Messara recommends against listing TAB
By Paul McBeth
Sept. 14 (BusinessDesk) - Australian racing expert John Messara considered privatising and listing the TAB but didn't recommend it given the lack of appetite among ministers and the wider industry.
Racing Minister Winston Peters wants feedback on Messara's report offering a series of recommendations to revive the ailing industry. Among Messara's suggested remedies is the outsourcing of TAB's betting service to an international player. That's triggered speculation in Australian media that ASX-listed Tabcorp was in the box seat to buy the operating rights for at least A$1.5 billion. TAB and Tabcorp already have arrangements to commingle certain betting pools
The New Zealand Racing Board has already hired Investec and Cameron Partners to gauge interest for fully outsourcing the TAB's operations. However, Messara said privatisation and a local listing wasn't on the cards and didn't recommend it.
"There is no appetite within the industry or within government to pursue this option," the report said. "With privatisation, a significant proportion of the economic benefits of outsourcing would be diverted from the racing industry to third-party shareholders."
Messara said the Racing Board's lack of scale was insurmountable. Capital demands to meet technology upgrades and anti-money laundering rules made it hard to meet increasing customer expectations, especially given New Zealand's small population and modest appetite for gambling relative to Australia.
When releasing the report last month, Peters said Cabinet will need to consider what legislation is needed to change TAB licensing. Submissions close on Oct. 19.
"The review delivers a blunt appraisal and concludes the New Zealand’s racing industry is in a state of serious malaise," Peters said. "It is important that those most vested in the industry have the opportunity to provide feedback on the recommendations."