Today we received a media release from TabCorp, issued we suspect not by accident on the one day of the year that the Australian public pay attention to the racing industry.

The release is written in a peculiar language called TabSpeak, similar to but not exactly the same as the language used by the US military.

For the convenience of our readers, the full text of the media release is repeated below with its translation into Plain English.

TabSpeak:
Tabcorp urges national action to secure funding for racing industry

Plain English:
Tabcorp urges national action to protect Tabcorp profits

TabSpeak:
Tabcorp Holdings Ltd today called for urgent action to safeguard the funding of the racing industry and ensure the long term viability of Australian racing.

Tabcorp Chief Executive Officer, Elmer Funke Kupper, said there was a need for a “greater sense of urgency” to address the inevitable decline in revenue for the industry, which today is largely funded by the TABs.

Plain English:
Tabcorp Holdings Ltd today called for urgent action to protect Tabcorp's profits because it believes that only Tabcorp can fund the racing industry.

Tabcorp Chief Executive Officer, Elmer Funke Kupper, said there was a need for a “greater sense of urgency” to address the inevitable decline in revenue for Tabcorp whose market capitalisation has halved since he became CEO.

TabSpeak:
The call for action follows the complete relaxation of advertising restrictions, which is accelerating the “leakage” of turnover from the totalisator to corporate bookmakers. Corporate bookmakers have a significant competitive advantage compared to the Tote as they operate from jurisdictions that have lower tax rates, lower racing industry fees and greater product freedom. Tabcorp believes other states will be forced to follow the Victorian example and deregulate.

Plain English:
The call for action follows the complete relaxation of advertising restrictions, by which Tabcorp's monopoly on wagering had been enforced. These restrictions have been found to be unconstitutional because they restrict free trade betwen the states meaning that since it started operating in 1961, Tabcorp has been illegally enjoying the benefit of extravagant margins because of lack of competition.

Corporate bookmakers have a significant competitive advantage compared to the Tote as they operate off lower margins, typically 5-6% compared to the 16%+ charged by Tabcorp.

The other states have no alternative but to deregulate because they are just as bound by the Constitution as Victoria.

TabSpeak:
Tabcorp stated that wagering turnover through the Tote during the Spring Carnival had been sluggish. Melbourne Cup turnover was up on 2007, driven by the recovery from Equine Influenza, however it was flat compared to 2006.

Today’s Cup turnover figures were:
• Victorian TAB customers wagered $36.5 million on the Melbourne Cup ($33.1 million in 2007, $34.6 million in 2006) and $64.8 million on the entire Flemington 10-race meeting ($62.6 million in 2007, $62.8 million in 2006).
• NSW TAB punters wagered $51.2 million on the Melbourne Cup ($45.2 million in 2007, $52.9 million in 2006) and $66.9 million on the entire Flemington 10-race meeting ($61.6 million in 2007, $68.1 million in 2006).

Plain English:
The only people who bet through TAB agencies these days are the once year punters who bet on the Melbourne Cup. Regular punters are so sick of our poor service and bad value that they bet elsewhere.

TabSpeak:
In contrast to totalisator betting, the turnover of Tabcorp’s fixed odds businesses, which includes TAB Sportsbet and Northern Territory based Luxbet.com, approached $10 million on the Emirates Melbourne Cup, up 30 per cent on last year.

Plain English:
Tabcorp's turnover on the Melbourne Cup alone is up from $86.0 million last year to $97.7 million if you include $10 million from Luxbet and TAB Sportsbet. We too can increase interest in racing if we offer better value products to the punter.

TabSpeak:
Tabcorp estimates that the leakage of turnover away from the totalisators in Victoria and NSW is approximately $20 million since advertising laws were relaxed last month. This leakage immediately reduces industry funding, as the fees paid by the TAB are lost.

Plain English:
The advertising laws were illegal under the Constitution and should never have been in force. Now that we can advertise Luxbet we increased turnover 13% in just a few weeks.

TabSpeak:
Tabcorp is responding commercially to the changes in the market by investing in new technologies, such as mobile betting, that allow it to operate across state borders and by building up its own fixed odds betting business.

Plain English:
Tabcorp is responding commercially to the changes in the market by doing things that our competitors did years ago.

TabSpeak:
Mr Funke Kupper said that the Totalisator is now at a significant competitive disadvantage to corporate bookmakers.

“Not only do bookmakers now simply copy tote prices, they can give a better price as they operate from jurisdictions where taxes and racing industry contributions are minimal. The Victorian Government has now relaxed advertising restrictions for corporate bookmakers and will soon give bookmakers greater freedom to operate from Victoria and over the Internet. This is putting further pressure on industry funding, which is derived from the totalisator. In 2008, the Tote contributed 100 times more funding to the racing industry than all corporate bookmakers combined,” he said.

Plain English:
Because we refuse to reduce margins in our totalisator business, bookmakers can offer to equal or better our prices. Because of our bloated and inefficient distribution structure our overheads are much higher than theirs so we find it hard to be competitive.

The collusive and illegal business arrangements we had with the racing industry which gave it funding in return for preventing competition are now starting to unravel. We wish government to pass laws to make punters pay more so we can go back to the way things were.

TabSpeak:
“Tabcorp believes that this week’s Victorian Government announcement on the future funding of the racing industry may compensate the industry for the loss of gaming earnings from 2012. However, a reduction in the tax rate alone will not be sufficient to secure industry funding, and it will be too little, too late. We cannot wait until 2012 to address the issues that we face today,” Mr Funke Kupper said.

