RITA - progress

[mardigras]

Below is a memo from RITA chair. Looks to me like they have been having a few issues around the new sports betting platform. And resulting margins. What a surprise. That's not the only problem either given the performance and other issues with the new site. 

The Racing Industry Transition Agency (RITA) Board met in Wellington for the first time on Wednesday, 10 July.

 The agenda was extensive covering progress with the implementation of the recommendations in the Messara Review; the development of regulations necessary to give effect to the provisions of the Racing Reform Act; and a detailed discussion about distributions next season in the context of the ongoing development of the RITA budget for the 2019/20 year.

 I am pleased to confirm that on the basis of that discussion the Board agreed that:

 ● Distributions to the Codes for the 2019/20 season will be held at the current level of $151.6 million.  This will enable Codes to continue to pay stakes at the same level as this season and deliver the agreed racing calendar.

 ● RITA will increase the amount of money available through the Industry Enhancement Fund to $4.0 million in the 2019/20 year, to be applied across Stakes, Infrastructure, Youth and Promotion of Racing.

 A working group, to be chaired by RITA CEO, John Allen and comprising DIA and RITA representatives has been formed to progress as a matter of priority for the industry, the regulations required to give effect to the new revenue streams established under the Racing Reform Act.  We are making good progress in dealing with a range of complex issues in relation to the regulations and will provide a further update in the next few weeks.

There are, as you will all be aware, continuing challenges with the sports’ margin in RITA’s betting business.  While the management team is confident that this will normalise over time the Board has required further work to be undertaken to reduce expenditure so as to increase confidence in our ability to support the agreed distribution level for next season.  This work will be reviewed at our next meeting on 23 July, and we will report further on progress.

 This is just the start.  There is a great deal to be done over the next few months.  The passing of legislation and the establishing of the RITA Board puts us in a unique position to implement the changes required to sustain the industry in the long-term.  Completion of the regulations and the finalising of the second Bill are now firmly in our sights.

From: https://www.rita.org.nz/sites/default/files/MEMO%20TO%20RIOs%20from%20RITA%20Chair.pdf

[Hesi]

Board has required further work to be undertaken to reduce expenditure so as to increase confidence in our ability to support the agreed distribution level for next season

That's positive

[Hesi]

Latest piece from Brian de Lore

I found the bit highlighted very interesting

Racing’s revival hampered by resistance to change

by Brian de Lore
Published 09 August 2019

Comparisons with Racing Industry Western Australian (RWWA) have often surfaced in these pages due to the western state being of a similar-sized industry to New Zealand.

Another shared feature is the geographical isolation of the two jurisdictions when juxtaposed against racing’s two super-power states of New South Wales and Victoria.

The Sandgropers as they are known are well to the west, and we Kiwis reside well to the east. Geographically Western Australia covers a far greater landmass at 2.65 million square kilometres against New Zealand’s 268,000 square kilometres – our land area would fit in WA’s almost ten times. But on the population score, we well exceed WA – 2.59 million for them while Kiwis are now up to 4.79 million (85 percent more).

Despite this seemingly distinct advantage, WA is very comparable to NZ in numbers of race clubs, racecourses, race meetings, races run but they offer higher prizemoney over the three codes – $30 million* higher due to the lower-cost administrative model under which they operate (one board against our five) and despite the high taxes they pay which we have now had removed.

All Three Codes	Western Australia	New Zealand
Attendances	823,000	614,678
Stakes Funding	$142 million*	$108 million*
Wagering Revenue	$322 million	$349.9 million
No. Administrative bodies	One	Five
Employee Costs	$41 million	$65m + codes
Senior Management	8	27
Population comparison	2.59 million	4.79 million
Thoroughbreds only	Western Australia	New Zealand
Race Clubs	54	62
Courses	38	48
Racemeetings	295	308
Races	2,212	2,568
Starts	20,942	26,666
Prizemoney Paid out	$61.2m	$59.3m
Racefields income	$58 m (WA race bets)	Nil
Economic Impact	$821m	$813.4

The NZ model is potentially superior, but they run racing efficiently, and we plod on with a clumsy, costly administrative structure.  RWWA make up for their lack of population with a more intense racing industry per capita than ours, which results in the economic impact of the two jurisdictions being virtually the same.

