Racing Industry Transition Agency Quarterly Update - 1 August to 31 October
The first quarterly report of the Racing Industry Transition Agency (RITA) signalled optimistic progress against the organisation's critical areas of focus. Reported net profit for the period from 1 August to 1 October was $33.6 million, up 2.9 percent on 2018/19 and up 9.5 percent against budget. Gross betting turnover was $95 million, up 3 percent against budget, while total operating expenses were down 1.6 percent against budget. The period also saw progress against the 17 recommendations contained in the Messara review of the New Zealand Racing Industry.
November 2019 - Racing Reform Update #4, Dean McKenzie, Chair, RITA Board
It’s been a very busy time for the industry since my last update, with a successful Spring Carnival and Cup and Show week.
During the period the Board has met twice and I thought it would be timely to provide you with some information on the performance of the TAB over the first quarter and an update on the progress of the racing reform programme.
October 2019 - Racing Reform Update #3, Dean McKenzie, Chair, RITA Board
The Board met recently in Auckland for its September meeting - its fourth formal meeting since being appointed to lead the Racing Industry Transition Agency (RITA).
The regular Board agenda is split over two sessions to focus on TAB Performance and RITA’s Change Management programme on the reform of racing. Here is a summary of what was discussed.
August 2019 - Racing Reform Update #2, Dean McKenzie, Chair, RITA Board
It’s been just sixty days since the establishment of the Racing Industry Transition Agency (RITA) and a timely opportunity to update you on progress against the Reform Programme the Board are advancing on behalf of the Minister for Racing.
July 2019 - Racing Reform Update #1, Dean McKenzie, Chair, RITA Board
The Racing Industry Transition Agency (RITA) Board met in Wellington for the first time on Wednesday, 10 July.
The agenda was extensive covering progress with the implementation of the recommendations in Messara Review; the development of regulations necessary to give effect to the provisions of Racing Reform Act; and a detailed discussion about distributions next season in the context of the ongoing development of the RITA budget for the 2019/20 year.
June 2019 - Industry Update from John Allen
Over the past month or so I have been around the country running a series of industry conversations discussing the current performance of the TAB, our financial projections, racing reform and the TAB’s new fixed odds betting platform.
These events have been well attended by industry participants and the discussions with people have been robust, considered and informative. I know it’s not always easy to attend these forums so I thought I’d provide a summary of the discussions and cover off some of the more recent matters facing the industry, not least the Racing Reform Bill.
Investing in the future
The Board is close to the end of a significant and critical period of investment. Over the past couple of years we’ve invested in the region of $70m into supporting the long term viability and increased profitability of racing in New Zealand. This investment is split over three core initiatives: a $40.8m Fixed Odds Betting (FOB) platform, a $20m upgrade of our vision technology to broadcast racing and an investment of $7m to ensure we meet our anti-money laundering responsibilities.
The FOB platform has been a significant advance for the industry and was the biggest technology implementation in the history of the TAB. The launch of the new site and mobile app wasn’t without it’s challenges and some of our racing customers struggled with the new layout or experienced issues that were frustrating. However, the new platform makes us competitive with other international operators and does allow us to make changes and respond to customers needs with greater flexibility than ever before and we will continue our work to further improve the customer experience.
We all know the introduction of the FOB platform in January wasn’t plain sailing. It was late, there were challenges when we launched, there was an initial dip in customers betting and we continue to have a backlog of fixes and improvements pending.
But, we are seeing some really strong results coming through. Customer numbers are back where they were in December, turnover on sport has grown considerably - we’re up more than 30% on the number of sports bets being sold since the platform went live. The largest increases have been on in-play betting (vs. pre-match and/or multis) with 1 million more in-play bets and $70m in turnover having been sold over the last 5 months than during the same period last year (+52% and +45% respectively). In-play betting now represents more than half of all Sports turnover, which is well above our target, however the level of pre-match betting is below our targeted increase of 30%.
At the forums around the country, I did point out the margin on sport product over the past six months has been much less than we’d anticipated. It’s been a good time to be a punter. The low margin is primarily down to a lot of favourites winning and some one-off results like the Joshua/Ruiz fight going against us. However it is something we expect to normalise over time. We are seeing positive signs, just not as quickly as we’d hoped for.
