Optimist article on Entain and NZ Racing

[Hesi]

Entain to inject a tripartite shot of new life into TAB NZ

by Brian de Lore
Published 14 March 2024

Owners, trainers and jockeys have already tasted the benefits this season of increased stakes money emanating from the partnering of TAB NZ with the global betting giant Entain, and by the end of April, punters will get their turn, and it should be a game changer.

Come to think of it, a large proportion of owners and trainers (not jockeys, hopefully) will fall into the category of punters, so they will be doubly pleased when Entain announce their three-pronged attack on the TAB NZ betting experience at the end of April.

Coming is a state-of-the-art app and betting platform and a refresh of the TAB NZ brand’s livery. Sydney-based Entain CFO and Deputy CEO Lachlan Fitt expressed his enthusiasm for the app at a recent Ellerslie race meeting.

The app and new platform comes to TAB NZ after around $200 million of Entain IT development for its global operations.   

Punters in NZ are historically entitled to a degree of TAB NZ cynicism after a prolonged period of poor service, poor odds, and incompetents in charge —some of whom had never placed a bet in their lives. How did it ever come to that?

But suddenly, we have gone from the invisible and uncontactable TAB people to an Entain trio of three passionate racing people – CEO Dean Shannon, Lachlan Fitt and NZ-based Managing Director Cameron Rodger.

Entain’s main players making the decisions for the future of NZ racing. From left, CEO Dean Shannon, CFO and Deputy CEO Lachlan Fitt, and NZ Managing Director Cameron Rodger

The infusion of Entain money into stakes and these three’s presence, enthusiasm and availability has put a spring in the steps of Kiwi racing stakeholders. It’s a refreshing start.

Cameron Rodger told me by phone last week: “We’re keeping the name and brand and everything that’s built up on it, but we’re giving it a new colour scheme and logo to give customers frustrated with the old platform – maybe the ones that have not been with us for a while – just to let them know this is a fresh start.

“And it’s very good—a high-quality customer offering,” continued Rodger. We think the user experience will be top of the market, and the other key part of it is that it’s very stable. We know just how frequently you’ve had outages and downtime with the current platform, and that will be a thing of the past.

New technology will provide a new experience

So, I asked, what else can punters expect from the new app and platform?

“What you have now is the exact product you’ve had all along; we’ve done nothing to improve it. We have put all our time and effort into the new product to get it up as quickly as possible. It will have more generosity, more flexibility, same-game, same-race multi-products—things that have become commonplace with offshore bookmakers and which, in NZ, the technology has lagged.

“It will be a huge, ‘brought up to speed,’ moment that will include simple things such as navigating quickly between races. It will be one or two clicks for what currently might take four or five. And that makes a world of difference for someone trying to quickly get on pre-race or pre-match.

“Betting on sports has been a big pain point for customers. It’s painfully slow, taking too long to accept, which has led people to think the bookmakers are being conservative, but it’s actually just the platform which was wired that way and can’t be changed.”

Thanks, Mr Allen, Ms Hughes and company, for spending $50 million on a dud platform and committing the TAB to pay $17 million annually for the updates for ten years. But that commitment happened only five-and-a-half years ago, so has Entain negotiated its way out of the contract? I asked Cameron Rodger if we had settled the Openbet and Paddy Power baggage.

Openbet and Paddy Power red-carded

“Yes, we have completely moved off that platform, and there’s no residual Openbet or Paddy Power reliance. As part of the deal we struck, it was our cost to bear, which we factored into our equations. That was all sorted and squared away after we signed up.

“It was a big cost, but we couldn’t stand still on that platform.”

What a relief to hear that the potential to be weighed down by the ball and chain NZRB Allen/Hughes debt had been rectified and kicked for touch.

But in my chat with Cameron Rodger, the ‘music to my ears’ part came when he said: “I think the big one I can give you that hopefully will be interesting and exciting for people to hear is that we are huge believers in freeware and broadening the television coverage to a wider audience.”

Free-to-air televised racing?

Free to air Trackside – wow, that would be a game-changer on its own.

According to the constitution, marketing racing is supposedly the domain of NZTR but is rarely actuated. By default, it’s now the territory of Entain, whose presence has generated newsworthy coverage on mainstream TV and radio.

At the Karaka Sales, Dean Shannon told me that Entain knew they had to make a ‘big splash’ to kick start racing here in NZ—it needed to be jolted into life to move forward. On the same question, Cameron Rodger recognised the need to revive the racing marketing and encourage new people to engage.

We have had droll accountants making the decisions, closing down radio, newspaper content, and TAB retail outlets, reducing broadcasting costs, and annoying the customer base. How does any industry thrive on a downsizing mentality?