Why? Because Australians bet more per capita, so in the end, the population has nothing to do with the size of the industry. What’s important is the revenue from betting, the administrative structure, and the quality of the people in charge – NZ has fallen off the pace in all of those three very critical issues.

The NZ TAB failed to recognise the importance of the small punter and is now paying the price for its concentration on mostly its VIP and Elite customers – many of which have also now gone to greener pastures. It ignored the idea of customer service for the average Kiwi investor in the misconceived belief that the multitude of small and aging punters were no longer needed to make the TAB fire – how wrong they have been!

Peter V’landys as CEO of Racing NSW was confronted with a similar attitude a few years ago when the NSW TAB attempted to increase the minimum bet from 50 cents to $5.00. He stayed loyal to thousands upon thousands of small punters and fought against the increase and won. Racing, in his jurisdiction, has thrived under his leadership.

Our TAB did the opposite and thumbed its nose to the small punter, closing TAB stores, sacking 70 telephonist betting operators and expecting those punters to embrace touchtone telephone betting which they had never before used. The NZ TAB has, over the years, developed an appalling customer service reputation.

It has cost the New Zealand racing dearly in both turnover and defections to Australian corporates due to its failure to know the needs of the bulk of its customers and an attitudinal problem from the top down. The anecdotal evidence is everywhere you find racegoers – it’s a far cry from the organisation for which the race clubs raised the money and inaugurated for its launch in 1951.

The TAB completely lost its way with incompetent decision making by people appointed for all the wrong reasons. Former NZRB CEO and now RITA CEO John Allen was clueless two years ago when arguing the Fixed-Odds-Betting (FOB) that he was planning was not aimed at global customers but instead for the New Zealand domestic market alone.

Nothing has changed except he will now realise the concept of building something superior with a smaller budget than overseas betting operators was always pipedream doomed to fail. The scale of IT development, the scale of the customer base, weight of money and a global mindset was always going to see any number of overseas betting operators outperform the NZ TAB

As well, sports betting is what the NZ TAB FOB platform is all about (not racing, although racing has paid for it) and the net margin on fixed-odds-betting is low at around five percent because the NZRB at the sign-up time agreed to pay $17 million per annum in fees to Paddy Power and Openbet.

Betting on the tote on horses returns 14 to 15 percent which is good for racing, but the thoroughbred turnover has been cannibalised in favour of sports betting, which is the main thrust of the TAB’s promotions.

And while Allen was building the FOB platform for $25 million which turned into $50 million-plus $17 million per year in fees, RWWA was busy negotiating the outsourcing of its FOB platform to Tabcorp for an annual fee of $A7 million (no building costs) and collecting its Racefield levies which last season returned that jurisdiction $A58 million.

Which jurisdiction is being well run and which isn’t? Imagine that; instead of building your own, simply outsource to an organisation that is technologically well-advanced, has the software in place, and then plug-in for a fraction of the cost. Did it make too much basic common sense for Kiwis?

RWWA has only one board and eight executives but gets its stuff down with committees compared to New Zealand’s five boards and 27 executives – NZRB (RITA), the three codes and the RIU. It’s blatantly over-structured, over-complicated and an overly-expensive form of administration.

Now we are into a new season, and the status quo is not an option. The industry needs some action, but you get the feeling as one-week rolls into another that the pace of change isn’t happening fast enough for most participants

New Zealanders appear to suffer from a resistance to any dramatic change, and it’s recidivous. The unconscious resistance to adopting radical change is the biggest single issue holding back New Zealand’s so far tentative move to resurrect the racing industry.

This misguided thing about sovereignty has always held us back – nothing has changed. We need to think of ourselves in racing terms as just another state of Australia from which we would benefit markedly on the score of the scale of operation.

Some stakeholders seem to believe outsourcing is akin to selling your soul, but the NZ TAB outsourcing would be more about negotiating a joint venture which might be a ten-year deal but would provide the industry with much needed up-front cash and a lower expense account for the future and much-improved bottom-line – resulting in higher stakes money.

Messara outlined a very doable plan in his review. The Minister reacted favourably last September by saying, “we haven’t engaged an Australian expert to write a comprehensive review and then disregard his recommendations,” and less than a month later he also said Messara would have an ongoing involvement which has never officially happened.

It was at that point that the Department of Internal Affairs (DIA) butted-in with too much influence and racing is now paying the price for its snail-pace, bureaucratic involvement.