There was a lot of conversation about the past, current and future level of distributions to the racing codes. Quite clearly we’ve been distributing more than our betting profits in recent years on the back of a decision the Board made (and agreed by the Codes) in anticipation of income from Racefields coming through. This has put pressure on our cash and balance sheet. This year we will distribute $151.6m to the Codes, but it’s tricky to say what we’ll distribute next year as it’s dependant on several factors, not least the decisions the new RITA Board will make about any repayment of debt and the speed with which Racefields, the Point of Consumption charge and the partial abolition of the betting levy will come through. What I can say though is that we are confident the Board will increase its profit by $15m+ in 2019/20 and we are confident there will be more money available from the new revenue streams established by the Racing Reform Bill.
It was very pleasing to see the Racing Reform Bill pass its third reading last week. We strongly support the development of new legislation which we expect will deliver additional revenue streams for the Industry, in the first instance through a reduction in the current Betting Duty and then the implementation of offshore betting charges. While the Bill has attracted a degree of debate, I am very confident Racefields, a Point of Consumption charge and the gradual abolition of the betting levy will provide sizable benefit to our partners in racing and sport over future years.
I want to acknowledge the appointment of Dean McKenzie (Chair), Sir Peter Vela, Bill Birnie, Liz Dawson, Kristy McDonald and Anna Stove to the Board of the Racing Industry Transition Agency (RITA). We have worked closely with the majority of the Board through our dealings with the Ministerial Advisory Committee and look forward to supporting them when they take up the reins next week. The outgoing Board are leaving the organisation on a strong footing, equipped to be able to deliver increased returns to the industry on the back of a competitive betting platform, solid technology and world leading presentation of racing content.
Finally, we are currently working through our Statement of Intent, which outlines the strategic direction for the organization over a three-year period and includes a discussion of the outcomes being sought by the main priorities for the three years ahead. We will be working with the new Board and Codes to finalise this over the coming month or so. Once this is complete, I will embark on another series of industry conversation and look forward to seeing as many of you as possible around the country.
April 2019 - Industry update form John Allen
With four months of the current racing season left I wanted to update you on a variety of topics, including NZRB’s performance and forecasts, which I know are currently being discussed within some parts of the industry: distribution, fixed odds betting program, Ministerial Advisory Committee (MAC) and industry conversations.
February 2019 - Industry Update from John Allen
One month ago NZRB’s new betting platform was launched, giving TAB customers a new website, mobile app and a range of new services and options that will help transform the customer experience and ultimately, the racing industry in New Zealand.
The fixed odds betting platform has been a significant advance for the industry. In the end, the implementation from the business case to launch took about 18 months and the total cost was $40.8m, made up of resources (mix of contractor and staff costs charged to the programme), infrastructure and technology costs and change and marketing costs. This is marginally more than the $38 million the NZRB Board initially approved in May 2017.
This is the biggest technology implementation in the history of the TAB. There is no doubt it is a major investment but it is one that was very carefully considered and closely managed throughout. Now that it is up and running, we remain confident it will give our customers what they expect and deliver the industry in the region of $17m - $19m in additional profit from next year.
December 2018 - Industry Update from John Allen
It’s been a busy month or so for the racing industry since my last update to you, with a number of highlights, including Melbourne Cup and Christchurch Cup Week.
TAB turnover for the Melbourne Cup race was in the region $10.6 million, equal to the record turnover in 2015, with the winner, Cross Counter, delivering the best possible result on the race for the Board. Despite enormous pressure on our systems at times - at our peak 38,000 customers were on the TAB digital channels - our technology held up well, up to the race, albeit with a short period of about half an hour from the race where the app was slow.
And while the results for the TAB during Christchurch Cup and Show were mixed, it was a great week of racing and wonderful to see such strong crowds supporting our three codes.
October 2018 - Messara Submission and Business Update from John Allen
As you will know, this coming Friday is the last day to provide feedback to the Department of Internal Affairs (DIA) on John Messara’s Review of the New Zealand Racing Industry, which was commissioned earlier this year by the Minister of Racing, Rt Hon Winston Peters.This is an important opportunity to have a say on the future of our industry. The Messara Review has started a timely conversation to achieve real and lasting benefit to the industry and punters.
