TAB sale odds on in tough market
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Opinion: The long-awaited sale of the government’s betting agency could still come at a big cost to taxpayers.
Finally, it seems that the on again, off again sale of the TAB will become a reality.
But the duck-shoving over the issue since a sale was first mooted more than four years ago has come at a significant cost – to taxpayers.
Treasurer Ben Wyatt was cautious about the return the government might get for the betting agency when he announced the intention to sell, noting that an upper figure of $500 million had been suggested.
Yet only two years ago Credit Suisse analysts said it could be worth “more than $700 million” if managed along the same lines as Tabcorp, which operated on a 20 per cent earnings margin.
The message here is that with increasing competition from other gambling outlets on the internet, the TAB’s market value is under continual challenge.
As far as taxpayers are concerned, the sooner it’s sold the better.
It’s fitting that a Labor government will oversee the sale, given that government regulation of off-course betting was introduced by a previous Labor administration – under Premier Bert Hawke (Bob’s uncle) – in the mid-1950s.
It was a highly contentious issue at the time.
The government naturally wanted to tap into the revenue associated with gambling, but it did not want to be seen to be encouraging the practice.
Betting shops for the first few years did not contain seats for patrons, for example. The idea was that punters would place their bets and leave. And the shops had to be a ‘safe’ distance from hotels.
The TAB structure was introduced by David Brand’s coalition government in the early 1960s.
And it proved a great money spinner – for both the government, racing, trotting and later greyhounds.
As a former NSW premier Neville Wran used to say: “Australians would bet on two flies crawling up the wall.”
But how times change. Instead of the betting shops being separated from hotels and taverns they are now in them – think ‘Pub TAB’.
Ownership of the TAB started to become an issue as other state governments began selling off their betting agencies.
WA resisted this trend until 2014, when then treasurer Mike Nahan said in his budget speech that the “continuing ownership of the Perth Market Authority, the TAB and the Water Corporation’s assets, such as the wastewater treatment plants”, would be reviewed.
Only the market authority was sold.
The TAB option was stymied by the Liberals’ governing partner, the Nationals, which claimed the network of part-time country race clubs could be damaged unless assured of an income stream from off-course betting, regardless of who the owners were.
And off-course betting had become the industry’s crutch – big crowds no longer went to the track on race day, even for the Perth Cup.
At one stage in the 1970s, it would be standing room only as 40,000 punters crammed into Ascot for the big race, which attracted Australia’s top horses, trainers and jockeys.
The champion Sydney galloper, Kingston Town, was brought to Perth to race in the 1980s. But those days are long gone.
Labor was less than enthusiastic about a sale too.
Then opposition leader Mark McGowan, for example, expressed concern about the future of the Sports Wagering Account, which had contributed $11 million over the previous three years to help increase participation in junior sport.
And with the Nationals playing ducks and drakes, support from Labor was crucial if legislation to sell was to pass the Legislative Council.
Considerable attention to detail has gone into the new Labor plan, to ease the concerns of the interested parties.
For example, a 15 per cent ‘point of consumption tax’ will be levied on the profits of all betting operators from bets within WA, regardless of where the operator is licensed.
The industry will get 30 per cent of the total revenue collected. The tax will apply from January.
Legislation to sell the TAB will be introduced next year. There are strong indications the Liberals will support it.
Certainly South Perth Liberal MP, John McGrath, a former sports editor at The West Australian, who has handled the issue for his party, is in favour, providing the safeguards for the industry stand up.
The odds on a sale are shortening. Better late than never.