The DIA was responsible for the terms of reference for MAC which stated, “…will involve the Committee gathering and analysing a wide range of inputs and carrying out engagement, investigation, and analysis about the effects of specific proposals under core areas of the Messara Report, including:

• the governance and structure of racing;
• finance and distribution to the codes;
• new legislation to support the various dimensions of racing reform;
• wagering and the TAB;
• club consolidation, racecourses and prizemoney; and
• any other matters that the Committee considers relevant to its work, including establishing the Racing Industry Transitional Authority (RITA).”

It was the gathering and analysing part that didn’t ring true enough – reeking of a bureaucratic takeover whereby the DIA assumed the role of scriptwriter and pacemaker. Historically the DIA knows nothing of racing and is inherently strong in its anti-gambling stance. Its wording displayed a distrust of the reviewer, so they wrote a script to review the reviewer in lieu of the Minister telling RITA to do it urgently.

As a result, we now have about 10 committees and sub-committees reviewing various aspects of the Messara Report to decide whether or not the 17 recommendations will work.  It’s a hypochondriacal assessment of the expert by non-experts – the DIA.   

It’s no different to going to the doctor, getting diagnosed, picking up the prescription but then developing some misguided suspicion and over-evaluation of what the side-effects could be.

The New Zealand Racing Industry has a similar mindset – it’s not generally a pill-taking industry. Kiwis have a penchant for the status quo. It’s in the DNA and has shown-up again in this reluctance or lack of speed in taking medicine which in this instance might rectify the problem.

The medicine came in the form of the Messara Report. The doctor said you must take these pills and take them quickly. What did we do; we brought home the pills, placed them on the kitchen table, and are still looking at them. Now we are looking for a second opinion.

A year ago when we received the pills our condition was dire.  Now it’s chronic.

It could be psychological – a fear of change, or progress or adaption. Seemingly, we are yet to develop a level of tolerance to change that will allow us to deal with transformations without compromising too much of our psychological imbalance.

Are we doing it again- more paralysis by over-analysis? The model’s been set out before us; now let’s just do it!

 

 

[pegs pride]

So much in your assessment here Brian contains enough for suggest our Industry Committees to take a bare look at themselves.

I love your "It's a hypochrondriacal assessment of the expert by non-experts". To me it's sounding like "Where can we spot the expert's flaws?".

To me it's the pervasive Kiwi attitude of "yes, but our unique-to-New Zealand-way-of-things doesn't have to be visionary. It's too scary and won't suit us. We can do better but don't know how (because we can't totally accept our failures) to overcome our malaise of "can't do that because it's so different to what we've known".

 

[curious]

Date 29 August 2019

 

RITA RACING REFORM PROGRAMME UPDATE #2

 

Good evening,

 

It’s been just sixty days since the establishment of the Racing Industry Transition Agency (RITA) and a timely opportunity to update you on progress against the Reform Programme the Board are advancing on behalf of the Minister for Racing. 

 

Our strategic focus is set out very clearly in the letter of expectation from the Minister for Racing -  we must work to secure the long-term success of the New Zealand racing industry. We must reform the industry into a more sustainable structure, and support them as it goes through this change. 

 

You will know that there are 17 recommendations from the Review of the New Zealand Racing Industry by John Messara that we are working through. Many of these need policy, legislation and comprehensive regulations for the proposed changes to take effect. Much of this work is complex and requires significant focus from RITA Board and management, as well as the Department of Internal Affairs. 

 

As we come into the important period of Spring racing we are encouraged by the progress made to give effect to this ambition. 

 

Bill One

The first Racing Reform Bill came into effect on July 1 and addresses the industry’s need for additional revenue. This included the totalisator (betting) duty paid to the Crown being phased out and the introduction of two new charges on overseas betting operators (offshore charges) to help ensure they contribute to the New Zealand racing and sports codes from which they benefit. 

 

The money available as a consequence of the reduction in Betting Duty is being held by RITA while the final details of its distribution between Harm Minimisation Initiatives, and the Racing Codes and Sports NZ is finalised. From mid 2021, we would expect the returns will be in excess of $14m, with approximately $4m available this year. The distribution amounts need to be set by a specific regulation and we will update the industry prior to Christmas on the outcome.

 

The Offshore Charges will be able to be set and collected following the implementation of regulations.  It is expected that this process will be completed and collection commenced from the beginning of the 2020 calendar year.

