ( quite rightly ) that each sport should get the entire benefits of any revenue / profit that sport generates.

In other words the big headline sports like basketball and rugby shouldn’t be subsidizing Racing, as they now do.

How could you not understand that ......had a few Lion Reds have we ?

And guess what happens when voters get a choice as in “who would you like to see TAB funded, rugby, basketball, netball or racing?”

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Most of you are truly naive. National's policy was never to help racing. It was mandating the morphing of the TAB's rights to have racing the beneficiary of the bet take. The appointments of mutton Glenda was to deliver an outcome. The appointments to the board, including Bill Bernie (who'e an OK guy with a patchy track record) were stacked to sports. The appointment of John Allen as CEO was stacking the pack. The only thing that went wrong with the program was that National didn't get enough votes. 

The recent Nicki Kaye statement is simply reinforcing that position. The real problem is that the lotteries business isn't as easy as it was any more. Earnings have hit a bit of a plateau after revenue in 2014 being $893m with distributions of $198m increasing to $1206m in 2016 with distributions of $272m. In 2017 this was $1246m with distributions of $275 and from all accounts the 2018 results are not all that crash hot. By capping pokie machine activity, who sometimes distributed profits to sports organisations, this is under pressure as their costs increase.

So where's the surprise. It was all a set up and Winnie put the proverbial in the spokes after joining forces with Jacinda.

   

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the nats have got a hell of a lot more show next time than winnie has of being there

and isn't a labour/greens government going to be great news for the racing industry......

the self imposed industry voices backed a 5% man and backing $20 shots eventually leads too a empty account and this will be no different for them........

the sports betting side of things was one of the massive negatives of getting rid of the out-dated racing act (messera report) its a hell of a lot of money and with the 3 codes basically now having no ownership or power/rights too any money generated from the nzrb, the politicians can now do what they like with it.............   

 

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Sportsbet is charging the Industry millions a year ($17 million a year between them and Openbet)  to price and result sporting odds. This is a charge that was never mentioned prior to the NZRB signing off the new betting platform so where are the millions coming from to pay Sportsbet each year? The Sports turnover is not returning anywhere near the yield it needs to be even if turnover is up so those millions in extra cost will have to be absorbed by the Industry which will equal less return to the Racing Industry.  

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1 hour ago, LightsOut said:

Sportsbet is charging the Industry millions a year ($17 million a year between them and Openbet)  to price and result sporting odds. This is a charge that was never mentioned prior to the NZRB signing off the new betting platform so where are the millions coming from to pay Sportsbet each year? The Sports turnover is not returning anywhere near the yield it needs to be even if turnover is up so those millions in extra cost will have to be absorbed by the Industry which will equal less return to the Racing Industry.  

So in your opinion how will or can the mess JA and his crew be rectified?

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So the **** is hitting the fan. And who here on Racecafe predicted exactly that. Few were aware here how the Racing Board was being stacked with sports people until I pointed it out. From day one I said the platform would be a disaster yet many were saying how great the new technology was going to be. Just before the launch p4p was sneering at the sceptics in his own words "you'll all look stupid when the new platform is a roaring success". Now p4p claims others to be naive. What a ***king joke. 

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6 hours ago, slam dunk said:

So the **** is hitting the fan. And who here on Racecafe predicted exactly that. Few were aware here how the Racing Board was being stacked with sports people until I pointed it out. From day one I said the platform would be a disaster yet many were saying how great the new technology was going to be. Just before the launch p4p was sneering at the sceptics in his own words "you'll all look stupid when the new platform is a roaring success". Now p4p claims others to be naive. What a ***king joke. 

Show me where I said the new platform would be a roaring success.......you lying bastard......all I ever said said ( once ) was what will you or anyone else do if it is a success

 BTW I’m told sports betting is doing well on the new platform..it’s only racing that’s in free fall 

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39 minutes ago, poundforpound said:

Show me where I said the new platform would be a roaring success.......you lying bastard......all I ever said said ( once ) was what will you or anyone else do if it is a success

 BTW I’m told sports betting is doing well on the new platform..it’s only racing that’s in free fall 

That’s what you would expect . If This new site was a main meal the sports are the eye fillet in front of the diner  and the racing is a few crumbs that have been brushed under the table . 

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57 minutes ago, puha said:

That’s what you would expect . If This new site was a main meal the sports are the eye fillet in front of the diner  and the racing is a few crumbs that have been brushed under the table . 

Arguably true....and of course sports now offer so many more options so you’d expect some growth.....but the undeniable fact is that customers / society have a huge appetite for sports betting and little or none for racing.....such is life Puha.......we’re producing a product no one really wants Puha.

Don't blane the TAB or NZRB champ....as an industry we have to be accountable to ourselves, we need to own this problem otherwise we’ll never be able to address it 

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...and of course sports now offer so many more options so you’d expect some growth..

