He will also need to be sure the deal meets harm minimisation (problem gambling) standards as well as the safeguards around money laundering legislation, both now key areas of betting agency governance.
But if all those requirements are met it will be a major surprise if the minister does not sign off on the deal and a new era in New Zealand gambling will begin.
The TAB has been left with little option but to seek a partnership with one of the overseas betting giants as its costs continue to rise, key customers are poached by offshore companies and the gambling marketplace changes so rapidly, with a huge move toward online betting.
Those issues have seen returns to the racing industry and sporting bodies fall. Without a major partnership, with the technology, skills and investment that will provide, there were huge fears the trend of diminishing returns would continue.
While the exact numbers in the Entain deal remain confidential, the TAB says if signed it will guarantee at least $1 billion in returns to the New Zealand TAB in the first five years of the deal.
Other key factors and forecasts in the deal include:
• Significantly strengthening the financial position of TAB NZ by facilitating an upfront payment to racing and sports, in addition to an increase in future payments over time.
• An additional and significant upfront payment should geo-blocking legislation be enacted that prevents unlicensed offshore operators from providing wagering services in New Zealand.
• Over the 25-year arrangement, the proposed terms have the potential to deliver a total uplift in payments to racing and sports of $5b compared with what the TAB expects to deliver during that same period.
• Investment and uplift in TAB NZ’s harm minimisation and responsible gambling efforts.
One of the key sweeteners for the New Zealand racing industry will be a $10 million sponsorship of an enhanced racing carnival, with Entain subsidiaries Ladbrokes and Neds already having a proven track record for major race and racing club sponsorship in Australia.
Most importantly, the deal is not reliant on the geo-blocking of other overseas betting agencies even though the Department of Internal Affairs is still working on that.
Geo-blocking, effectively giving the new TAB/Entain business a potential monopoly on New Zealand racing and sports betting, would require legislative change, so wouldn’t come into effect before this year’s election and should be at least a year away.
But that type of monopoly would greatly enhance the value of today’s deal and trigger that significant new payment from Entain as well as stop the poaching of New Zealand’s biggest punters and huge losses in turnover to overseas agencies who return far less to New Zealand racing and sport.
While racing codes bosses privy to the deal will be bound by non-disclosure agreements and therefore not able to reveal to racing industry participants what level of initial windfall the deal will bring, the Herald understands all three racing codes are highly supportive and the initial payouts could be within months.