 

While overseas betting operators will be required to pay product fees in due course, a number of these have already committed to voluntary charges, most recently Sportsbet. This is in addition to the arrangement secured with Betfair earlier this year,  and discussions with other operators in the Australian market are ongoing.

 

The first Bill also permits RITA to offer betting on a wider range of sports where an agreement is reached with Sport NZ. We are hopeful of new sports being made available to TAB customers before the end of the year. 

 

Bill Two

Work is now well advanced on preparing the second Bill which we anticipate being introduced into Parliament at the end of this year.  This will include provisions designed to give effect to the establishment of TAB NZ in order to maximise revenue and profit for racing and to the transfer to the individual Codes of a range of racing and industry responsibilities previously undertaken by RITA. We have sought feedback from the Codes on this with a view to policy decisions being taken for inclusion in the draft policy papers for the Bill.

 

Provisions to facilitate discussion between Codes and Clubs in relation to the future of New Zealand’s racing venues, as part of the Future Venue Plan work started last year, are expected to be included in the new Bill.

 

The Messara recommendations in relation to the racing Integrity bodies and animal welfare have been advanced in an independent review undertaken by Malcolm Burgess.  His Report has been circulated for consultation with the various views currently being analysed, including from the JCA and RIU who presented to the Board at our last meeting.  The decisions on a new Governance structure for integrity bodies will likely be made by the Board at our next meeting on September 25, and could result in specific legislative considerations in the Bill. 

 

Messara also recommended an independent performance and efficiency audit on the NZRB and we expect a final version in mid September. This has been slightly delayed to ensure the scope of the report brief was fully met. Once complete it will be sent to the Minister. In addition, we've had an independent report on the Distribution Model under section 16 of the Act developed and which will be discussed with the Codes within the next few weeks with regulations developed next year.

 

Harm Minimisation

As the Board work through the various recommendations we remain acutely aware of our responsibility to minimise the harm that gambling can lead to for some people. RITA management has reviewed its work in this area and developed a comprehensive strategy to add further weight to activities already underway. This will include utilising technology, improving communications and building stronger partnerships with the sector. 

 

Industry Engagement

Over the past few weeks we have met with the Boards of the three Codes to update them on the process and our progress.  We will also keep the industry up to speed on our progress where we can. 

  

Good progress is being made but to meet the timelines required for the legislative process the momentum must be sustained.

 

We will provide a further RITA operational update in September.

 

Yours sincerely,

 

 

Dean McKenzie

Chair

[Hesi]

Brian De Lore not mincing his words.  How many times have these very thoughts been echoed on various racing chat forums

 

Pace of Kim Dotcom’s extradition parallels pace of racing industry change

by Brian de Lore
Published 13 September 2019

Police raided the Kim Dotcom mansion in January 2012, and the US Department of Justice has been trying to extradite him to America ever since, to face charges relating to illegal file-sharing to his Megaupload site that earned him millions of dollars.

New Zealand’s bureaucracy has stretched the extradition into its eighth year, and we are still counting. Let it be a warning to New Zealand racing that the industry is now in the hands of like-minded bureaucrats in Wellington who have no conception of time and no care for racing’s future

The bureaucracy in Petone and Wellington has probably never heard of Charles Darwin who once said: “A man who dares to waste one hour of time has not discovered the value of life.”

Time is the one critical ingredient in very short supply for racing, and as long as the DIA is controlling the schedule, time won’t be a consideration. If the Minister doesn’t intervene and rev-up the DIA and RITA and get the Messara Report actioned then it may become another statistic and go dusty on a shelf somewhere like every other review in racing’s history.

RITA was expected to take control of racing and make a big splash, but instead has barely dipped its toe in the water. If you read MAC’s interim report released in late April it talked about taking action; the actual words were “Change will happen quickly and disruption must be carefully managed,” but no such action is has occurred.

MAC/RITA said that from July 1^st it would, “enable initiatives that will drive revenue growth and reduce cost for the racing industry.” But the legislation that became law on that date has shown just how ill-prepared the DIA-RITA co-operative was by having no agreements in place and nothing to collect which is simply money down-the-drain as a consequence. From all accounts, the rates are not yet set.