Entain has shown it is diametrically opposed to that thinking. And since its arrival, it has injected $30 million more into NZ racing than its commitment to the contract.  

Other positives have happened in NZ racing in the past year: the revival of Ellerslie; NZ Bloodstock embracing the arrival of Entain and joining in with sponsorship, and NZTR initiating ‘The Kiwi’ slot race, which, according to several sources, is a collaboration between all three parties.

Entain dragging the industry up with it

Simply put, Entain is dragging the rest of the industry along with its dynamism.

Meanwhile, the TAB NZ board can only be sitting on its hands, doing practically nothing, and wondering if it should be embarrassed by continuing to draw directors’ fees. The board is now relatively powerless and has failed to produce a half-year and full-year report for the year ending July 31, 2023.

Why haven’t they? The answer simply lies in an embarrassing rise in costs and a downturn in profits for the year in question. At the half-year mark last financial year, the TAB profit had fallen behind by $9.4 million on the previous year and heading for a record annual running cost in the vicinity of $130 million.

My regular reviews of the TAB’s financial downturn caused the bosses to stop publishing the monthly figures. And now, no half-year or annual report. There is no transparency or accountability, which is the short history of NZ racing.

The TAB board comprises Anna Stove (Chair), Wendie Harvey, Raewyn Lovett, and Bill Birnie. Kristy McDonald no longer appears on the website as a director, so she presumably has resigned.

Dean Shannon told me I shouldn’t be concerned about the cost of running the TAB from now on because Entain now covers all its expenses, along with a guaranteed minimum payment of $150 million a year to run the codes and provide stakes. He also said Entain expected to lose money for two years but should be in the black by year three.

30 percent of NZ online betting placed with Bet365

He aims to claw back the 30 percent of all online betting in New Zealand that goes directly offshore to Bet365, a privately owned platform that gives nothing back for the use of NZ racing.

Cameron Rodger said Entain would not be pushing the issue of geo-blocking but leaving it to the due process of government to decide. The codes will benefit by an additional $100 million from Entain if it’s passed into law.

Things have improved since Entain’s arrival, but this partnership has a cautionary side regarding the long-term sustainability of racing. We are in the honeymoon phase but should remember that the deal has to work financially for both parties to survive beyond the annual $150 million guarantee, which ceases in 2028.

The five years will come around quickly, after which the partnership will be conducted on a 50/50 gross profit basis. We need Entain to turn its massive NZ investment into an excellent annual long-term profit so we can run for prizemoney that will incentivise Kiwis to grow breeding and racing back to higher levels than we have now.

So, what do we really know about Entain beyond the charismatic trio of Shannon, Fitt and Rodger?

What we know about Entain

We know it’s a highly geared $4 billion global betting empire that, in August 2020, changed its name from GVC Holdings to Entain and has since invested heavily in various betting jurisdictions worldwide, including our TAB NZ.

We know that the company is registered in the tax-haven Isle of Man, where it runs worldwide gambling operations under the Ladbrokes, Neds, BetCity, Eurobet, Sportingbet, Crystalbet, Coral, PartyPoker, bwin and BetMGM brands. BetMGM is Entain’s joint venture with MGM Resorts.

We know the company’s share price fell by 40 percent last year, which caused shareholder dissatisfaction and indifferent reviews. Since then, replacements have arrived for the CEO and several board members.

We know that Entain expects the NZ betting market of approximately NZ$600 million to grow by 35 percent over the next five years.

We know that in an Australian interview last week, Dean Shannon was asked if he thought a 17 to 20 percent betting downturn across the board was a sizeable shift. He answered, “Yes, it has been a sizeable shift, but it shouldn’t be that surprising. This is predominantly driven by macroeconomic factors such as higher interest rates and cost-of-living pressures.”

We know, most importantly, that if it hadn’t done a deal with Entain, TAB NZ would now be either broke or less attractively partnered with one of two alternative offers – fact.

What else is there to know beyond that last bit?

[Hesi]

A few key points for the slow readers

1.  A new state of the art wagering App/platform at the end of April

2.  Paddy Power dog is all gone

3.  A new TAB logo and colour at the end of April

4.  A strong commitment towards free to air TV

5.  30% of online betting with NZ'ers is with Bet 365

6.  To date Entain have spent 30 mil more than their contract commitment

 

[mardigras]

23 minutes ago, Hesi said:

5.  30% of online betting with NZ'ers is with Bet 365

I'd love to see proof of that. I very much doubt what they claim. Deposits etc, cannot be used to determine betting losses. Geoblocking also would not necessarily bring that money back to NZ.

Whilst the TAB functionality is woeful, they require more than an improved interface. They need better odds, and guaranteed betting acceptance.

