Entain-TAB NZ deal becomes a reality

Racing’s bright new future became defined on Tuesday when Racing Minister Kieran McAnulty announced that the Government had approved the joint venture between TAB NZ and Entain Australia.
The bright future is more than a metaphor, and the stakes are high – literally. From June 1 Entain, a global betting agency whose stable includes the United Kingdom’s iconic Ladbrokes brand, will take operational control of New Zealand’s monopoly betting agency.
The 25-year deal comes with an immediate payment of $150 million to TAB NZ, and a guaranteed minimum payment of the same amount for distribution to the industry for each of the next five years, beginning from the start of the 2023-24 racing season.
The figures as outlined in Tuesday’s announcement are impressive: $170m for 2023-24 (a 36% lift on $123m for the current period), rising incrementally to $200m in 2027-28, which represents a whopping 60% increase on 2022-23 distributions.
Even allowing for the dip in distributions post Covid, a guaranteed payment totalling $900m (or as much as $1.06m based on the figures above) for the next five years is a far cry from what would otherwise have been the grim future that had become only too obvious before any joint venture became a reality.
What TAB NZ described as a “David and Goliath” battle with offshore betting agencies when it announced two months ago that the only solution to sliding revenues was a joint venture, now finally has an end-game.
“TAB NZ has been facing increasing financial challenges over recent years and was facing an uncertain future, largely due to competition from offshore gambling websites,” Kieran McAnulty said in confirming the joint venture agreement. “This deal will reverse falling revenues for racing and provides certainty. If we didn’t do anything, the TAB could be gone in five years.
“This partnership will also allow TAB NZ to use Entain's expertise and economies of scale to make necessary upgrades and invest extensively in infrastructure and technology. It will be an improved offering for customers.”
Coinciding with the Minister’s announcement and matching the timeline of Entain taking operational control at the start of next month, TAB NZ advised that CEO Mike Tod, who has led the organisation through one of its most challenging periods and ultimately a defining negotiation, has resigned.
His place will be taken by Nick Roberts, whose recent roles in the TAB NZ management team have included general counsel and chief transition officer, to which he will oversee on-going transition to the new integrated model.
While the boosted platform resulting from the joint venture has put a spring in the step of the industry at large, what the money looks like in real terms is understandably of keen interest to racing’s stakeholders.
Now that the figures have substance, code body number-crunchers are busy doing their calculations for new season stakes and other core spending. Following the Minister’s Tuesday announcement, NZTR Chairman Cameron George outlined how the thoroughbred code will be guided in its decision-making.
“It’s too early to nail down stakes, there’s still a lot of work to be done before we reach that point,” George said. “What we need to do is work within four key parameters – stakes, well-being and welfare, marketing and promotion, and infrastructure.
“They’re all important in making the most of the opportunity that now presents itself and this is our chance to get it right and ensure industry sustainability.”
The essential element underpinning the industry is the punter, whose interests during recent negotiations have been considered from Government down, and whose participation covers an immensely wider field of choice than when the TAB was founded 70 years ago.
While the Minister on Tuesday outlined plans for Government to re-confirm the TAB’s monopoly position as a counter to offshore competitors and to implement geo-blocking to offshore providers, he also intends ensuring that punters’ interests will be given due consideration.
“Under a monopoly punters will have nowhere else to go, but they shouldn’t be unnecessarily restricted,” he said in reference to ‘successful’ punters being allowed to continue to take on the odds-setters. “The TAB has got to be fair to the punter.
“Regulating this environment offers a significant new revenue source for local racing and sport, while also addressing the inherent risks in unregulated online gambling,” McAnulty said.
The other side of that coin is problem gambling, with $5 million of the $150m up-front payment from Entain being added to the gambling harm minimisation fund.
“By prohibiting online gambling outside of the TAB the Government can place greater controls over the betting environment. We would expect to also see much more money allocated to harm minimisation, a fairer deal for Kiwi punters and sports codes and a greater focus on animal welfare.”