The lack of preparation to collect racefields levies that could be supporting stakes money is a disgrace. And the complete disregard for taking action to reduce racing’s massive administrative costs is also a disgrace. The NZRB which has a new name called RITA still has a CEO earning $680,000 annually, a total of 14 employees on $220,000 or above and 144 employees on $100,000 or more.

The wastage is diabolical and is nothing short of thievery from a starving industry. For years and years the ever-fattening NZRB has been siphoning off the cash that belongs to the owners and workers of racing. That it has been allowed to continue this long is extraordinary.

The hatchet-man needs to come in to slash and burn the costs. Tweaking, convening more meetings, continued full involvement with the DIA and the failure to be honest with the coal-face people of racing is not making the drastic changes required to salvage whatever can be salvaged of this once great industry.

Does racing need to be once more reminded about our 2006 status when the combined cash and property assets amounted to more than $106 million and interest was an income stream. Now, it owes $25 million which is the upper level of the limit, couldn’t pay back the due $9 million at the end of July and has effectively rolled over the loan and has placed itself in a tight corner with no room to move.

Racing is displaying all the signs of self-harm and needs a financial shrink. Instead of facing up to the issues three years ago when the writing was clearly on the wall, John Allen intensified his campaign of fake news and borrowed money to put the stakes up – tantamount to putting a bandaid on a severed limb.

All the while Allen was singing the praises of everything he was doing, releasing Statements of Intent that showed profits of up to $220 million and acting like the court jester. Many people believed the bullshit, and look what we have now – a FOB that has cost $50 million which is a crock.

Worst still, he’s still employed and effectively in charge and still collecting his weekly pay packet of $13,000. WHAT A JOKE!, metaphorically speaking. Yet, the Interim Report said that RITA from July 1^st “supports the Change Management Programme,” which can only mean one thing.

The cover-ups and the lying to the participants has been going on for years and has become the norm rather than the exception – same as the politicians. We have been lied to so much we expect lies and deception. Proof is everywhere between the lines in the annual reports.

A recently departed employee from NZRB has stated that if the top three executives at this dysfunctional organisation failed to get out of bed for a month or two it would make no difference whatsoever to the running of the TAB.

The gravy train rolls on at full pace and today on the RITA website a total of 17 jobs were in the offing. A couple of months ago NZRB employed a new IT Manager and will relocate that person and his family from Australia at a massive cost and pay him $350,000 to $400,000. Where is the cost-cutting?

The scope for cost-cutting is massive. Apart from salaries, the last annual report shows they spent $58,700 each and every week on travel and accommodation. Another weekly debit of $49,000 comes in the form of hiring consultants. A further $65,000 a week was spent on items listed as ‘other operating expenses’ with no further explanation offered.

No accountability and no transparency. No broom through management to clean out the dead-wood and costs, and no apparent show of strength in the leadership of RITA to give stakeholders a glimmer of hope. RITA should seriously address all these issues and take drastic action.

It makes this paragraph which appeared on page six of the executive summary quite laughable:

“The committee also want to reverse the historical model where the stakeholders of the business get what’s left after the administrators have taken what they believed they needed to run the industry. The stakeholders can no longer be left at the end of the food chain. Their interests must sit at the heart of an efficient, responsive, future-proofed commercial model.”

Lip service at best. Too much self-interest and job protection going on and a lack of strong leadership. Someone needs to make a statement as this industry is fed-up to the teeth with the same old, same old as the inertia of the downward spiral intensifies.

Where is the accountability? Why is this industry allowing these people to write such promises, not deliver them and get away with it? The codes have displayed their total apathy and lack of grit in failing to protest in any positive way while racing is dying a slow and agonising death. 

And for the lack of recent statements from the Minister while he continues his absence on sick leave, it is worth regurgitating the NZ First Racing Manifesto which included these promises:

• Introduce a new (below Premium Meeting) where every race will be for a$15,000 minimum with relativity across the codes.
• Restore marque racing plans and prize money initiatives in-line with NZ First Implementation 2005-2008.
• Urgently review the operations and costs of the New Zealand Racing Board.
• Enhance employment and export opportunities by working with the industry to improve the international status of New Zealand Group One races to attract greater international interest

Two years hence and none of these have happened. All we have to date is the promise of maintaining stakes at the current paltry level of last season – a directive from the Minister to RITA.

But on the figures shown here in last week’s blog (and those figures are correct), the prospect of keeping the status quo with an underperforming TAB looks bleak without an infusion of revenue from some unknown source.

