The naivety and gullibility of the ACT Government in entering the VITAB deal was exposed last night when the Victorian TAB pulled the rug out.
The ACT signed a contract with VITAB to run a TAB in Vanuatu to attract Asian punters. The theory was that these punters would get access to the TAB super pool, which is all the money bet in Victorian, South Australian, Western Australian, Tasmanian, ACT and Northern Territory TABs _ some $5 billion in turnover.
When Australian punters bet on these TABs on average they get 85 per cent back. The other 15 per cent goes to government, the racing industry and operating costs.
Under the VITAB deal, VITAB would pay 85 per cent to punters and a couple of per cent to the Vanuatu Government and the ACT TAB, leaving between 11 and 13 per cent for its operating costs and profit.
The worry, expressed by the ACT Opposition among others, was that with this profit margin, VITAB could entice major Australian punters to it by paying back in brown paper bags, say, five percentage points of that 13.
If Australians bet through Asian agents through VITAB, it would be money lost to Australian state and territory governments and the racing industry.
VITAB has two Australian directors and several Australian shareholders, including former Prime Minister Bob Hawke. It gave assurances that it would not permit Australians to bet through it. But how would it know whether money bet through Singapore or Hong Kong came from Australia?
The Victorian TAB very quickly came to the conclusion that it could not and thus yesterday prevented access to its pool by ACT TAB.
My guess from this is that one or two big smart Australian punters were sick of betting in a system which had a leakage of 15 per cent to government, racing industry and costs. With that sort of leakage, even with their great race-form information, they were making only a few percent. I guess they thought to themselves, how can we reduce that 15 per cent and still have access to the huge amounts of money bet by mug punters in Australia?
They thought that if an off-shore TAB were given that access, they could bet through it. If that off-shore TAB had plenty of profit margin (say, 11 per cent) it could split that with the punter. And if that off-shore TAB were set up in a tax haven like Vanuatu it would be even better. No more leakage to Australian governments and Australian racing industry.
I guess a big NSW punter whose syndicates put, say, $5 million a year through TABs would have the incentive to underwrite an operation like VITAB. All perfectly legal.
But who would be mug enough to allow such a thing. Who would be dumb enough to allow them access to $5 billion a year?
Wayne Berry. That’s who.
The former chair of the ACTTAB, Jim Colquhoun, who was turfed out (pardon the pun) by Berry in favour of Athol Williams, a man will good Labor connections, when the TAB was decorporatised and brought under the Public Service last year, must be shaking his head with a sad “”I told you so.”
And what is the result? Victoria has seen the possibility (I’d guess certainty) of leakage and has pulled the rug out.
Now the ACT TAB has a pitiful pool of $90 million a year. Big punters do not like that. If they put big money on a horse they watch it run round the track and get their money and only a tiny contribution from a few ACT mug punters, not all the mug punters from four states.
The big punters will not bet on ACTTAB and the revenue and race industry will suffer. The ACT might go cap in hand an do a deal in desperate circumstances with the NSW TAB, but it will be disadvantageous.
Failing that, there will be one ironically amusing result. The little mug punters in the ACT will now get better returns in a smaller pool because the big punters who bleed it with their better horse knowledge are no longer there.
It great to see Wayne Berry serving the battler.
But in the long run it will be only a temporary set back for the big punters who will find a way around a government monopoly that takes 15 per cent of turnover, when a less greedy operation could work on a third of that margin.