INSIGHT affiliates told iGB in August that they’ d been approached by operators including Bodog, Rival and RTG, which were all preparing new offerings to cash in on the pullout of the licensed operators.
In September, Australia’ s Black Economy Taskforce recommended a crackdown on illegal gambling sites after an investigation found that there were at least 10 illegal exchanges operating in the country, with a combined annual turnover of A $ 1bn.
But if the government’ s aim is to do away with unfair competition, it’ s hard to see how it can achieve this and add all the extra burdens currently being proposed for the sector. By far the biggest threat is the PoC tax being bandied about by policymakers.
From place to point of consumption After South Australia brought in a 15 % PoC tax in July 2017, other states have taken notice and Western Australia announced it would introduce a similar one in January 2019.
There’ s also talk of a national PoC tax, although individual states aren’ t too happy about the idea of the federal government collecting the tax.
Regardless of whether it’ s state or federal bodies that collect the tax, it’ s a disaster for the sector, says Conroy.“ If a 15 % South Australian-style PoC tax was implemented nationwide, it would wipe out the entire profitability of the sector, and jeopardise the more than 2,000 Australian jobs the industry directly provides.
“ Australian wagering providers already pay a 10 % consumption tax through the GST and hundreds of millions of dollars in product fees to racing and sporting codes nationwide – a 15 % PoC tax on top of this would make Australia the least competitive jurisdiction in the world for wagering service providers.”
As the RWA sees it, a 15 % POC that doesn’ t allow a deduction for the 10 % GST already paid is not viable, although Unibet’ s Staunton says“ a POC based on 5.91 % of net wagering revenue in combination with the 9.09 % GST rate resulting in a an effective 15 % consumption tax rate” might be palatable for the sector.
As well as hitting profits – and he estimates Sportsbet’ s will be halved – Barry says a POC would have other repercussions for the sector.“ The tax has the potential to drive consolidation and reduce demand for marketing assets, reduce innovation and generally reduce competition.
“ I think inevitably this scenario would lead to worse outcomes for consumers and ultimately those sporting codes who are dependent on wagering for their funding, eg horse racing.”
Survival of the biggest Although undoubtedly a huge blow to the big operators such as Sportsbet and the other members of the RWC – bet365, Betfair, CrownBet, Ladbrokes and Unibet – these operators would also be the most likely to survive the introduction of a PoC, particularly when combined with other regulatory changes coming in.
It is expected that the television advertising restrictions will come into play in March 2018. Both Barry and Conroy say they support the move because it should help improve community perceptions about the overload of gambling advertising.
For his part, Staunton says:“ I don’ t want to speculate in this but long-term I don’ t see any major impact.”
In fact, for these operators it could be a blessing in disguise – they can cut marketing budgets safe in the knowledge that other operators aren’ t gaining exposure to new audiences and, because their brands are already established, they’ re likely to be at the top of punters’ minds anyway.
The ban on introductory offers could benefit the big operators in the same way. Rather than competing with new entrants willing to throw cash away to steal market share from them, they can focus on maintaining customer loyalty in other ways.
It’ s likely that it will be the new entrants to the Australian market who are likely to be hit hardest by the restrictions on advertising and introductory bets.
Without the ability to advertise during the sporting events that the nation is so enamoured with and without any way of enticing customers with introductory offers, it’ s hard to see how they could encroach on the territory of established operators such as Sportsbet.
Take new sportsbook Neds, for example, spearheaded by former Ladbrokes CEO Dean Shannon. It launched in October with an A $ 10m advertising campaign and an A $ 500 sign-up offer.
If neither of those options is available to new operators in future, one has to wonder how they’ ll make their mark in an already crowded industry.
Unfortunately, as it happens, Neds’ advertising campaign wasn’ t very well received anyway: the country’ s Advertising Standards Bureau banned two of its ads for promoting excessive gambling.
Also, the lottery betting offering that it said it was planning to launch has not materialised and perhaps now never will, given Lottoland’ s travails in Australia and CrownBet’ s decision to pull its lottery betting site only weeks after debuting. So, for both new operators and
“ It could be a blessing in disguise – they can cut marketing budgets safe in the knowledge that other operators aren’ t gaining exposure to new audiences”
established ones, the Australian market is a difficult one to navigate at the moment.
However, given the fact that every year Australians come out top around the world when it comes to per capita spending on gambling, there’ s little risk that demand from punters is about to dry up.
But, with regulations potentially making regulated markets unprofitable unless operators dramatically increase their margins, there’ s certainly a risk that more and more punters will look further afield to get their bets on.
iGB Affiliate Issue 66 DEC 2017 / JAN 2018
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