The hole is getting deeper. The list of unfulfilled promises is mounting, and the industry morale is badly in need of a massive dose of decisive action.

[pete]

Where's Winston?

What a bloody joke this whole thing is.

[curious]

de Lore is an idiot. Doesn't have the foggiest clue and is somehow sucked in to believing the same shit that has been promoted by Messara, Peters, RITA and their cronies for at least a decade. Time has not suddenly become an issue. It has been an issue for at least that long but continuing to suggest that doing more of what has long since failed is just pie in the sky and saying we must hurry up and do that is quite ridiculous. He's got this all completely wrong and the DIA and Treasury are much closer to the mark but have been ignored. I was talking with a Treasury data scientist last night about this but as he said, we can only crunch the numbers and report what they say. What the politicians do with that is another thing.

Doesn't really matter whether they do it faster or slower. The result will be the same. Things are going to get a whole lot worse before they get better if they ever do. Meanwhile, the likes of NZTR who have the potential to make the necessary changes to improve things continue to sit on their hands awaiting some knight in shining armor to rescue them from their own stupidity.

[Hesi]

I've put this up here, seeing as I asked you to do it Curious

•  

 

curious

 

Posted September 25, 2018 (edited)

  On 9/23/2018 at 11:11 AM, hesi said:

Would you be prepared to put up a precis then, just on BOAY, about your main concerns about the report and why.

Just summaries really, no urgency, and we'll keep it to one side and use it as a reference back to what actually happens.

Here's a brief crack at that Hesi.

Recommendations

1.       Change the governance structure, so the NZRB becomes Wagering NZ with racing responsibilities devolving to the individual Codes. This will sharpen the commercial focus of TAB operations and improve the decision-making and accountability of the Codes.

Something along these lines possibly a good idea. Worth more detailed development.

2.       Establish Racing NZ as a consultative forum for the three Codes to agree on issues such as entering into commercial agreements with Wagering NZ, approving betting rules and budgets for the integrity bodies, equine health & research, etc.

Same as 1.

3.       Change the composition and qualifications for directors of regulatory bodies.

Yes, definitely needs sorting. Again, the devil is in the detail.

4.       Request that a Performance and Efficiency Audit of the NZRB be initiated under section 14 of the Racing Act 2003, with particular emphasis on the operating costs of the NZRB.

Absolutely. Required under current legislation anyway and overdue. The right reviewer and terms of reference to address some of the matters in this report is critical.

5.       Amend the Section 16 distribution formula of the Racing Act 2003 to a more equitable basis for fixed 10-year terms.

Don’t think the report makes a sensible case for this. Should remain proportionally based on domestic revenue generated.

6.       Initiate a special review of the structure and efficacy of the RIU and allied integrity bodies, to be conducted by an independent qualified person.

Yep. Probably should be devolved back to the codes. Has been a disaster as currently structured. Critical ingredient for increasing wagering revenue that integrity system is much more robust and reliable and seen to be so by punters.

7.       Begin negotiations for the outsourcing of the TAB’s commercial activities to an international wagering operator, to gain the significant advantages of scale.

Worth considering but detailed business case needs to be made alongside alternatives. In particular, retaining the tote business and making it globally competitive and licensing fixed odds operators in NZ (with a restriction on tote derivative products) should be considered.

8.       Seek approval for a suite of new wagering products to increase funding for the industry.

OK. But not likely to improve revenue. Adds to costs and unlikely to increase overall punter spend.

9.       Confirm the assignment of Intellectual Property (IP) by the Clubs to the Codes.

Don’t see the point in this. Clubs may be better to retain and control this themselves. Needs work and a better case made. Can club and community assets be co-opted legislatively or lawfully?

10.    Introduce Race Field and Point Of Consumption Tax legislation expeditiously. These two measures will bring New Zealand’s racing industry into line with its Australian counterparts and provide much needed additional revenue.

Race fields, yes of course. But legislation not required for arrangements with corporate bookmakers to be put in place as already demonstrated. RB estimates wildly out of kilter with the reliable research. DIA estimates more robust. I’d say might get to $3-5m net across all codes.

PoC tax, nope. See DIA estimates that administrative costs may exceed revenue. Providers already paying a consumption tax in the form of GST. If implemented any net revenue should go to taxpayer not racing anyway.

