Submission
to
Greyhound
Racing NSW
regarding
the
On-Course
Totalisator Rebate Scheme
Submitted
by:
•
NSW GBOTA
Wentworth Park
•
NSW GBOTA
Gosford
•
NSW GBOTA
Lismore
•
NSW GBOTA
Maitland
•
NSW GBOTA
Bathurst
•
NSW GBOTA
South Coast
•
NSW GBOTA
Gunnedah
•
NSW GBOTA
Temora
•
NSW GBOTA
Appin
Date
of Submission: March 7, 2008
1.
Introduction
GRNSW
is currently in the process of considering changes to the on-course totalisator
rebate.
Currently,
the on-course rebate scheme is considered an incentive scheme which encourages
clubs to drive on-course activity, particularly totalisator wagering activity.
Under
an arrangement agreed to by the then controlling body and all NSW greyhound
clubs, clubs receive a rebate of 7.38 cents for every dollar of turnover.
This is despite NSW GRNSW only receiving .6 cents for every dollar of
turnover via TAB earnings.
GRNSW
is proposing to reduce the rebate over four years to 3.5 cents in the
dollar. The remaining 3.88 cents would, under the GRNSW scheme, be re-directed
into a prizemoney incentive scheme. The prizemoney scheme would be repayable
only to clubs able to pay prizemoney above the GRNSW minimum standard
and payments to clubs would be driven by the club to club ratio of such
‘overs'.
2.
Current Scheme
The
current scheme returns 7.38 cents in every dollar of on-course turnover
to all NSW greyhound clubs conducting an on-course totalisator service.
It
is one of three primary forms of revenue received by clubs from GRNSW.
These revenue streams are (a) prizemoney allocations, (b) administration
subsidies and (c) on-course totalisator rebates.
In
reality, the majority of TAB clubs use all or the majority of the revenue
received from the totalisator rebate to offset various operating costs.
Only the Dapto Greyhound Racing Club (which has a unique high secondary
income capacity) and Casino Greyhound Racing Club (which has a unique
low cost operating structure) are currently able to fund prizemoney above
the GRNSW operating minimum.
The
current scheme does encourage clubs to promote on-course activity and
is the only division of funds paid by GRNSW to clubs that allows a club
to be rewarded for operational activity.
The
current scheme, however, does present an opportunity for clubs to stimulate
wagering activity via high valued wagering customers who, in the majority
of cases, also expect a return on turnover.
Although
GRNSW receives only .6 cents for every dollar turned over on-course, the
incentive paid to clubs is 7.38 cents. This creates a situation whereby
a club may choose to ‘incentivise' high valued customers to wager at their
club in return for a rebate on turnover.
If,
in the above scenario, the incentive paid to the high valued wagering
customer is above .6 cents in the dollar, then the arrangement in place
is financially positive for the club but financially negative for the
wider Industry.
3.
Proposed Scheme
GRNSW
proposes to reduce the rebate over a period of four years from 7.38 cents
to 3.5 cents for every dollar of wagering turnover.
The
difference between 7.2 cents and the reduced rebate will be re-directed
into a prizemoney pool. The totalisator rebate pool and the new prizemoney
incentive pool will be capped at $2.5m annually, no matter what growth
in wagering turnover occurs in the future.
The
prizemoney incentive pool will be available only to clubs that trade profitably
and fund prizemoney above the GRNSW standard. The formula which calculates
the return for clubs will be based on the proportion of prizemoney a given
club is able to pay above the minimum for its sector.
4.
Observations
On
face value, the review of the on-course totalisator rebate scheme is,
from a GRNSW perspective, being driven by a desire to increase Industry
focus on prizemoney improvement.
The
NSW GBOTA supports the merit associated with this objective.
However,
the review of the totalisator rebate scheme also presents the opportunity
for GRNSW to remove the potential for the Industry negative practice of
‘incentivising' high valued wagering customers.
The
NSW GBOTA would argue that a vast proportion of TAB tracks currently rely
on all or the major proportion of the on-course totalisator rebate revenue
to cover current operating costs.
In
addition, some clubs do have an advantage over others in terms of their
capacity to increase prizemoney. They either have high secondary income
opportunities (which are unique and therefore not available to all clubs)
or they have a low cost operating structure (which is not able to be entirely
duplicated elsewhere).
Accordingly,
the NSW GBOTA believes that the review of the proposal does not have regard
for the fact that virtually all clubs currently use the vast proportion
of their on-course totalisator rebate to cover operating costs. Unless
drastic changes are made to current operating procedures, the majority
of clubs currently receiving on-course totalisator rebate payments will
not be able to participate in a new prizemoney incentive pool.
Though
the process of incentivising high valued customers will be more difficult,
the proposed scheme will still provide sufficient funds for this practice
to continue.
Given
the above, the NSW GBOTA believes a more effective review of the on-course
totalisator rebate would be achieved by allowing clubs to continue claiming
the 7.38 cents rebate up to a certain level of turnover so to ensure clubs
are still able to meet operating costs.
Turnover
above this amount would only receive a small incentive – say 2 cents –
and the remainder would be placed into a prizemoney pool which would be
small in the first instance but would grow over time.
5.
Recommendations
•
That GRNSW maintain
the current on-course totalisator rebate level at 7.38 cents in the dollar
for wagering turnover generated by NSW greyhound clubs, capped at approximately
the following levels:
•
Metropolitan Club
Race Meetings: Wagering turnover up to $80,000 per meeting.
•
TAB Club Race Meetings:
Wagering turnover up to $45,000 per meeting.
•
Non-TAB Club Race
Meetings: Watering turnover up to $35,000 per meeting.
•
That the on-course
totalisator rebate be altered to 2 cents in the dollar of wagering turnover
above the thresholds in Point 1.
•
That the remaining
5.38 cents in the dollar of wagering turnover above the thresholds in
Point 1 be directed into a prizemoney incentive pool.
•
That the prizemoney
incentive pool be based on prizemoney payments paid by clubs in each pool
above the minimum standard. That clubs eligible to compete in the prizemoney
incentive pool be solvent and Operating Standard compliant. (Some consideration
may need to be granted to clubs with high depreciation levels due to GRNSW
GIDF funding of projects).
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