CORRECT: Double-edged sword of online betting eats into Racing Board's earnings
(Corrects figure provided by company in fourth paragraph)
By Suze Metherell
April 4 (BusinessDesk) - New Zealand's Racing Board has posted a 2 percent gain in first-half betting and gaming turnover as it continues to push online gambling options in a bid to drive growth and stem any flow to overseas bookmakers.
The national bookie's turnover rose to $1.05 billion in the six months ended Jan. 31, from $1.03 billion in the same period a year earlier. Total gambling income climbed 1.4 percent to $159.9 million as a 3 percent boost in net betting sales more than made up for a 3.7 decline in its net gaming, or pokies, income.
The Racing Board has expanded the opening hours of its sports desk to 22 hours and increased the available sports to bet on to attract customers. It has also expanded its digital offerings to include live streaming on iPads and sees digital gambling as the future of the business, but said online gambling is a "double edged sword" for the betting monopoly, as the company loses kiwi bets to international websites.
"We're driving our digital business hard, not only to provide that new offering experience to our customers but to protect further leakage to offshore bookmakers," Chris Bayliss, chief executive of NZ Racing Board told BusinessDesk. Bayliss believes the Racing Board missed out on about $300 million of bets that New Zealanders place with overseas bookmakers.
"That's a big issue for us in terms of how do we get that turnover back, how do we get kiwis to bet it with us?"
The Racing Board is a legislated monopoly and must return any profits back to the sporting and racing industries. The board distributed $74.9 million in the first-half, the majority of which went to the three major racing codes.
"We have a statutory monopoly in this country," Bayliss said. "In a cash sense that is a real monopoly, there are no other betting shops in this country there is only TAB, but in a virtual, digital sense we don't have a monopoly because if you want to go on betfair, bet365 you can do that."
International bookmakers can't advertise here, but get around the rule through sponsored sporting events which are then screened here. They were also able to offer highly favourable odds as they had no requirement to deliver cash back to the sporting industry. The NZ Racing Board is pushing for legislative requirements that would see overseas bookmakers pay a levy for offering odds on New Zealand sports.
"Not only will that obviously help sport and racing in this country in terms of funding, but it will also mean the odds that those bookmakers offer will be closer to what we offer and there will be less incentive for kiwis to use those providers," Bayliss said.
TAB customer numbers have been declining over the past decade, but there had been a 7.1 percent boost in active accounts over the past year, something the board attributed to its wider suite of betting options and an improving New Zealand economy.
"Our customers are using discretionary spend and the more discretionary spend they've got, we're lining up against all the other forms of entertainment that they can choose to spend that on," Bayliss said. "We're seeing a high area of growth in our sports betting and there's no doubt about it the younger customer is attracted by the sports betting and we've added a lot more sports during the year and different bet types. A great example of that would have been the Americas' Cup last year, we saw over a million dollars turnover on the Americas' Cup alone."
The company expected a solid full-year profit, but said the headwind of the high kiwi dollar has and would continue to impact on earnings.