11.    Repeal the existing betting levy of approximately $13 million per annum paid by the NZRB, given that the thoroughbred Code is a loss maker overall, with the net owners’ losses outweighing the NZRB’s net profit.

Nice if you can get it. Note that some $50m of duty relief previously granted has been wasted on stakes and operating costs. Industry didn’t do what they said they would with that so why should the taxpayer gift more to a declining industry, or any industry for that matter. Also, an equity matter with casinos betting duty. Probably politically unpalatable.

12.    Clarify legislation to vest Race Club property and assets to the Code regulatory bodies for the benefit of the industry as a whole.

Big NO. Can’t legislate to colonise community and club assets. Needs to occur voluntarily at the discretion of club members where clubs will no longer have raceday licences. They should decide whether assets are put to other uses in the community. Any reinvestment in racing will also mostly have to be in the same region.

13.    Reduce the number of thoroughbred race tracks from 48 to 28 tracks under a scheduled program. This does not require the closure of any Club

Yep. No brainer but the redevelopment of remaining tracks needs to occur first in order to have an infrastructure in place that can cope with the racing required.

14.    Upgrade the facilities and tracks of the remaining racecourses with funds generated from the sale of surplus property resulting from track closures to provide a streamlined, modern and competitive thoroughbred racing sector capable of marketing itself globally.

Yep to the upgrades but the business case for that needs to be funded from current and future revenue and be sustainable.

15.    Construct three synthetic all-weather tracks at Cambridge, Awapuni & Riccarton with assistance from the New Zealand Government’s Provincial Growth Fund. Support the development of the Waikato Greenfields Project.

Yep in principle. Again, the initial cost and ongoing maintenance needs to be funded from current and future revenue increases. The business case is not made in the report. Needs more detailed work. That should include comparison of synthetics with Strathayr for these AWTs.

16.    Introduce robust processes to establish traceability from birth and the re-homing of the entire thoroughbred herd, as the foundation stone of the industry’s ongoing animal welfare program.

Fine.

17.    Increase thoroughbred prizemoney gradually to over $100 million per annum through a simplified three-tier racing model, with payments extended to tenth place in all races.

Great but it is not clear where the revenue or cost savings to do that will come from other than some from the restructuring perhaps. Recommended changes as above will not on their own make the NZ racing product competitive or attract more wagering spend. That also requires, among other things, aligning the prizemoney structure more closely to revenue generated and having a fair and competitive handicapping system for starters.

[Hesi]

They seem to have got distracted by some of the almost insurmountable issues, like the transfer of land and assets from the clubs to NZTR.

Something that was ultimately a nice to have, but was never going to make an initial difference to making a sustainable model.

As many have alluded to, cut fixed costs by a draconian review of the NZRB, this would allow so much more money to be returned to racing.

Reduce variable costs, by outsourcing the TAB, so once again, more could be returned to racing.

And please, with the extra funds, someone allocate a substantial marketing and promotion budget for NZ racing, so it's not left up to outfits like BGP to push racing

[curious]

3 hours ago, Hesi said:

I've put this up here, seeing as I asked you to do it Curious

•  

 

curious

 

Posted September 25, 2018 (edited)

  On 9/23/2018 at 11:11 AM, hesi said:

Would you be prepared to put up a precis then, just on BOAY, about your main concerns about the report and why.

Just summaries really, no urgency, and we'll keep it to one side and use it as a reference back to what actually happens.

Here's a brief crack at that Hesi.

Recommendations

1.       Change the governance structure, so the NZRB becomes Wagering NZ with racing responsibilities devolving to the individual Codes. This will sharpen the commercial focus of TAB operations and improve the decision-making and accountability of the Codes.

Something along these lines possibly a good idea. Worth more detailed development.

2.       Establish Racing NZ as a consultative forum for the three Codes to agree on issues such as entering into commercial agreements with Wagering NZ, approving betting rules and budgets for the integrity bodies, equine health & research, etc.

Same as 1.

3.       Change the composition and qualifications for directors of regulatory bodies.

Yes, definitely needs sorting. Again, the devil is in the detail.

4.       Request that a Performance and Efficiency Audit of the NZRB be initiated under section 14 of the Racing Act 2003, with particular emphasis on the operating costs of the NZRB.

Absolutely. Required under current legislation anyway and overdue. The right reviewer and terms of reference to address some of the matters in this report is critical.

