Racing Victoria Introduces Huge Increase in Bookmakers Fees in Australia

Racing Victoria will implement higher fees for bookmakers, mostly affecting the successful online operators.

Racing Victoria (RV) was registered in 2001 and it assumed the functions and responsibilities of the new Principal Racing Authority, which manage thoroughbred racing in Victoria, Australia. RV’s primary vision is “to enhance the Victorian thoroughbred racing industry’s position as a leading world-class sporting industry, delivering integrity, quality and entertainment.”

The information that currently made it into the gambling news and will change a lot the betting business, is that RV will introduce huge increase in the fees, which bookmakers are charged with. This is how the business models of these operators will be challenged.

The affected parties

Racing Victoria introduces higher fees for bookmakers

• In 2013 RV got $78 million in race-field fees
• It will implement a blended model in charging, called “’race-fields”
• This change will mostly affect online operators

RV management announced that it will start implementing a blended model in charging, called “’race-fields” fees in order to increase its income flow, especially from the popular at the moment online bookmakers.

These new changes will affect to very high degree online operators and in particular Tabcorp, a stock exchange-listed operator, which currently has a joint venture with Racing Victoria for parimutuel or tote betting, as well as a corporate bookmaking business with Luxbet.

Other seriously affected companies will for sure be Sportsbet, Sportingbet and Betfair – all online sportsbooks in Australia.

New fees

The new model will require from the operators in question to pay the higher of 1.5% of turnover or 15% of gross revenue for 440 standard race meetings in Victoria, starting from July 1st.

Moreover, the 45 meetings, which have a group or listed race will have to pay either 2% of turnover or 20% of gross revenue. The charges will be even higher – 3% of turnover or 30% of gross revenue – for the 10 premium group 1 meetings, of course including the Melbourne Cup.

Additionally, the traditional parimutuel or tote betting will have to pay 1.5% of turnover for standard meetings, 2% for group or listed race meetings and 2.5% for the 10 premium group 1 meetings.

the future

Looking at the most recent revenues, in 2013 RV received $78 million in race-field fees. For the past two years it has applied a turnover model for all race-field fees, keeping the rate for standard meetings at 1.5% and 2% for group, listed and premium group 1 meetings.

Raising the fees for Racing NSW and Racing Queensland are also expected to be announced further on this year. The overall situation for bookies dealing with horseracing in Australia has been tough since 2012 when the High Court took a very significant decision that Racing NSW has the right to charge corporate bookmakers based on their betting turnover and not on the revenue or gross profits.

So since the switch from gross revenue to a turnover-based model by RV, many corporate bookmakers implemented twisting techniques, so that the yield on their income would increase, rather than just trying to attract new bettors, so that the total turnover would increase.

All in all, bookmakers have to start planning new ways of keeping their earnings high, as the new fees will definitely get to their pockets.