The Melbourne Cup is a billion dollar bet by online gambling giants. Your punt helped them win
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Version 0 of 1. “Growing broke” – that’s how racing mogul Robbie Waterhouse described his son Tom’s business strategy back in 2012. Tom Waterhouse’s strategy could be extended to the rest of us too. As the nation that gambles more than any other, we’re growing broke together to finance the growth of the online gambling industry. Unlike the 5,000 pound gorilla that is the poker machine lobby, the online bookies are like ticks: unless they can keep sucking the life out of us, they’ll shrivel up and die. That’s because the big players in the industry are foreign owned and bought into Australia, or bought up existing outfits. They organise under the banner of the Australian Wagering Council (AWC). SportsBet is the most successful online betting agency, with its profit of around $50m in 2013 making up a quarter of Irish parent company Paddy Power’s total take. That’s lucky; the Irish snapped up SportsBet for $200m in 2010. Around the same time they also bought IASBet for $40m, which they promptly shut down in August this year. Sportsbet’s CEO, Cormac Barry, is the chairman of the AWC. William Hill, the British gambling giant, bought Tom Waterhouse, Sportingbet and Centrebet in 2013 for $710m. They plan to shut down Sportingbet and Centrebet but will keep Tom: “The awareness [of Tom Waterhouse] was why William Hill wanted to buy the Tom Waterhouse dot com brand,” Tom Waterhouse said earlier this year. His face is going to be doing a lot of heavy lifting; SportsBet’s $50m profit is the industry-leading figure and there’s a lot to be recouped. At the other end of the scale, Bet365 was set up from scratch and has lost $77m over the last two years. It’s operating off the back of a no-stress loan from its British parent company. And Betfair was recently bought out by James Packer for $10m. As one writer in the know quipped, the industry’s total investments add up to a “billion dollar bet” by foreign companies on Australians’ insatiable thirst for gambling. For that to pay off, the bookies have to hustle hard. Last year’s Spring Racing carnival was a fizzer: SportsBet alone lost almost $6m because the favourites kept winning. After the favourite taking home the cup, successful punters who don’t lose enough are the bookies’ other worst nightmare. In 2013, a punter who alleged he was being frozen out by bookies after a $22,500 win took SportsBet to the Victorian civil and administrative tribunal. The bookies won: the tribunal dismissed the applicant and said that SportsBet was well within its rights to refuse to place bets. This followed similar rulings in the NSW supreme court and from the NT government, which hosts most online betting companies because of tax concessions, and receives little in the way of receipts for their trouble. The AWC fought tooth and nail to stop a “minimum loss” bet limit being introduced by Racing NSW: they lost, and now most online outfits subscribe to a new set of rules as of June 2014, in NSW at least. The online bookies also have to compete with the retailers at Tabcorp and Tatts, and keep trying to cannibalise them. Back in 2011 SportsBet tried to raid Tabcorp’s turf to set up betting kiosks in pubs; they eventually retreated after a lawsuit. In turn, Tabcorp and co are upset that the online outfits don’t have to pay for retail exclusivity rights; there’s no love lost between the two sectors. To win on a punt as big as a billion dollars, the online operators will need a bit of luck. But as General Douglas Macarthur said, “the best luck of all is the luck you make for yourself”. In the AWC’s case, this happens through lobbying: NSW Liberal party president Chris Downy does double duty as the AWC’s CEO. The lynchpin of the AWC’s entire strategy is that the sector is inherently anarchic: “prohibition doesn’t work on the internet”. Because punters will go to offshore betting agencies that aren’t regulated and don’t pay tax in Australia, the local (read NT-licensed) players should be permitted to do whatever they wish, within reason of course: in-play betting on sporting events, exemptions from “product fees” paid to the racing industry on turnover (the churn of bets placed) rather than gross profits, self-regulation of advertising and so on. Really, it’s about an estimated $1bn in potential gambling revenue currently flowing to offshore companies – nearly 14% of Australians’ online spend, according to Tabcorp. But as the federal government noted in its 2012 review of the interactive gaming act, it’s hard to account for the overall spend on online gaming. Professional punters have their own interest in seeing the industry regulated, and the industry will keep fighting back to keep the bets flowing in. For the rest of us the issue is a lot simpler: as we saw with the Tom Waterhouse NRL live odds fiasco, the online gambling industry has no problem with pushing further and further out of the birdcage, and off the track, to capture a larger share of the market. Say what you want about the race itself, but the spectacle – Geoffrey Edelsten’s proposal, the fashions on the field, Bart Cummings’ hair, and the death of this year’s favourite, Admire Rakti – is now in the service of an engine that’s working overtime to backfill a billion-dollar sized hole. Online gambling spent $90m last year on marketing alone; perhaps we can look forward to a Waterhouse on every television and every smartphone until we find out whether their bet pays off. |