5.       Amend the Section 16 distribution formula of the Racing Act 2003 to a more equitable basis for fixed 10-year terms.

Don’t think the report makes a sensible case for this. Should remain proportionally based on domestic revenue generated.

6.       Initiate a special review of the structure and efficacy of the RIU and allied integrity bodies, to be conducted by an independent qualified person.

Yep. Probably should be devolved back to the codes. Has been a disaster as currently structured. Critical ingredient for increasing wagering revenue that integrity system is much more robust and reliable and seen to be so by punters.

7.       Begin negotiations for the outsourcing of the TAB’s commercial activities to an international wagering operator, to gain the significant advantages of scale.

Worth considering but detailed business case needs to be made alongside alternatives. In particular, retaining the tote business and making it globally competitive and licensing fixed odds operators in NZ (with a restriction on tote derivative products) should be considered.

8.       Seek approval for a suite of new wagering products to increase funding for the industry.

OK. But not likely to improve revenue. Adds to costs and unlikely to increase overall punter spend.

9.       Confirm the assignment of Intellectual Property (IP) by the Clubs to the Codes.

Don’t see the point in this. Clubs may be better to retain and control this themselves. Needs work and a better case made. Can club and community assets be co-opted legislatively or lawfully?

10.    Introduce Race Field and Point Of Consumption Tax legislation expeditiously. These two measures will bring New Zealand’s racing industry into line with its Australian counterparts and provide much needed additional revenue.

Race fields, yes of course. But legislation not required for arrangements with corporate bookmakers to be put in place as already demonstrated. RB estimates wildly out of kilter with the reliable research. DIA estimates more robust. I’d say might get to $3-5m net across all codes.

PoC tax, nope. See DIA estimates that administrative costs may exceed revenue. Providers already paying a consumption tax in the form of GST. If implemented any net revenue should go to taxpayer not racing anyway.

11.    Repeal the existing betting levy of approximately $13 million per annum paid by the NZRB, given that the thoroughbred Code is a loss maker overall, with the net owners’ losses outweighing the NZRB’s net profit.

Nice if you can get it. Note that some $50m of duty relief previously granted has been wasted on stakes and operating costs. Industry didn’t do what they said they would with that so why should the taxpayer gift more to a declining industry, or any industry for that matter. Also, an equity matter with casinos betting duty. Probably politically unpalatable.

12.    Clarify legislation to vest Race Club property and assets to the Code regulatory bodies for the benefit of the industry as a whole.

Big NO. Can’t legislate to colonise community and club assets. Needs to occur voluntarily at the discretion of club members where clubs will no longer have raceday licences. They should decide whether assets are put to other uses in the community. Any reinvestment in racing will also mostly have to be in the same region.

13.    Reduce the number of thoroughbred race tracks from 48 to 28 tracks under a scheduled program. This does not require the closure of any Club

Yep. No brainer but the redevelopment of remaining tracks needs to occur first in order to have an infrastructure in place that can cope with the racing required.

14.    Upgrade the facilities and tracks of the remaining racecourses with funds generated from the sale of surplus property resulting from track closures to provide a streamlined, modern and competitive thoroughbred racing sector capable of marketing itself globally.

Yep to the upgrades but the business case for that needs to be funded from current and future revenue and be sustainable.

15.    Construct three synthetic all-weather tracks at Cambridge, Awapuni & Riccarton with assistance from the New Zealand Government’s Provincial Growth Fund. Support the development of the Waikato Greenfields Project.

Yep in principle. Again, the initial cost and ongoing maintenance needs to be funded from current and future revenue increases. The business case is not made in the report. Needs more detailed work. That should include comparison of synthetics with Strathayr for these AWTs.

16.    Introduce robust processes to establish traceability from birth and the re-homing of the entire thoroughbred herd, as the foundation stone of the industry’s ongoing animal welfare program.

Fine.

17.    Increase thoroughbred prizemoney gradually to over $100 million per annum through a simplified three-tier racing model, with payments extended to tenth place in all races.

Great but it is not clear where the revenue or cost savings to do that will come from other than some from the restructuring perhaps. Recommended changes as above will not on their own make the NZ racing product competitive or attract more wagering spend. That also requires, among other things, aligning the prizemoney structure more closely to revenue generated and having a fair and competitive handicapping system for starters.

No problem hesi