Anyone who witnesses bookmakers going about their business at Australian race meetings quickly appreciates the sheltered life enjoyed by the Totalisator Agency Board in this country. Operated by the Racing Board, it continues to have a national monopoly on all racing and sports betting. Clearly, however, it is not satisfying all New Zealand punters. To the tune of perhaps $300 million to $400 million a year, they are choosing to use Australian-based online racing and sports bookmakers, such as Centrebet and Sportsbet. This growth is irritating the local industry, and last week the Racing Minister, Nathan Guy, set up a working group to "shed some light" on the topic.
The attraction of the overseas bookmakers is obvious enough. In general, they simply offer better odds. The racing industry claims this is because they do not have to meet many of the costs that must be met by the TAB. Because the bookmakers operate outside the New Zealand regulatory framework, they are not required to pay GST. Nor do they have to make contributions to racing and sporting organisations. The Racing Board, in contrast, must distribute all profits from betting back to the racing industry. National sporting bodies also receive a percentage of sports betting turnover.
The Racing Board has been seeking Government assistance to stem the online leakage. Before he resigned last year, chief executive Chris Bayliss suggested overseas bookmakers using New Zealand product should have to be licensed here. As part of that, they would have to pay GST and other levies paid by the TAB. This would, in effect, create a level playing field.
That seems fair. But the TAB would still be at a disadvantage. Unlike its online competitors, it has the cost of a large store base. The danger, therefore, is that, even if not immediately, the racing industry may begin demanding something more than licensing. It could, for example, press for the blocking of access to overseas online betting services or ask the Government to follow the example of Hong Kong, which has made it illegal for banks and credit-card companies to process payments to overseas bookmakers.
As much as that would suit the industry, it would not be in the public interest. In this instance, as well as some others involving internet trading, the Government must be careful that it does not heed calls for digital walls. The level playing field envisaged by Mr Bayliss is fair, and it would be fair also for the bookmakers to have to give a percentage of their betting turnover to racing and sporting bodies. And on that basis, competition should be allowed to flourish. It would be up to the TAB to make itself competitive.
