RITA profit beats initial expectations

New Zealand Racing Industry Transition Agency (RITA) has reported that profit and turnover for this year so far are ahead of the initial guidance. The organisation is hopeful that come June 2020, we will have a second Racing Bill pressed into action.

RITA head, Dean McKenzie, stated that he anticipates the bill to be tabled on the floor of New Zealand parliament in the coming month, followed by a Select Committee process that will allow the stakeholders in the industry to weigh in on the proposed reforms. He noted that the bill is slated to be passed before June end next year, as the enactment of the law is planned for July 1.

Key aspects of this bill deal with allowing RITA to charge offshore bookmakers on odds offered for New Zealand racing and sports, along with provision for a consumption tax that will be levied on operators who accept wagers from New Zealanders.

McKenzie said, “We have two focuses for these charges: the first is doing whatever we can to support the Department of Internal Affairs and Parliamentary Council Office to draft and implement them as soon as possible; the second is signing up as many offshore bookmakers to voluntary agreements in the meantime.”

He added, “We have already secured voluntary agreements with Tabcorp, Betfair, Sportsbet and Ladbrokes – with negotiations underway with others. This means we have about 80% of the Australian online bookmaker market now contributing back to the industry.”

Other regulations that are being proposed include the formulae for payments to racing codes and minimum payments to be made to national sports organisations. Payment of savings made in betting duty is also under consideration.

In the meantime, McKenzie has said that customer numbers, gross betting margin and turnover were all beating budget expectations for the year-to-date period that began on Aug 1.

RITA got a boost from the 2019 Rugby World Cup, which as per McKenzie was the most successful sporting event of all time conducted by TAB, New Zealand’s own racing and sports betting agency, with revenue jumping to $7.5m. The tournament saw a consumer wagering total of $32.9m, with 90,000 customers making bets in excess of 1m.

McKenzie added that the NZ cup, Show week and the Melbourne Cup all delivered solid returns for the TAB. Not only that, the new betting platform launched by TAB also showed strong performance, with 148,000 active customer registrations.

This better-than-expected performance from RITA comes after the agency in this month had reported a 3.1% year-to-year decline in revenue which had dropped to $348m for the fiscal year that ended on July 31. Collective expenses from both operating costs and turnover fell to $211.3 m, which is 0.9% lower from 2017-18. This led to a before distributions net profit of $136.7m, which is 6.3% lower year-to-year.

The Racing Reform Act, which came into force on July 1, led to major changes in the New Zealand racing arena for this fiscal year. The act provides for a variety of new taxes, including race field and point of consumption fees. It also paved the way for the formation of RITA, which took the place of the New Zealand Racing Board.

Things seem to be looking upward in the New Zealand racing and sports industry.