Changes ahead for Australian sportsbooks

[dave nz]

Roy Masters
May 10, 2009


The Australian wagering industry is at the crossroads, a confusing collision of corporate Bookmaker.com/?cmpid=4437" target="_blank">Bookmakers, totalisators and new industry players with innovative technology.

The Victorian wagering licence is up for tender and British-based Ladbrokes and the Hong Kong Jockey Club are circling.

Tote Tasmania, boasting a zero tax regime and a 50-year licence, is dressing itself up for sale, with Betfair, the betting exchange half-owned by James Packer, ominously quiet.

The Irish-based Paddy Power, a big player in Britain, has its eye on the corporate Bookmaker.com/?cmpid=4437" target="_blank">bookmaker Sportingbet. Or is it the rival Sportsbet, meaning that if it seized the latter, it would take IASBet with it?

Paddy Power needs to expand into the Asia-Pacific region and acquire a new market to boast to the London Stock Exchange.

Centrebet, the online operator listed on the Australian stock exchange, was the first corporate bookmaker to exploit the removal of interstate barriers on advertising, sponsoring NRL, AFL and Sydney and Melbourne racing clubs.

Its increased sponsorship has resulted in a "pleasing" increase in March turnover on NRL and AFL betting, up 14 per cent on new clients and 11 per cent on active clients, based on last year's figures.

It is making some of the smaller, struggling Northern Territory-based corporate bookmakers nervous.

Meanwhile, Tabcorp, the totalisator monolith, talks only of investing in its casino assets, and a cash-strapped NSW Government has put NSW Lotteries on the block.

The reason for all this agitation is the intersection of two main roads along which wagering in Australia has traditionally travelled - the totalisator highway and the corporate bookmaker route.

The TABs, while able to extract high commissions (14.25 per cent on wins in NSW), have old systems that are expensive to maintain, affecting their operating margins.

Tabcorp's Bravo totalisator engine is possibly 20 years old and it cost $2 million and two years to add the Big 6 (six winners across six races) bet type.

Its retail network is old and its idea of brand positioning is to advertise "no frills" combination bets, using a 50-year-old man dressed in a tutu.

The fixed-odds corporate bookmakers operate on low margins that involve managing risk, a sometimes costly exercise.

On a billion dollars of turnover, they may be fortunate to generate revenue of $50 million, and their costs eat up the bulk of it.

Betting exchanges, such as Betfair, are also low-margin products but with no risk to the owner, while not leaving much profit once the cost of operations is removed.

A new player, Typhoon Pools, has entered the market, claiming to address the problems of the antiquated systems of the TABs and the low margins of the corporate bookmakers.

The Norfolk Island-based operator is akin to the TABs insofar it is a pools punter, which means eliminating risk, but with innovative technology that reduces cost, and offering a broader range of product bets.

Typhoon Pools boasts that a punter can walk into a shop in Sydney and place a bet in Australian dollars on a race or a sports event, such as the Tour de France, in a pounds sterling pool, while watching the progressive dividends on that pool shift in real time on his mobile phone.

The managing director of Typhoon Pools, Nick Plowman, says: "We can run head-to-head and multi bets at a lower commission, while still paying product fees, which is good for the punter and the sporting codes. Our technology allows us to offer bets the others can't, such as win pools on the Brownlow Medal and Pick 8's in the NRL and AFL.

"This month we will be launching a variety of new bets for the sports punter, which

will include win, quinella

and trifecta on golf, head-to-head multi bets on cricket and tournament pools for Tri Nation rugby."

Typhoon Pools has therefore sent out a challenge to the TABs, corporate bookmakers and Betfair, all of which are involved in a frantic race to lock in loyal customers, while using marketing to win over the neophytes.

The risk to the operators in this ramping up of the industry is the potential to upset the regulators and inflame the anti-gambling lobby.

The current Productivity Commission review could apply the brakes to this frantic race along a wagering super highway.

[SCALPER]

Is sports betting 100% legal in Australia?

[dave nz]

Yes, as long as you are betting with licenced books.