Plain English:
We rather stupidly commited to long term contracts to pay state taxes and racing industry contributions which still have some years to run. We'd like to welsh on those contracts because the terms no longer suit us.

TabSpeak:
Tabcorp believes that more urgent action is needed to secure the future of the Australian racing industry, and urges the state and federal governments to consider a number of important and immediate steps. They include:

• An immediate reduction in the Victorian wagering tax rate by 3 per cent, followed by a similar reduction each year over the next four years.
• A clear distinction between totalisator and fixed odds betting, with a prohibition on tote odds betting by bookmakers.
• Removal of constraints on TABs that restrict their ability to compete, such as the inability to bet fixed odds on all races.
• A single national product fee regime that applies to all bookmakers in every state and that secures industry funding.
• Clear rules around the responsible delivery of wagering products, with a national ban on the advertising of free bets and a national ban on credit betting.
• Clear safeguards that secure the exclusivity provisions of State wagering licences, particularly retail exclusivity.

Plain English:
Tabcorp believes that more urgent action is needed to secure the future of the Australian racing industry, and urges the state and federal governments to consider a number of important and immediate steps.

The NSW government is currently conducting the Cameron inquiry into these very issues and the results are not looking very good in terms of maintaining our monopoly position.

The Victorian government is very concerned about allegations that Tabcorp tried to bribe Clubs Victoria to not compete for the gaming machine licence. 

We want to involve the Federal government by pretending that this is a matter of national interest because we just can't control the states any more.

They include:

• An immediate reduction in the Victorian wagering tax rate by 3 per cent, followed by a similar reduction each year over the next four years. We might pass this on to punters but then again we might not.
• A clear distinction between totalisator and fixed odds betting, with a prohibition on tote odds betting by bookmakers. We'd prefer people to forget that when bookmakers offer tote odds, its actually the best price across 7 totalisators. Technically they could all be offering different prices but for reasons of retail price maintenance they don't.
• Removal of constraints on TABs that restrict their ability to compete, such as the inability to bet fixed odds on all races.We of course want to ban bookmakers from offering tote odds, but want the freedom to offer fixed odds without restriction.
• A single national product fee regime that applies to all bookmakers in every state and that secures industry funding. We've carefully left out the bit about bookmakers having any say in what the funding level should be.
• Clear rules around the responsible delivery of wagering products, with a national ban on the advertising of free bets and a national ban on credit betting. We don't want our competitors to be able to offer better value.
• Clear safeguards that secure the exclusivity provisions of State wagering licences, particularly retail exclusivity.Regardless of the fact that anyone with a phone or computer can bet wherever they like.

TabSpeak:
In addition to these immediate measures, Tabcorp believes it is necessary to conduct a national study that forecasts industry funding for the next 10 years. This will provide clear input to governments as they make changes to the market place.

“The racing industry and the tens of thousands of people who work in the industry are totally dependent on a successful totalisator,” Mr Funke Kupper said.

Plain English:
In addition to these immediate measures, Tabcorp believes it is necessary to conduct a national study that forecasts industry funding for the next 10 years. This will provide clear input to governments as they make changes to the market place.

“The thousands of people who work for Tabcorp are totally dependent on a successful totalisator,” Mr Funke Kupper said.

TabSpeak:
“Recent reforms put this funding model at risk without any clear long term funding solution for the industry. International experience says that this is the wrong way to go. Successful countries with a strong racing industry recognise the value of the Tote and its importance for industry funding. They think through reforms carefully and nationally before acting.

Plain English:
Virtually every country with a Tote basis for industry funding sees its racing industry in decline because the high cost of wagering drives punters to bet on other sports. International experience says that dependence on the Tote for solutions to this problem does not work.

TabSpeak:
“To date no government has produced projections that show how the market will evolve and that prove that the national industry will be well funded over the next 10 years. Yet in the meantime we are making significant changes to the competitive rules in the third largest racing industry in the world and one of the largest industries in the country. This is in stark contrast to other government policy initiatives which are well thought through on a national basis before any change is implemented. Basically, we’re making it up as we go, state by state, in what is a national industry. This cannot work. Our suggestions will address this and we believe the government should consider them seriously. We believe that many participants in the industry support our views, now that the impact of the changes is becoming evident.

Plain English:
Although Tabcorp is in decline since I took over and only one of many totalisators and bookmakers out there, we believe we have all the solutions. Our proposed solution will have Federal and state laws making it compulsory for all punters to use Tabcorp and pay an inflated price for their wagers by supporting our outmoded business model.

TabSpeak:
”In the meantime, we are making commercial decisions that put Tabcorp in a better position in a changing market place. We are investing in new technologies such as the Internet and mobile betting that allow us to operate across state borders, and have started an aggressive push into fixed odds bookmaking with our Northern Territory Luxbet.com offer,” Mr Funke Kupper said.

Plain English:
In the meantime, Tabcorp is desperately trying to make up for the stuffing around we have been doing for the last decade. We've just discovered "the Internet", which looks like it might let us operate across state borders. We've also just dicovered a wonderful place called "the Northern Territory" which promises to tax us not so much as other places.

TabSpeak:
Mr Funke Kupper said Tabcorp was looking forward to evaluating the conditions around the wagering licence process in Victoria, in particular what arrangements would be put in place to safeguard the exclusivity of the licence post 2012.

Plain English:
They don't like us very much in Victoria. We're trying to figure out how we can avoid going for the license down there without upsetting the few shareholders we have left.

Cyberhorse 2020 Bill Saunders Published 04/11/08