Edited March 14 by mardigras

[Hesi]

I'm sure they know all that

[brown fox]

Sorry if this seems a dumb question but what are the pros and cons of bookmakers to the Australian TAB?

[mardigras]

2 minutes ago, Hesi said:

I'm sure they know all that

know what?

[mardigras]

Just now, brown fox said:

Sorry if this seems a dumb question but what are the pros and cons of bookmakers to the Australian TAB?

No pros to the Australian TAB I suspect. Cons being that they compete with them, therefore taking market share and force price competitiveness.

For the industry/punters, here are a few initial thoughts.

Pros to the industry/punters

-price competition

-attracts punters that otherwise wouldn't bet (and hopefully lose)

-pay the industry fees for betting

Cons to the industry/punters

-Betting restrictions against winning punters

-Non-progressive fee structures limiting potential growth of betting revenue to the industry

[brown fox]

Thanks Mardy.It was mainly around their fees being re -routed back into the Industry that I was thinking about.

[mardigras]

11 minutes ago, brown fox said:

Thanks Mardy.It was mainly around their fees being re -routed back into the Industry that I was thinking about.

I'm not sure in regards Bet365, but I would have expected that they would also be paying the NZ industry fees for bets taken on NZ Racing. Other betting operators based in Oz have been doing so.

Which makes this statement a surprise to me.

He aims to claw back the 30 percent of all online betting in New Zealand that goes directly offshore to Bet365, a privately owned platform that gives nothing back for the use of NZ racing.

As most of the major players would want to be seen as a good corporate citizen. If indeed, they have been paying fees, that statement would be a lie. If they haven't been paying fees, then I'd blame the management of NZ TAB for being ineffective.

[pete]

I know we've been through the pros and cons of bet365 ad nauseum on here but, personally, if the NZ TAB offered the same service I wouldn't see any reason to bet with 365.

At the moment they don't.

[Hesi]

As I said above, I'm sure Entain know they have to match or better Bet 365

[mardigras]

17 minutes ago, Hesi said:

As I said above, I'm sure Entain know they have to match or better Bet 365

I didn't read that. More important would be guaranteed minimum bet acceptance - with massively better pricing. 135-155% early on simply doesn't attract anyone new.

I think they are hoping that geoblocking comes in to mean they don't have to compete with others, which may lead to their downfall.

Edited March 14 by mardigras

[Hesi]

I think they know they have to compete, regardless geo blocking.

Marketing 101, if you are going to spend a truckload of money on promoting your product, you make sure your product is good.

Some of the amateurs commenting on Entain, not on this site, would not have a clue.

NZ racing always needed a truckload of money to kick start it, and it was always going to be a case of losing money in the first 2-3 years

Do people think Entain have not crunched the numbers ad infinitum

[mardigras]

6 minutes ago, Hesi said:

I think they know they have to compete, regardless geo blocking.

Marketing 101, if you are going to spend a truckload of money on promoting your product, you make sure your product is good.

Some of the amateurs commenting on Entain, not on this site, would not have a clue.

NZ racing always needed a truckload of money to kick start it, and it was always going to be a case of losing money in the first 2-3 years

Do people think Entain have not crunched the numbers ad infinitum

I expect their numbers are optimistic. But I don't have an issue with that.

I do not see them looking at NZ racing with a view to make NZ racing more attractive. I see their position being to take advantage of potential growth in sports betting and offshore racing.

We are likely getting more and more entrenched in a world where the income to sustain NZ Racing is derived from other sources. That is fine whilst Entain are continuing. Not so flash should things not work out in that regard. All our eggs are in one basket - and that basket has zero to do with the performance of NZ Racing as a self income generating industry.

No one is talking about the potential that Entain fail to deliver after 5 years. At that point, where will NZ Racing industry be. No money, no interest, no industry.

[mardigras]

Putting it into my bakery scenario. What we have done is engaged a third party to guarantee revenue to my bakery. It matters little how my bakery performs for the next 5 years, as the guarantor is going to sustain my bakery during that time.

If after 5 years, the guarantor has not been able to make enough money from its alternative revenue sources, my bakery is unlikely to be getting the revenue it needs to survive. And under the current regime, because my bakery bakes a load of crap products, nothing is being done to improve the offering from my bakery so that it is self sustainable.

And the guarantor walks away - and what do we have left. A bakery that isn't selling any goods. No back up plan, no contingency, nothing.

 

 

Edited March 14 by mardigras

[Hesi]

12 minutes ago, mardigras said:

I expect their numbers are optimistic. But I don't have an issue with that.

I do not see them looking at NZ racing with a view to make NZ racing more attractive. I see their position being to take advantage of potential growth in sports betting and offshore racing.

