The final report of the Victorian Wagering Review conducted by leading international consulting firm PwC and chaired by highly respected business advisor and former Publishing and Broadcasting Limited (PBL) Chief Executive, Peter Yates, was presented to the Board of Racing Victoria (RV) at a meeting on Thursday and is now available for public release.
The highly detailed report reaffirmed the methodology of charging based on a percentage of gross revenue rather than turnover and recommended an increase to the current product fee.
The recommendation is to increase the current standard rate from 10% to 13% of gross revenue and to increase the premium rate from 15% to 18% during the Spring Racing Carnival months of October and November.
A key feature of the new model will be the introduction of a minimum payment of 0.5% of turnover per month. In any month where the percentage of gross revenue of any wagering service provider is less than 0.5% of that provider's turnover a minimum fee of 0.5% of turnover will apply.
The RV Board has accepted the recommendations of the final report in principle and intends to implement the new regime from August 2012, to coincide with the commencement of the new Victorian wagering Licence.
RV Chief Executive, Rob Hines, said, “The independent Wagering Review considered the optimum method and price which Racing Victoria should charge for the use of our product through detailed econometric modelling and consideration of future trends and delivered its findings after extensive consultation with industry stakeholder groups and wagering organisations.
“Interestingly the review found that the existing product fee regime would have delivered around $56 million per annum to Thoroughbred racing on average over the period of the new licence while a fee based on 1.5% of turnover would only have delivered $53 million. The recommended fee structure is likely to return over $63 million per annum.
“The implementation of the new product fee regime could still be impacted by the outcome of the High Court Challenge to NSW Race Fields legislation by Sportsbet and Betfair and the issuing of the new wagering licence in Victoria but both of these matters are expected to be resolved long before the new fees are scheduled to be implemented.”
The Review also highlighted the following key challenges in the outlook for racing wagering:
> Corporate bookmakers are gaining an increasing market share, with Turnover between totalisators and corporate bookmakers expected to converge in approximately 10 years time;
> Sports betting has not had a material impact thus far, but is still a relatively new product with increasing appeal to the younger demographic;
> Different wagering customer segments have different price sensitivities and make up different proportions of the wagering pools across different wagering providers;
> Changing demographics and technology mean the ‘average' punter now has easier access to a broader range of competing wagering products.
CLICK HERE to download the full report