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ACTTAB sale a body blow for Canberra’s racing industry

By 11 August 2014 5

horse-racing-stock

The sale of Canberra’s betting agency ACTTAB for $105.5 million and a 50-year exclusive totalisator licence to Tabcorp Holdings (for $1 million a year) has been met with disbelief and anger in some quarters of the racing industry.

Representatives of the thoroughbred, harness and racing codes feel they were excluded from consultations over the sale and have no assurances that the annual $8 million plus racing industry funding model will continue beyond the next ACT elections in 2016-17.

One key industry source said ACTTAB turnover had fallen and racing could not survive on declining turnover.  “We have made clear that over time it would not be a good outcome,” the source said. “There is no certainty for the racing industry. The funding model doesn’t make sense. It’s a very short-term fix.”

In 2013 ACTTAB’s revenue fell to $29.405 million (from 30.494 million in 2012) and there were $1.529 in total payments to the ACT Government. But earnings have been in slow decline for many years, blamed by industry on poor marketing and out-of-date computer capability.

An Investigation into the ACT Racing Industry by Access Economics (November 2010) found that the thoroughbred racing industry generated $52.0 million in expenditure, which resulted in direct plus indirect economic impacts of: $44.4 million in value added to the ACT; and employment of 480 full time equivalent workers.

Plans to invest the ACTTAB windfall

Treasurer Andrew Barr said the sale would allow his Government to boost the budget and invest in new assets and infrastructure for the territory.

However, the sale comes after the ACT Government announced it is struggling with a record budget deficit of $332.8 million for 2014-15 and has plans to borrow $2.5 billion for ‘infrastructure investment’ over the next four years.

The Government said Tabcorp plans to give $3 million to the racing industry in Canberra and $4 million in sponsorship for sport. But so far no arrangements are in place with the racing industry.

State TAB sales ‘a disaster’ for racing

The sale of ACTTAB reflects a national sell-off of state assets, including TABs. Industry sources say sales of TABs in Tasmania, South Australia and Queensland have proved disastrous to their local racing industries.

The WA Government said it is looking at selling the TAB as one of several state assets to reduce the state’s debt. The state’s horse racing industry held an emergency meeting in May to address concerns the TAB would be sold. WA Racing Trainers Association President Michael Grant said trainers were concerned over the potential loss of profits from the TAB, which – like Canberra – supported thoroughbred, harness and greyhound racing.

“One of our main concerns is obviously having seen the devastating effects associated with the sales of TABs in other states – so our concerns are well founded,” he said. “I can’t see a longer-term upside from the sale of the TAB.”

ACTTAB role in racing

Industry sources say they have problems dealing with ACT Government bureaucrats and that no member of the ACTTAB Board has relevant experience running a TAB, and only one of the directors is involved in thoroughbred racing.

Chairman Con Kourpanidis is a lawyer and businessman; Ted Quinlan AM is a former Labor Member of the ACT Legislative Assembly and a former Deputy Chief Minister, Treasurer, and Minister for Gambling and Racing; Howard Powell AM, with more than 44 years in business with a variety of national companies, is an owner and breeder and an elected member of the Canberra Racing Club; Dr Robyn Hardy is a part time lecturer who was formerly employed in senior roles with various ACT Government agencies.

ACTTAB featured in the high-profile Vitab affair in the early 1990s when the then Labor government faced the loss of $7 million to $10 million. The ACT was forced to pay compensation to a group of investors, including former Labor Prime Minister Bob Hawke. See ACT Auditor General’s report (page 75).

In 2002, a then director on ACTTAB’s Board, Sue Baker Finch, was asked to manage the appointment of a new CEO to replace outgoing CEO Roger Smeed. But instead Ms Baker-Finch was herself appointed as ACTTAB’s CEO (which then paid around $220,000). The Stanhope Labor government said no suitable candidate had been found after the first round of interviews.

The appointment aroused concerns about equity and fairness.

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5 Responses to ACTTAB sale a body blow for Canberra’s racing industry
#1
davo1018:36 am, 11 Aug 14

Given that Thoroughbred Park will have to be turned into high-density, vibrant, transit-oriented deigned apartments to justify the tram plan, selling out now was probably a wise move.

#2
dungfungus9:12 am, 11 Aug 14

davo101 said :

Given that Thoroughbred Park will have to be turned into high-density, vibrant, transit-oriented deigned apartments to justify the tram plan, selling out now was probably a wise move.

That is a real visionary comment.

#3
mcs1:27 pm, 11 Aug 14

I think it would be fair, to give a proper view of this issue, to include a link to the work previously done by the icrc:
http://www.icrc.act.gov.au/archives/non-regulated-industry-reviews/#act-racing-industry-review-2011

This gives a very different view on thr ACT racing industry to the work of access economics, with key findings being that the contribution to the economy is much smaller than the industry makes out and that current budget funding is very generous indeed.

There is little justifiable reason why a government should run a tab, and at least from my point of view, the privitisation should have happened a long time ago. Thr government should have engaged the industry more, but it also was right to try and maximise value from the sale.

The key point that really weakens any argument from the industry about going to a funding model again based on a % of acttabs turnover (even as a privatised entity) or through an agreement directly with tabcorp is that the industry is in an exceptionally weak negotiating position.

That is because betting on ACT races by people in the ACT only makes up a tiny proportion of total Acttab turnover. I think am article the other day suggested 3 per cent of it or around 5 million bucks. Thats turnover, not profit. Lets hypothesise that profit is about 20 per cent on that – 1 million.

Id expect there would be little appetite for the new operator to provide anything much out of that – certainly nowhere near the 8-9 million odd the industry gets from the Government. If I was the industry, id be thinking the current deal for funding is exceptionally generous, and not looking at stirring up really the only group that can keep you viable.

#4
MERC6003:19 pm, 11 Aug 14

I wonder when they will give the South Australian Keno the flick. Would much prefer NSW.

#5
dungfungus8:51 am, 12 Aug 14

Another example of why ACT Governments should stay out of the business sector.
There is no mention of the frauds that have been committed on ACTTAB either. These would have amounted to millions of dollars.
Any business ventures involving the sale of liquor or participation in gaming require the most stringent controls to eliminate pilfering and fraud and the ACT Government has failed again.
The spin about the sale is similar to the “great outcome” we had when TransACT was sold and somehow realised a return of $4 million after $50 million plus had been lost.
I wonder how much of the $2.5 billion “infrastructure” money Mr Barr plans to borrow on ratepayers risk will end up in financial disasters like ACTTAB?.

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