You would expect it and with a  far lower margin that Racing you would need to but sadly as reported: 

Quote

The margins on sports betting are a lot less than racing. For example, the gross profit is historically between eight and nine percent from which sports would be paid a net two percent and racing a net two percent. But Allen has admitted that in the first three months of the FOB (January to March) the margins were running at, not nine, but only three percent, and given the competitiveness of the global market, the margins are likely to have remained skinny ever since

Puha - So in your opinion how will or can the mess JA and his crew be rectified? Sadly only by outsourcing to TABCORP.

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3 hours ago, poundforpound said:

Show me where I said the new platform would be a roaring success.......you lying bastard......all I ever said said ( once ) was what will you or anyone else do if it is a success

 BTW I’m told sports betting is doing well on the new platform..it’s only racing that’s in free fall 

Hardly surprising. There is a tribal element involved with most major sports that Racing can't hope to compete with. Punters have much more knowledge of "their teams/players" and don't have to worry about all the variables racing has....like will they handle the track/conditions...?! Apart from all that, it is a two horse race, the odds are better, so why wouldn't you have a go....??

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22 hours ago, poundforpound said:

As predicted 

Wait until they get back into gummint 

This industry will pay a high price for their political naivety 

https://www.national.org.nz/sport_funding_at_risk_from_rushed_racing_bill

can this industry pay a higher price than is already being paid? National did nothing significant to revitalise an ailing industry in nearly a decade of power. At least we are seeing real legislative action, led by Winston, delivering on his promise for the codes pre-2017 election; any imperfections in this Bill can be amended over time. ,National is farting into the wind arguing the toss over this 'rushed' Bill; it will be passed, so they may as well pick on another issue -preferably one that they haven't already lost  credibility on. 

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I don't think a lot of you get this. We have a problem of monumental proportions. Fixed odds used to be people (bookmakers) who offered odds because they had inside information on an event. It was a form of cheating but it was acceptable to many. Then the tote arrived. Then the bookmakers leveraged the tote to manipulate their book. Then the longer odds bets arrived in the tote and these were also arbitraged and manipulated by the cheaters who manipulated their own books. Then the betting exchanges arrived where you could lay a horse to lose. Much easier than betting on a horse to win. So legislation reigned that one in as cheating increased disproportionately. Then the cheaters began to be inefficient and that has left the door open to automated bookmaking....the FOB platform.

A sucker like NZRB comes along and pays for the development of a "new look FOB platform" but doesn't own the exclusive rights to deploy. That belongs to the developers (Open Bet), who are also competitors because they have retained the rights to distribute the platform in other jurisdictions. To really push the boat out, these developers have also negotiated a service agreement which allegedly provides the Open Bet with fees of $17m per annum. 

The projected benefit is that the NZRB now has a betting platform that promotes race betting and sports/ events betting. The benefit to racing was that the NZRB bookmaking services wouldn't have the catastrophic results of the past that it had while manually processing the fixed odds bets. The theory is that with the added sports/ events offering, more people, who previously didn't bet, would start  betting on racing, sports and events. The main beneficiary would be the racing industry, who originally paid for the Tote. The argument that racing should be taking at this point in time is that we selfishly, for our own enjoyment, race horses. They are animals that need all the care and attention we can muster to make their lives better during and after the racing experience. They have no choice. We impose it on them, sometimes cruelly. So if we decide to partake in this activity we need to do everything to accommodate the nauseous feeling, that some people have, that we are exploiting a poor animal. This needs adequate support and funding. We aren't doing enough for our horses post racing.

But sports has leaked into this equation. It was promoted as a mechanism to help fund sports. That was a political decision under the old act. Unfortunately that is also the recipe for promoting cheating, which sport was meant to be clear of cheating and politics. It was meant to be a pure humanoid activity. That changed with professionalism. So all bets were off.

So a deal was done as a stop gap filler to provide sports with some revenue utilising the TAB, with racing still as the main beneficiary.....my argument being for the reasons above. So there was always going to be an argument that sports wanted more. So the best racing could expect is to offer sports betting, where they were paid as the service provider for supplying the sports bets. This changes the current distribution model considerably.

But back to the FOB platform. So the odds are no longer set by a humanoid, they are set by an algorithm based on the amount held in account, the margin to be taken off the top which is seen as gross profit, and the amount that the betting person wishes to bet. If the bet is too high an amount, then the bet will be turned down because of the disproportionate exposure to the amount held in account. So no liquidity, no big bets. If the margin take out is too great then the betting person will bet else where. So there is this fine line called efficiency which dictates the amount able to be called the level of the take out. This is predicated by the cost of offering the bet and the amount of funds required to the support the activities of the beneficiaries, this being racing and sports in NZ. But in NZRB's case, this algorithm also includes the annual fees to Open Bet, which if the performance of the amount bet is depressed, this fee will be disproportionate to the distributions to the beneficiaries.