September 2018 - Introducing NZRB's AML/CFT Project
One of our major priorities over the next 12 months is to ensure the TAB has systems and controls in place to detect and deter money laundering and terrorism financing through betting. Did you know about $1.35 billion from the proceeds of fraud and illegal drugs is laundered through everyday New Zealand businesses like the TAB every year? We need to work with you to make it harder for criminals to profit from and fund illegal activity.
The requirements of the act
From 1 August 2019, we must comply with the Anti-Money Laundering and Countering Financing of Terrorism (AML/CFT) Act, which requires us to know more about our customers, and sometimes about where their money comes from. There are other requirements, such as reporting our AML suspicions, monitoring betting activity, vetting staff and bringing existing customer records into alignment.
Who is involved?
Everyone. All staff including NZRB, TAB board venues, agencies, pubs, clubs and oncourse terminal operators and supervisors, as well as all TAB customers.
What does this mean for your club?
All customer-facing staff must be aware of what AML/CFT is and what’s required to achieve and remain compliant with the Act. They will require advanced training on our AML/CFT requirements as well as any system or process changes.
What does this mean for customers?
Customers must adhere to our obligations if they want to continue to bet with us. Some will have to provide evidence of their identity, and in many cases evidence of the legitimate source of their spend depending on the size of the bet. This won’t apply to small bets oncourse, but for everyone making large bets and all our account customers.
How we'll support you
Our AML/CFT project team will support your club through the changes using a mix of training, communications and awareness pieces. You’ll know what you need to do and by when. Our engagement has already begun as we work to understand where we are now, where we need to be, and what the gaps are.
What we need from you
There are some specific questions we need to ask to help us discover:
- More about the contractual arrangements between terminal operators/supervisors, consortia and clubs, to inform our risk assessment and to assist in understanding the overall control environment these staff operate in.
- More about the employment arrangements that apply (who holds the employment contract(s), pays staff, employs staff).
- More about current vetting and training processes and record keeping.
Shortly we’ll be contacting a selection of approximately 15 clubs to arrange a time for us to discuss the above in more detail and are happy to do this in person, by phone or by email. For the rest of you, we’ll be in touch again in October. An infographic about the AML/CFT project is here for more information. Please don’t hesitate to get in touch with our Government and Industry Relationship Manager, Bill de la Mare, if you have any questions or with the project team at [email protected].
July 2018 - Statement of Intent Update from John Allen
The New Zealand Racing Board’s Statement of Intent, which outlines our strategic direction, priorities and financial forecasts through to 2020/21, has been formally signed off by the Government.A range of ambitious priorities has the NZRB targeting net profit growth of 52% over the period of the SOI - from $142m in 2017/18 to around $220m in 2020/21.Distributions for the racing codes for 2018/19 are budgeted at $151.6 million, a $0.8 million increase on last year and 10.2% increase on 2016/17. This includes the $12 million of additional funding targeted at increasing stakes across the 2017/18 and 2018/19 seasons that has been approved by the Board.
As profitability increases, the expectation is code distributions will increase to $172.2 million in 2019/20 and a further $17.8 million in 2020/21.The 2017/18 season has been a year of significant transformation and delivery for NZRB. We’re delivering on our financial targets, making good progress in the delivery of our strategic initiatives and delivering on our financial commitments to the racing industry.
We’ve made good progress with our key strategic initiatives - fixed odds betting platform, customer and channel improvements, racefields legislation and the optimise the calendar programme that will, once fully implemented significantly improve the customer experience and we expect will increase annualised net profit significantly.
Looking ahead, we are continuing to explore our broader strategic options that may provide improved returns and address the challenges inherent in our industry. There is significant potential for further growth, however, we recognise that these strategic options may be potentially affected by the review by Australian racing expert, John Messara, commissioned by the Racing Minister, Rt Hon Winston Peters. We look forward to seeing the outcomes of Mr Messara’s review and working with the Government and the wider industry to set racing on a sustainable path for the future.
As the main financial provider for the racing industry, NZRB is highly aware of our need to perform and deliver and we are excited about the opportunities ahead. What we have achieved so far, what we are doing now and what we are planning for the future will deliver its people an enduring livelihood and ensure New Zealand racing is successful on the world stage.
I have attached a brief summary of the SOI and you can read the full document on the NZRB website. I encourage you to share it with your committees, Boards and members. If you have any questions about the SOI feel free to contact me or our Head of Government and Industry Relations, Ian Long ([email protected]).