Racing Reform Update (Harness) from Chair, Dean McKenzie

14 January 2020

With the new year underway, we wanted to write to you and your members again regarding the Racing Industry Bill. As you will be aware, the Government’s Bill is currently before Parliament and will, once passed, give effect to many of the critical changes required to revitalise the New Zealand racing industry.

This is a very significant and comprehensive Bill and reflects a determined focus and commitment from this Government to the racing industry. The RITA Board welcomes the Bill and the opportunities it presents for everyone connected to racing in New Zealand.

Prior to the Christmas break, both Harness Racing New Zealand and New Zealand Thoroughbred Racing provided initial assessments of the Bill to their clubs, outlining their early views on some of the key provisions. Subsequent to this, we have received requests from some racing clubs for
RITA’s initial thoughts on the Bill, particularly the areas highlighted by their code.

Racing Intellectual Property (IP)

The Bill confirms that, within Australasia, TAB NZ will have exclusive rights to all IP associated with racing betting information, racing betting systems and any audio or visual content derived from a NZ race. HRNZ has indicated concerns with this clause. From RITA’s perspective, it is essential that TAB NZ has uninhibited access and usage of racing IP in order to be able to monetise that IP effectively and thereby maximise its profits for the benefit of the three racing codes and the wider racing industry, as the legislation intends. In simple terms, for the benefit of the industry, TAB NZ needs to be able to use racing IP to function effectively as a wagering operator.

RITA/TAB NZ does not see the enactment of this provision as radically changing the status quo for clubs or Codes. RITA is using racing IP today to drive profits (for the benefit of the industry). RITA is also entering into arrangements with third parties (such as Tabcorp) which authorise the usage of that IP in exchange for the payment of fees, again for the benefit of the industry. Other parties, including clubs and Codes, also use that racing IP. Race books and domestic Code website field lists are good examples of this.

TAB NZ has no intention to constrain these types of activities and will ensure that industry players can use racing IP as they need to (subject to any contractual constraints restricting this). Vesting racing IP with TAB NZ does not mean that only TAB NZ will be able to use it; on the contrary TAB NZ expects industry players will continue to use racing IP as they do today for the promotion of the industry.

Notwithstanding this, and as HRNZ has indicated in their note, RITA has and will continue to discuss this provision with all codes over the coming weeks to ensure there is a workable, mutual understanding of how this will be applied.

Partnering Arrangements

The Bill requires TAB NZ to obtain written Ministerial approval for a “partnering arrangement”. This is an arrangement which would provide for a substantial proportion of TAB NZ’s betting, broadcasting or gaming functions to be undertaken by another person. Contrary to HRNZ’s position, RITA considers this clause is appropriate, given the significance of the TAB in New Zealand to not just racing but to all Kiwis. The TAB is a valuable, and arguably, the most important asset the industry has and therefore, it is understandable that the responsible Minister should make the final decision if such a significant transaction is proposed in relation to it. This is no different from similar arrangements overseas and provides clarity and ensures the process is robust.

Racing Integrity Board

There has been significant discussion about the structure of New Zealand racing’s integrity functions and performance over recent years, which is unsurprising given the paramount importance in ensuring there is confidence in the integrity of racing. In undertaking a review of the structure and efficacy of the RIU and allied integrity bodies (as recommended by Mr Messara), Malcolm Burgess (who was commissioned by the Ministerial Advisory Committee (MAC)) engaged extensively with industry participants and administrators and with experts in the area of integrity - in New Zealand and Australia.

His independent report made a number of recommendations, including the establishment of a new single governance Racing Integrity Board (RIB), which will be responsible for compliance and adjudicative functions. This recommendation has been adopted in the Bill and is one which RITA supports (the combined structure is not unique in the New Zealand context). In order for the industry and punters to have confidence in the integrity of racing, independence from the industry is vital. Accordingly, in RITA’s view, an independent, streamlined model (as proposed in the Bill) can only be a good thing for racing.

HRNZ contends that there needs to be a separation between the adjudicative powers of the JCA and the functions of the RIU. As HRNZ recognises, the Bill specifically requires the new Board to ensure that the compliance and adjudicative functions are performed independent of each other and in, RITA’s view, the details of how that will be achieved is a matter for the RIB Board and not one for legislation. Further, the RIB members will be appointed by the Minister on nominations from codes and will be independent of the codes, which is an important feature of the new independent model and is a structure commonly found across a number of industries in New Zealand.

Venues

As HRNZ indicated, the Bill’s provisions in relation to racing venues have generated much attention already. We understand that the new proposed processes are a source of concern for some clubs and so with this in mind, we sent you a more detailed synopsis of the Bill’s venue provisions last week. The majority of the industry recognise that there are too many racing venues to support sustainably. In helping determine the optimum footprint of racing venues, the Bill provides a transparent, industry led evaluation process to identify any surplus racing venues based around a statutory prescribed process (venue assessment criteria). This includes clear opportunities for consultation with industry stakeholders and Codes will be bound by the natural justice principles to ensure a fair process is followed.

The intent behind the venue provisions in the Bill is that industry assets should continue to provide long term benefit for racing, whether that’s continuing as a racetrack, becoming a training facility, being developed for commercial benefit or selling it (which some incorrectly default to). Critically, the industry will be at the forefront of determining if a venue is not required for racing and then considering its alternate optimum use. In the event that the Code and the Club cannot reach an agreement, it is only then that the fall-back provisions of the Bill (which involve Ministerial decision making) come into play.

New Revenue

The Bill introduces provisions which are intended to allow TAB NZ to offer a broader range of betting products, to increase revenue for the industry (subject to an approval process and a number of important considerations being met, including in relation to harm minimisation). We agree with HRNZ’s view that this is not yet where it needs to be and it is one area of the Bill that RITA will be considering closely as part of the Select Committee process, with a view to seeking increased flexibility for TAB NZ in introducing new products.

Interactive Gambling Act

In its communication, HRNZ highlights that there is no provision in the current Bill to establish an equivalent to the Australian Interactive Gambling Act (IGA).Under the IGA in Australia, any (unlicensed) offshore bookmaker (including the TAB) is prohibited from accepting bets from anyone based in Australia. We have had extensive discussion with the DIA to impress on them the impact this has had on the TAB and we understand this is being considered separately in the context of the Government’s Online Gambling Review which got underway last year.

Next Steps

Over the coming weeks we will meet with clubs, Racing Industry Organisations and other stakeholders to listen to the views of the industry on the Bill. While RITA was consulted in the development of the Bill, this is the Government’s legislation and we will be providing a submission ourselves which we will share with you when complete. The RITA Board encourages clubs to participate in the Bill process; as we have indicated previously we believe this will be the final opportunity to get the reform that the industry needs in place.

If you have questions you want to send us directly, please email us at [email protected].

Sincerely,

Dean McKenzie
Executive Chair