But even this isn't the biggest issue. Open Bet now has a fully paid for and working FOB platform which the NZRB has paid for. It has the right to market and distribute this platform to everyone in other jurisdictions. Because we are in the internet phase of the planet, this means everyone is a competitor. This will mean two things. The first is the liquidity in the markets where  more betting people will be established more quickly and secondly, the takeout margins will be able to be squeezed better due to efficiencies. Which means we could get squeezed by competitors who are utilising the platform that the NZRB paid for.....nice.

We may though have a situation where Open bet "white label" the back-end, much like Party Poker did for online poker.  White labelling is where the software is the same but the actual look and feel of the site can be individually branded. In Party Poker's business model they needed to assure people that there were enough people sitting at a table when anyone wanted to play. So although Ladbrokes, William Hill etc were all offering poker, it was in fact the same system. The real issue with this is that no one wants to reveal to anyone else who their clients are because retention of the client is king. So there needed to be a settlement process developed that although a client was paying, the payoff was firstly through accounts held by the individually branded offeror (Ladbrokes etc), and then an overall settlement was made by the holders of the winning and losing bets. 

I do not believe that this is what has been anticipated with the NZRB as I have asked on numerous occasions an explanation of the model. This information has not been offered so I can only think it doesn't exist.

So that gets us to the competitiveness of the bet takeouts. I believe that the NZRB are finding it very hard to attract big betting customers because the odds are not competitive enough. I believe that as this space gets more competitors, due to the automation of FOB platforms, that this will be continuously put under pressure. I also believe that sports/ events betting will become more prevalent because this space was not looked after well by consecutive racing boards/ TAB.

But what I not sure of is whether we are seeing a cannibalisation of betting from racing to sports. That frightens me and keeps me awake at night. There used to be 1.1m people who bet on racing from 2.35m people of gambling age. 10 years later it was 480,000. I here it is now 110,000. When you consider that there are now 3.45m people of legal gambling age in this country, this statistic is woeful for racing but encouraging for sports betting. Shows how far we have slipped. If racing get less for the amounts bet, and cannibalisation occurs, then we are seriously shot to pieces.

 

And then there came the blockchain.....

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16 hours ago, poundforpound said:

Simple really......Nikki is saying that sports are currently on fixed fee deals with the TAB....but the Nats think ( quite rightly ) that each sport should get the entire benefits of any revenue / profit that sport generates.

.

 

Let's be clear here now each sport should get the entire benefits of any revenue/profit that sport generates by doing nothing and taking no risks. :rcf-laughing-2:  It's akin to working people paying for those who don't want to work.

I repeat "Firstly they have no costs, the racing industry have paid for, set up and run everything including advertising to supply money to the various sporting codes."  Also with providing sports betting you are bastardizing/diluting your own product by diverting money away from your core business and you want the entire benefits from all that to go to the sport.  

Now if you are in business why wouldn't this be abhorrent.

If I suggested to you that you go down the road not far away from your own business and outfit a new restaurant, give it to someone and run it for them, paying for all the advertising, staff wages and all the other costs, diluting your own business in the process and then tell you to give all benefit/profit to the person you gave it to who did nothing and took no risk...……...you would laugh, give me my pedigree and tell me to take a long walk off a short pier.

         

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Ted, you’re a dinosaur.....Racing doesn’t own the TAB, nor did it fund the establishment of the TAB......punters did that......that argument you’re using is old & tired......feel free to explain how greyhounds fit into your model though.

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Berri that is astounding that the Industry paid for the development of a betting platform costing $10's of millions and they don't own the rights to it. You don't negotiate deals like that when your acting in the best interests of an Industry who pays your salary. Talk about getting screwed over big time. Not that it is a betting platform in its current form that would be attractive to any bookmaker.

The reason that sports betting is now dominating racing betting is because since the 70's and early 80's when racing was flourishing a couple of those generations of punters have now passed on. Sports betting with mostly just two teams is easier for the younger people to bet into. Horse racing is complicated betting wise as so many variables have to be taken into account if your serious about trying to make a dollar. Those earlier generations knew the art of reading and understanding form where as its like another language for the younger generations to learn and come to grips with.   Basically its too hard a task and sports betting is far easier.

I still find it hard to believe that an Organisation would pay a company millions to develop a new betting platform and they didn't ensure they owned the sale right to it. If that indeed happened the Industry was sold down the river. The agreement signed on the above is reading like a script from a Laurel and Hardy movie. 

Racing and sports yields on average are about 6% different in return (racing higher) so if Sports betting is attracting money from racing the turnover has to be millions more to achieve the lost % from racing.   

  

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