Executive Chair - Racing Industry Update

10 June 2020

It’s been two weeks since we updated you on changes across the TAB in response to the significant impact COVID-19 has had on our business. Fortunately, in that time we have seen the resumption of NZ Harness racing, a full programme of domestic greyhound racing, and the reopening of our gaming business.  And this week, an important milestone in securing racing’s future was achieved with the Select Committee Report on the Racing Industry Bill presented to the House of Parliament. We wanted to provide you with an update on these and some other developments which will be of interest to you.

Racing Industry Bill

The Transport and Infrastructure Select Committee have this week delivered their Report on the Racing Industry Bill to the House of Parliament, including some recommended changes. 

While nothing is confirmed until it is voted on, it is a positive signal to the racing industry that the Government has continued to prioritise the passing of the Bill especially in light of the significant amount of industry feedback to work through and the impact Covid19 has had on the ability of Parliament to operate.

There are over 30 areas where the Committee have recommended changes and it will take us some time to work through and understand each of the different proposals. Our initial view of the Select Committee’s recommendations is that the overall direction and structure of the Bill remains the same as it was before the Committee and is still in line with the direction of the Messara Report. The TAB will be established as a pure betting, broadcasting and gaming entity, and the Codes will have greater roles and responsibilities for developing and promoting their sport.

From our initial review of the Report, the key aspects of change the Select Committee has recommended includes:

  • The establishment of Racing NZ as soon as the Bill becomes law. This is a formal consultative forum comprising the three Codes. It could carry out some of the functions of the Codes (if the Codes wish). 
  • Changes to the venue provisions of the Bill. The changes appear to require the Minister to have greater consideration of the community before deciding whether to vest a Club’s assets with the Code.
  • Changes to the composition of the TAB NZ Board. The TAB is proposed to have three out of seven members appointed on recommendation of the Codes. A Selection Panel is proposed and the overall required skillset of the Board remains generally in line with what was in the Bill previously. 
  • Intellectual Property. The clause that gave TAB NZ exclusive use of racing industry intellectual property is proposed to be removed. This clause was viewed by almost all submitters (including RITA) as being too broad and encompassing, when the intention was for the clause to apply to negotiations with offshore bookmakers.  
  • Betting Information Use Charges (Racefields). There are some welcome changes to this aspect of the legislation which make it easier for the industry to require offshore bookmakers to pay for their use of New Zealand product. We will be working with the Codes to ensure we have a coordinated plan for this important revenue earner. 

The next stage of the process is that the Minister could also introduce any changes he wants to see included as part of the Second Reading. The Parliament then agrees to or rejects the amendments recommended by the Select Committee and the Minister. This will hopefully all happen prior to the end of this month. If all goes to plan, the Bill could come into effect by 1 August. 

TAB Transition

Late last month we shared with you details of the changes across the TAB to enable it to emerge out of COVID-19 a leaner, more efficient business and focused on driving our core wagering, broadcasting and gaming offering to our customers.

In parts of our business, such as oncourse betting, the trend for our customers is increasingly to bet on a device and on self service terminals. We have identified considerable savings for the whole industry by moving away from traditional tote services, however we know many of our clubs and some customers want to see a more gradual change. RITA is currently working with a group of major clubs and the Codes to explore options that enable some tote services remaining over the next 12 months or so, without compromising the savings RITA has committed to. There is broad agreement amongst the group that the status quo is not commercially tenable going forward and digital and self service solutions are the way of the future.

The oncourse betting solution for clubs hosting meetings over the next six weeks are currently being prioritised given the lifting of attendance restrictions under Alert Level 1. 

Executive leadership team review

As you are aware, in addition to major staff changes announced, the Board has recently undertaken a review of the TAB executive structure to ensure it is fit for purpose for the new TAB operating model, subsequent to the new legislation being passed.

The Board has accepted the recommendations of the independent consultants we engaged to review the structure and we have advised our executive that we will undertake consultation on a proposed new structure later this month. The process is being led by myself with appropriate support and a Board Subcommittee providing additional oversight of this work.

The Board expects to conclude the consultation process, consider feedback, and make final decisions in July. In respect of the appointment of a new Chief Executive, the Board intends to also revisit this in the coming weeks. 

Board extension

Last week the Racing Minister Winston Peters announced that the terms for the directors of RITA have been extended to 30 June 2021, or the passage of the Bill. This allows the directors to continue contributing to work to help make the racing industry both more prosperous and sustainable.

TAB performance

In many cases the Board had to make some tough decisions as we focus on the essential parts of our business that generate the funding required to drive the industry. For the likes of Trackside Radio, printed newspaper form, and phonebet, the high cost of providing these in the current climate is simply not sustainable. It’s early days yet but pleasingly these changes don’t appear to have compromised revenue with turnover and gross betting revenue for domestic racing tracking ahead of budget, and close to or above pre COVID levels. TAB’s gaming business has also returned strongly with gaming turnover for the first few weeks above the pre lock-down weekly average.

Right now, we are working with the codes on next year’s distributions and we hope to be able to give them a more accurate forecast in the next few days, prior to confirming a final budget at the end of the month. Once this is done they will be able to provide information on stakes for the new calendar which will be released early next month. 

Positive signs ahead

While we are certainly not out of the woods yet, the progress of the Racing Bill, an early return (and full) programme of domestic racing and revenues returning, in some cases, to pre-Covid levels provide enough reasons to be optimistic that RITA and the wider industry can come out of this crisis with some confidence.