Entain, a global wagering and gambling company, will become the new owner of the New Zealand-based TAB by signing an agreement that will secure hundreds of millions of dollars for horse racing and sport.
Minister’s approval of the agreement:
Kieran McAnulty, the Minister for Racing, reported on Tuesday that he had validated the agreement. In addition, the approval will allow Entain to acquire the day-to-day management of New Zealand’s only wagering agency for 25 years. In this regard, McAnulty said: “This is one of the most significant days in New Zealand racing history. This deal will reverse falling revenues for racing and provides certainty over the coming years. I’m confident this agreement will help secure a solid future for the racing industry and sports in New Zealand through increased financial distributions to national sports organisations. Our racing industry is worth $1.6 billion to the economy and directly employs 14,000 New Zealanders. It’s reliant on TAB NZ distributions, and if they were allowed to fall that would hit the industry hard and jobs and revenue lost.”
However, the agreement had to offer few guarantees before McAnulty could validate it, one of the most important of which was that no new jobs would be lost in New Zealand, meaning that all of TAB’s 460 full-time workers are guaranteed job for a minimum of next two years.
The Racing Minister has also made sure the agreement caters to New Zealand racing fans with the TAB’s innovative Punters Promise, which guarantees fans a chance to support any horse and win at least $2000, which will definitely be kept. This caused a lot of concern among many punters as overseas bookmakers, especially those based out of the UK, were often quick to restrict or suspend consistently winning punters.
This agreement is similar similar to the Punters Promise, which means New Zealand punters will be good to go under Entain’s management and will be able to fully embrace the world-leading guarantee that will allows them to actually place bets instead of being banned from doing so.
$150 million bonus:
The agreement includes a $150 million bonus for New Zealand’s racing and sporting codes. However, the sporting codes will be disseminated among the 38 National Sporting Organisations (NSOs), with which the TAB has deals. In addition, the sports codes actually benefit because they paid nothing to set up the TAB, but will get $15 million during the next three years for their sports percentage of the TAB’s turnover. That involves turnover in overseas sports, which due to the aforementioned agreement, will have good payouts for NZ basketball, soccer and rugby league, each sport having high TAB turnover due to the high interest of bettors in their overseas competitions.
Of the total bonus of $150 million, nearly $100 million will be delivered to New Zealand racing codes over the next five years, in addition to increased returns guaranteed to nearly $200 million over five years. Additionally, money from this bonus will be set aside and used for harm minimization and problem gambling assistance. But that’s not all; as part will also be held in reserve by the TAB, a lesson learned the hard way when COVID-19 caused many problems in 2020, which caused many races and sports to cease, which further caused TAB to become nearly insolvent.
As for the racing code payout, it is important to provide the future of thoroughbred, harness, and greyhound racing as all three have problems with escalating costs due to the need for large infrastructure investment. That’s why paying $100 million payment on top of Entain’s guaranteed distributions during the next five years will offer racing a sustainable profit and a way forward following a drop in TAB distributions this year.
Day-to-day management of the TAB business:
Entain is headquartered in UK and manages, in addition to other brands, the biggest wagering agency Ladbrokes. However, the NZ TAB brand, very familiar to many New Zealanders, will be kept.
Although it’s called a “strategic partnership”, in reality it’s more of “an outsourcing of the day-to-day running of the TAB business”, which will come as a shock to many industry insiders. However, Entain will officially have TAB from June 1st. When it takes over, it will deliver global experience, scale and professionalism to the TAB, which will be paticularly important as the TAB has problems to ward off other big overseas wagering agencies from stealing New Zealand bookies, whose wagering with other bookmakers has cost New Zealand racing and sports more than $150 million in lost revenue annually. It has also invested very much in visual content in recent years and it is possible that New Zealand races will be promoted more extensively in Australia and overseas markets, increasing overall traffic. Additionally, it will reduce the ticket price for those bets, but the overall traffic in New Zealand will most certainly increase.
Although the $150 million sign-on bonus and guaranteed returns during the next five years is a big boost for racing and sport New Zealand, there could be another big financial windfall.
In addition, the agreement includes a provision for one more payment of roughly $100 million if the New Zealand wagering market becomes geo-blocked, which means New Zealand punters could stop wagering with other overseas agencies. Furthermore, if this happens, it would make a monopoly for TAB/Entain, but geo-blocking will need legislative changes that may be difficult to implement prior to the election. However, the Minister gave the strongest indication so far that geo-blocking is close to reality.
In this regard, McAnulty said: “I am also pleased to announce that Cabinet has decided an in-principle agreement to extend TAB NZ’s monopoly for sports and racing betting to the online environment, subject to further work being done. The TAB was set up as a monopoly to fund New Zealand racing and sports. But the onset of unregulated online gambling changed the game and our racing and sports industry has been losing money ever since. Regulating this environment offers a significant new revenue source for local racing and sport, while also addressing the inherent risks in unregulated online gambling.”