Despite a promising start and a lucrative market, it appears that Betfair's time in Australia might be up. They've not made a profit in Australia since day one and racing authorities, led by Dr Evil in NSW, the self-proclaimed Emperor of all things equine north of the Murray, Peter V'Landys, have done everything they can to make Australian racing unviable for them.
The new set of race fields fees for Victorian racing, the best in the land, will inevitably be followed by other states when their next opportunity to revise their structure comes around.
Racing Victoria announces revised race field fees to be applied from 1 July, 2014
An excerpt: A scale of rates will also apply for all other betting types (non pari-mutuel bets), with a higher rate for premium race days. All other betting types will be charged the greater of, for:
Standard race meetings (440 meetings) – 1.5% of turnover or 15% of gross revenue
Meetings containing a Group or Listed race (45 meetings) – 2.0% of turnover or 20% of gross revenue
Premium Group 1 meetings (10 meetings) – 3.0% of turnover or 30% of gross revenue
Fees for all operators go up - TABs, corporate bookies and Betfair, but it is the exchange that gets screwed the most because there simply isn't any fat in the exchange model when punters only pay commission on their profit per market. Change that model and it dies. They've already raised base commission rates to 6.5% on Aus racing, and warned off all the traders, there's not much hope left for them. And that Federal legislation change to allow in-play betting online like the rest of the civilised world? Richmond might win an AFL Premiership before that happens.
It has already been strongly rumoured that James Packer's 50% share via Crown Resorts Ltd would buy out the parent company and take full control of Betfair Australia. The UK operation has been shedding costs left, right and centre and Australia has been in the firing line for sometime. There's only so long you can wait for laws to change. If that sell-off went ahead, I couldn't imagine them retaining the exchange part, at least for Australian racing. They may just retire the brand in Australia, send it all back to the UK and let punters bet on sports via the main exchange. It has never been Betfair's style to break laws, and as a listed company it certainly won't be now so I couldn't see them offering Aussie racing from abroad in defiance of local legislation. It wouldn't stop them betting on Aussie sport though, those fees aren't draconian enough to defy them or drop local sport altogether. There's always the sportsbook section, but there's no need, or even point, retaining the Betfair brand to operate that.
Rich blokes tend to know rich blokes, and it would not surprise me at all if James Packer teamed up with Matt Tripp to revive the business, in whatever form that may take. After all, Tripp is on public record as saying he wanted to acquire a few brands and work his magic on the Australian punting public again. He's already taken over BetEzy (now BetEasy), rest assured there will be more to come - he has plenty of financial backing behind him.
There will be one hell of a party behind closed doors for Australian racing authorities if and when Betfair shuts up shop, with V'Landys happily pissing away thousands in the process. British bookies and racing authorities need not bother getting excited about this - those copyright laws that were struck down in 1997 in the case of British Horseracing Board v William Hill means the same laws do not apply in the UK/EU and thus that avenue of shutting out betting exchanges isn't available. William Hill might regret fighting that case now....
Disclaimer - this is all speculation on my part, I do not have any inside knowledge of Betfair in Australia these days, understandably inside sources have clammed up.
The new set of race fields fees for Victorian racing, the best in the land, will inevitably be followed by other states when their next opportunity to revise their structure comes around.
Racing Victoria announces revised race field fees to be applied from 1 July, 2014
An excerpt: A scale of rates will also apply for all other betting types (non pari-mutuel bets), with a higher rate for premium race days. All other betting types will be charged the greater of, for:
Standard race meetings (440 meetings) – 1.5% of turnover or 15% of gross revenue
Meetings containing a Group or Listed race (45 meetings) – 2.0% of turnover or 20% of gross revenue
Premium Group 1 meetings (10 meetings) – 3.0% of turnover or 30% of gross revenue
Fees for all operators go up - TABs, corporate bookies and Betfair, but it is the exchange that gets screwed the most because there simply isn't any fat in the exchange model when punters only pay commission on their profit per market. Change that model and it dies. They've already raised base commission rates to 6.5% on Aus racing, and warned off all the traders, there's not much hope left for them. And that Federal legislation change to allow in-play betting online like the rest of the civilised world? Richmond might win an AFL Premiership before that happens.
It has already been strongly rumoured that James Packer's 50% share via Crown Resorts Ltd would buy out the parent company and take full control of Betfair Australia. The UK operation has been shedding costs left, right and centre and Australia has been in the firing line for sometime. There's only so long you can wait for laws to change. If that sell-off went ahead, I couldn't imagine them retaining the exchange part, at least for Australian racing. They may just retire the brand in Australia, send it all back to the UK and let punters bet on sports via the main exchange. It has never been Betfair's style to break laws, and as a listed company it certainly won't be now so I couldn't see them offering Aussie racing from abroad in defiance of local legislation. It wouldn't stop them betting on Aussie sport though, those fees aren't draconian enough to defy them or drop local sport altogether. There's always the sportsbook section, but there's no need, or even point, retaining the Betfair brand to operate that.
Rich blokes tend to know rich blokes, and it would not surprise me at all if James Packer teamed up with Matt Tripp to revive the business, in whatever form that may take. After all, Tripp is on public record as saying he wanted to acquire a few brands and work his magic on the Australian punting public again. He's already taken over BetEzy (now BetEasy), rest assured there will be more to come - he has plenty of financial backing behind him.
There will be one hell of a party behind closed doors for Australian racing authorities if and when Betfair shuts up shop, with V'Landys happily pissing away thousands in the process. British bookies and racing authorities need not bother getting excited about this - those copyright laws that were struck down in 1997 in the case of British Horseracing Board v William Hill means the same laws do not apply in the UK/EU and thus that avenue of shutting out betting exchanges isn't available. William Hill might regret fighting that case now....
Disclaimer - this is all speculation on my part, I do not have any inside knowledge of Betfair in Australia these days, understandably inside sources have clammed up.
Good write up tho Scotty and as interesting as ever , thanks.
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