With the showdown over race field fees between Racing NSW and the corporate bookmakers in the Federal Court only three weeks away, a little noticed announcement from Thoroughbred Racing South Australia is worthy of comment.

Long considered a basket case by the rest of Australian racing, South Australia is suddenly showing strong growth from a combination of embracing non-TAB wagering operators, government taxation reform and self help from rationalisation of resources and cost cutting.

The net result is a stunning year to year turnaround in performance by TRSA, from a loss of $2.1 million in 2007-08 to a profit of nearly $6.8 million in 2008-09.

By far the biggest factor in the improved performance was race field contributions from the bookmaking sector, which boosted gross revenue for TRSA by $9.2 million for the 9 months of the year that the contribution was paid.

After paying other racing jurisdictions for the use of their product, TRSA netted $5 million from the new levy. Giving the lie to suggestions that competition from the non-TAB sector would decimate TAB contributions, Unitab's funding also increased - up by more than $2 million.

Add in a further $2.7 million from wagering tax relief provided by the South Australian state government and its easy to see how gross revenue for TRSA increased by nearly 40% year on year from $29.1 million to $40.6 million.

Interestingly the collection of the race field levy was accompanied by none of the heat and light generated by Racing NSW's attempts to extract more revenue from the non-TAB sector.

TRSA Chairman Philip Bentley explained how they went about negotiating with bookmakers to collect the race fields fee.

"We appointed a consultant to talk to the bookies", he said.

"He was on a three month contract. All the bookies were agreeable to the fee being based on their profit."

Bentley is pleased with the result obtained by TRSA from the first 9 months of operation of the new levy scheme and expects it to show further revenue growth in 2009-10.

"We are budgeting for the net contribution to grow from $5 million to $7 million this financial year", he said.

The last time the crisis ridden South Australian racing industry was looking for funds was two years ago when there was huge controversy over the planned sale of Cheltenham racecourse.

Bentley pointed out that there was no contribution from that sale in the most recent results and even when the funds did arrive, they were likely to be eclipsed by contributions from bookmakers and tax reform.

"We expect the Cheltenham sale to provide about $3.5 million a year", he said.

By then TRSA will also see revenue gains of $7 million a year from wagering tax reform as well as increased contributions from bookmakers and Unitab.

Much of the increased revenue will flow into prizemoney, meaning that in the space of two years South Australian races will be worth 30% more. For example, from February 2010 open class city races will carry prizemoney of $50,000.

Bentley expects to see a continuing trend for Victorian gallopers to go after these returns with consequent greater interest from Victorian punters and the increasing number of NSW and Queensland punters who follow Victorian racing.

TRSA has had few problems with implementing its new strategy.

"The only concern we now have is that we suspect one or two of the on course bookies are not paying the full 10% of gross profits", he said.

"There appears to be a discrepancy between the percentages being bet in the ring and the profits they are reporting."

As corporate bookmakers and Betfair account for the bulk of the race field levy, any understatement of revenue by sole traders is more irritating than costly for TRSA.

However, it seems that such discrepancies are easily audited and are certainly not sufficient cause to abandon the gross profit levy calculation.

By any measure the TRSA team have done a wonderful job of turning around the fortunes of the South Australian industry. With little fanfare they have established a sound basis for future development.

The contrast with New South Wales could not be more stark.

Cyberhorse 2024 Bill Saunders Published 29/10/09