Adjustments To Industry Returns From January 2020
With unprecedented change in the wagering market during 2019, GRSA has had cause to reforecast the financial position of the business. The wagering landscape has been affected by multiple factors including abnormally high yields (affecting turnover), intense competition spreading customer spend across multiple operators, continual erosion of pari-mutuel betting and softer broader economic conditions.
This has had an adverse effect on the returns to GRSA via the TAB. A bet placed through the TAB generates higher returns to GRSA compared to other operators and while TAB wagering on SA greyhound racing (including the G-SIX initiative) has remained relatively solid in the current year, the softening of wagering on interstate product through the TAB has been significant.
The completion of Tabcorp’s integration of the TAB and UBET businesses provides a strong opportunity to address the declining returns, however it is now the case that greyhound market share will reduce in FY21 which, in turn, will continue to place downward pressure on the returns from our exclusive wagering partner.
Having regard for this unexpected downturn in forecast wagering revenue, the following changes will be implemented as a direct response from 1 January 2020. In arriving at this approach, the Board and Management were keen to preserve baseline stakemoney levels across the various grades and categories of meeting.
- Thursday night race meetings will be restricted to 10 races comprised of eight dog fields (12 races may occasionally be scheduled to accommodate feature race nights)
- Maiden events will not be programmed automatically for the Thursday night meeting, but may still be run subject to grading priority
- The trainer rebate will reduce from $60 to $50 for all TAB meetings
- The unplaced payment for time-graded meetings and pathway events will reduce to $50 (for greyhounds placing 5th or lower) and be allocated wholly to the trainer
- Unplaced fees will be removed from feature events (e.g. Adelaide Cup final) in line with the common practice of other states
Despite these changes, total returns to SA participants will still grow from $8.6 million to over $11 million in the current financial year.
That overall increase in industry returns has come largely on the back of additional racing opportunities and Government funding and still represents the largest year-on-year increase that this state has known. Whilst a higher target for current year returns initially appeared to be deliverable, the ongoing deterioration in the wagering revenue forecast has compelled GRSA to react across a number of different areas within the organisation.
In recent years participant returns have averaged 47% of total wagering revenue. Due to a combination of recent stakemoney increases and the reduction in forecast TAB revenue, that ratio has increased to a level that cannot be absorbed without changes being made.
The Board and Management always have an overarching obligation to manage the business responsibly in line with movements in the wagering market and the broader economy, particularly given the current commitment to loan repayments for Murray Bridge. A more sustainable ratio in GRSA’s current operating environment would approximate more closely to 50%.
When Tabcorp merged with Tatts Group in 2017, a key commitment from Tabcorp was to consolidate national tote pools. Under the historical framework, UBET (now operated by Tabcorp under the TAB brand) has the smallest of the three totes which, in turn, has also made it the most vulnerable (particularly so for the minor racing codes). GRSA is supportive of national pooling and sees it as an opportunity to reverse declining returns to the industry.
Further, GRSA and Tabcorp continue to work collaboratively to explore opportunities to promote greyhound racing.
Media Enquiries:
Matthew Watson - Marketing Manager - Greyhound Racing SA
0422 671 314
[email protected]