Australian corporate bookies Tabcorp have renewed their retail betting monopoly in the state of New South Wales. The new 20-year deal, which was confirmed just two days before the existing deal expired, will see Tabcorp as the exclusive tote and fixed odds betting provider in NSW until June 22, 2033 (although the exclusivity is subject to legislative amendments). Tabcorp operates some 2,130 points of sale in NSW.
In exchange, Tabcorp will pay the NSW government $75m – $50m upfront, the rest in installments over a 10-year period beginning in 2024. Tabcorp CEO David Attenborough called the deal “a great outcome” for both parties, noting that NSW’s thoroughbred, harness and greyhound racing industries had reaped $238.6m via Tabcorp’s operations in 2012.
There were apparently no rival bidders seeking the NSW monopoly, so Tabcorp was likely bargaining from a position of strength. The NSW government just turned in a budget projecting a $329m deficit for the coming financial year, so any guaranteed cash injection is appreciated. The budget also projected total gambling tax revenue would reach $1.94b in 2013-14 and grow an average of 4.1% per year over the next four years. Gambling accounted for 8.8% of total government revenue in 2011-12 but is projected to account for 7.8% by 2016-17.
Video poker (pokies) machines are expected to contribute 63% of the total gambling tax haul in 2013-14. Given its Sydney monopoly won’t expire until (at least) 2019, tax generated by Echo Entertainment’s The Star casino is projected to grow 6.4% per year. By 2016-17, The Star is expected to contribute $71m more than NSW derives from racing revenue, whereas the contributions were equal amounts just two years ago. Racing’s decline is attributed to weaker tote wagers “as a result of interstate and online competition.” NSW imposes a 19% duty on ‘player losses,’ making online wagers with companies based out of more charitably inclined states an attractive option for punters.