We are likely getting more and more entrenched in a world where the income to sustain NZ Racing is derived from other sources. That is fine whilst Entain are continuing. Not so flash should things not work out in that regard. All our eggs are in one basket - and that basket has zero to do with the performance of NZ Racing as a self income generating industry.

No one is talking about the potential that Entain fail to deliver after 5 years. At that point, where will NZ Racing industry be. No money, no interest, no industry.

Entain lose a lot of money if that happens, so guess what, they have a huge vested interest in making  it all work.  And yes probably right about the Sports side etc

 

[mardigras]

6 minutes ago, Hesi said:

Entain lose a lot of money if that happens, so guess what, they have a huge vested interest in making  it all work.  And yes probably right about the Sports side etc

 

The losses would be a drop in the bucket across all their activities. It's a risk, with a calculated reward. Just business.

[Turny]

I like what they are doing

Sure each office has a copy of Seth Godin's The Purple Cow

That surely is their mantra

[Hesi]

1 hour ago, mardigras said:

The losses would be a drop in the bucket across all their activities. It's a risk, with a calculated reward. Just business.

It's a calculated business decision for them, but give them some credit, they have all the data (casual observers such as you would find on these chat sites have very little, as much as some think they have all the answers as per usual), they have huge resource and wagering is what they do.  Plus, we do not know what the situation is in the contract after 5 years.

So far everything they have done indicates a long-term commitment.

The major concern so far is, as you have mentioned is punter confidence in tracks, which in theory they have no control over.  The reality in all likelihood is that they will pull the strings there.  I've mentioned this before, but I believe Cameron George went because of the track issue and not enough money being apportioned to track renovation.  It would be George and the Board that make decisions on strategic spending.

If there are more abandonments, then Sharrock will be next to go.

 

[mardigras]

8 hours ago, Hesi said:

It's a calculated business decision for them, but give them some credit, they have all the data (casual observers such as you would find on these chat sites have very little, as much as some think they have all the answers as per usual), they have huge resource and wagering is what they do.  Plus, we do not know what the situation is in the contract after 5 years.

You are kidding right? I do give them some credit - just different credit than you seem to give them. I give them credit for believing they can generate revenue growth from offshore racing and sports betting. And I expect they can. I don't see them growing NZ Racing interest, as they don't control the things that are not working in NZ Racing.

I've been involved in strategic business advice for decades. Including advice to some of the biggest entities around Australasia - such as Telstra and ANZ bank. And I probably have more historical information about the reality of NZ racing than Entain have been given or been able to obtain. But even with that, I expect they aren't particularly bothered as to whether NZ Racing generates more revenue. They just want there to be more revenue.

Your statements are just accepting things that you don't know yourself. Equally just assumptions as to what is going on, as are mine. However I know a heck of a lot more about betting markets than you seem to realise, and a lot of information that pertains to NZ itself - which as a jurisdiction, is nothing like Australia or the UK.

As per the details I shared about what the repercussions would be of the decisions taken nearly 20 years ago. Which have all come to fruition.

Yes, we don't know the actual details of what happens after 5 years. But what I am finding most surprising about your comments, is that you seem to be of the view that you are happy for NZ Racing to be propped up as an industry, by an operator, regardless of where that operator gets its money from. Something that does not happen in Australia and shouldn't happen here. If the non-racing orientated public knew how much money was being earned from elsewhere and gifted to NZ Racing, people would not be happy. The more this happens, the more the industry is a beneficiary/parasite. And I find it appalling that there are individuals happy for that to continue.

 

 

Edited March 14 by mardigras

[Hesi]

I wasn't referring to you by the way

[curious]

I have contacted both the DIA (as the designated authority) and NZTR to find out if it is true or not that Bet365 are not paying BIU or consumption charges as de Lore has claimed. I'll let you know if and when I get a response. It seems incomprehensible to me.

[Hesi]

You could also challenge Brian de Lore directly about his claim, here is the link to his site.  He has not been very active of late, last post since this one was Nov 6

Entain to inject a tripartite shot of new life into TAB NZ - (theoptimist.site)

[curious]

I'd rather just do what any diligent journalist worth his salt (and I'm not referring to de Lore) would do and verify what he is reporting before he does so.

[Hesi]

All good.

I note de Lore talks about guaranteed payments of 150 mil per year for 5 years, but I thought it went up each year, to be 200 mil in year 5

From NZTR Strategic Funding Document

1) What is NZTR’s share of the MinimumGuarantee (MG) payment from Entain?

Entain’s MG commitment applies for the first five years of the agreement and starts at $150m per annum, rising each year thereafter (NB – if a ‘legislative net’ is implemented this would see an additional $15m added to the MG per annum from 2024/25)