Parliament races to save racing
By Richard Harman (author)
The country's racehorse industry came to Parliament yesterday calling for urgency to get new legislation for the industry through Parliament.
The CEO of the Thoroughbred Racing Bernard Saundry said the industry was currently losing $1 million a month and was at a tipping point.
He was supporting the Government’s move to push the legislation through with what amounts to urgency.
This was given added weight in the Regulatory Impact Statement from the Department of Internal Affairs, which said there was a risk the industry would continue to decline until it was no longer viable.
“The timeframes for delivery are short," the Department said.
However, it pointed out that many of the measures proposed in the new legislation had already been introduced in a Bill from the previous National Government which was then dropped and that there would the legislation under consideration yesterday was only the first part and would be followed by another Bill later in the year.
Saundry said New Zealand could not afford to wait.
“In Victoria and New South Wales, the Australian states started this journey ten years ago.,” he told Parliament’s Transport and Infrastructure Select Committee.
“It needs to happen now.
“It needs to happen to support the industry that generates the economic benefit for all New Zealanders.”
The new legislation proposes three moves designed to increase revenue flow into the industry.
It proposes that offshore bettors (mostly Australians) or New Zealanders betting on New Zealand races through an offshore agency or website will have to pay a "point of consumption tax"; race fields will effectively be copyrighted, and so any betting agency will have to pay a fee to use them, and it also proposes to return the current TAB betting levy top the industry rather than have it flow into the Government's coffers as it does at present.
The challenge is how to impose these taxes and charges in Australia.
New South Wales already imposes a 10 per cent tax on all betting.
Saundry, who has long experience in the Australian industry told the Committee this would be possible by forming partnerships with the Australian wagering operators and organisations.
“We also need the flexibility to ensure that working with these offshore operators they are delivering on their obligations around integrity and aligning with the rules of racing and supplying wagering data,” he said.
He proposed that this be undertaken by a new body, the Racing Industry Transition Authority, which will take over from the New Zealand Racing Board.
But an indication of the resistance that will come from Australia is before the Committee in a submission from Betfair, a subsidiary of the Australian casino company, Crown Resorts Ltd.
The company’s CEO, Tim Moore-Barton, says the point of consumption charge should be removed from the Bill.
“Betfair already pays a point of consumption charge in the form of GST for all revenue generated from bets taken in New Zealand to Inland Revenue,” he says.
And he says that the tax in Australia has led to lower racing turnover.
“After a period of strong growth, turnover volumes started to decline at the exact time Betfair introduced pricing changes to help pay for the Point of Consumption taxes,” he says in the submission.
“Anecdotally customers tell us that this turnover is now moving to illegal (unlicensed) offshore operators such as Citibet, who pay no product fees and provide no transparency on activity – a key tool in fighting integrity concerns.”
There is also opposition from the Department of Internal Affairs to the point of consumption charge.
It would prefer that consideration of that is included in
“Some of the Department’s issues with the introduction of a Point of Consumption charge include: significant variation in the projections of possible revenue, the level of voluntary compliance by offshore operators, the cost of administration, the perception of double taxation (with GST), and difficulty for offshore operators in complying with requirements
“The Department recommends a POC charge be considered in the context of the review of online gambling under the Internal Affairs portfolio.
“This would look at how this charge might best fit in New Zealand’s overall system for regulating (and minimising the harm of) gambling.
“The online gambling work being carried out by the Department will look at the full range of options to better regulate the online environment without disrupting the New Zealand gambling framework.”
However, Moore-Barton does support the introduction of fees for the provision to betting operators of race fields and data about them.
There is clearly some friction between the Department and Thoroughbred Racing.
Thoroughbred Racing says in its submission that it has serious concerns about Internal Affairs acting as the designated authority under the betting information use scheme.
“ Thoroughbred Racing should not have to request permission from the Department to be able to administer the use of its own information by offshore wagering operators," the submission says.
“ The Department is not a commercially-focussed body and nor should it be.
“It does not have the expertise required to negotiate or administer commercial rights agreements on behalf of racing or sporting Codes, or to interpret the information supplied by offshore wagering operators that drives product positioning, promotion decisions and therefore overseas returns. “
The other big issue --- the removal of the betting levy --- has, possibly predictably, attracted little opposition.
It is estimated this would see Racing and other sports get around an extra $57 million over four years.
However, this brings into focus the role of the TAB and its business of providing betting facilities for a range of sports beyond Racing.
Saundry said that about 15 per cent of its total revenue came from sport, much of it from overseas sports products.
Thoroughbred Racing's general counsel, James Dunne said this presented its own problems.
Replying to question about whether the legislation should set out what share of the total TAB turnover the other sporting organisations would get said that events over the weekend showed the complexity of sports betting.
“Last weekend there was obviously a bit of an upset in the boxing (Andy Ruiz’s surprise heavyweight title victory over Anthony Joshua) which ended up costing our friends at the Racing Board a fairly large amount of money as you can imagine," he said.
“But because of the current structure boxing card continued to be entitled to a percentage of that turnover.
“So that was not true was not a commerciality to that arrangement.
“But and that's bigger question that's not going to be sorted out right now, but it does what I think illustrate some of the complexity that comes in here. “
Thoroughbred Racing argued that sports share should be negotiated directly by the sports with the three racing codes; thoroughbred, harness and greyhound.
But Sport New Zealand, the government body charged with promoting sport in New Zealand, wants to see a minimum of 23 per cent of new TASB turnover distributed to sport.
Racing will oppose this because they believe they face a crisis.
“The thoroughbred industry trainers apprentices jockeys stable hands 4000 in total are at the minimum wage end of the spectrum of what is on offer today, and we are at a tipping point and are also at the tipping point in terms of breeding or investing in animals,” said Saundry.
“To keep owners investing in breeding horses requires urgent reform on every level as outlined in the Messara report.
“We should all understand in simple terms the current model is broken.”