Asia, Australasia eye lost funds from offshore betting

Governments from Singapore to New Zealand are concerned about their citizens betting offshore and are looking for ways to recapture, or replace, tax revenue and income for racing clubs and sporting bodies.

 In Australia, a government-appointed inquiry into offshore wagering is due to report this month. Singapore has already enacted legislation to prohibit its citizens from using offshore gambling operators, and the Malaysian government is also talking tough on the issue.

 In New Zealand, a recently released report from the Offshore Racing and Sport betting Working Group set up by the New Zealand government and the thoroughbred racing industry is proposing a levy on bets placed with offshore gambling operators on New Zealand races and sports events.

 The government minister responsible for the racing industry admits that the logistics of enforcing the Offshore Bookmaker Levy are “challenging.”

 Under the working party’s plan, offshore gambling operators would be required to register, pay a fee for the use of New Zealand race or sports information, pay a fee based on turnover or profit (as determined), co-operate with integrity inspectors and be auditable.

 Although the levy would in effect be voluntary because it would be difficult to enforce extra-territorially, the report says that it expects that major offshore gambling operators would be “highly likely” to comply.

 It concludes that “gambling laws with extraterritorial effect now exist in around half of the Organization for Economic Cooperation and Development nations. There is also a parallel in our region in that Australian state legislatures have followed a similar path with Race Fields legislation.

 “Taxes or fees in other jurisdictions have achieved their purpose and brought in much needed revenue to offset risks associated with online gambling. There is growing acceptance in Europe that extraterritorial reach is necessary to protect domestic gambling frameworks,” the report says.

 But it admits that “robust enforcement tools” will be required, and that there is a risk that offshore operators could “collude…to flout the law.”

 Legislation will be introduced into the New Zealand Parliament next year. The levy is expected to raise up to $16 million ($10.2 million) a year, increasing to $20 million ($13 million) by 2020 with all the revenue being channelled back to the sports and racing sectors.

 In New Zealand, racing clubs (including greyhounds) own the monopoly sports betting agency the Totalisator Agency Board, or TAB.  Many clubs are cash strapped and struggling to retain members and maintain facilities, and any loss of revenue is keenly felt. The racing industry is politically strong and well connected.

 The government has established a fund to improve the health and safety of New Zealand racetracks, which critics say is really a disguised subsidy to help struggling clubs maintain their facilities after many years of under investment, which in turn stems from a decline in membership and lower on track betting.

 Government revenue is not a major consideration. The report estimates the tax losses to the government at just $7.7 million ($5.2 million) currently, rising to $16 million ($10.7 million) by 2020.
By contrast in Australia the betting company Sportsbet told the government inquiry into offshore betting that if the government failed to make any changes, more than AU$2.2 billion ($1.6 billion) would be lost to offshore wagering operators by 2020, representing a loss of around $100 million a year in tax revenue.
Crucially for the racing clubs, the New Zealand report says, “if the $518 million ($347 million) estimated turnover currently bet offshore was spent with the New Zealand TAB, the racing codes would receive an additional $39.5 million ($26 million) in distributions,” with another $5 million ($3.2 million) to come from the profits from sports betting.

The report estimates that without government action the losses from betting would rise to $100 million ($67 million) in five years.

According to research company ACNielsen (in a study commissioned for the working group) “a third of New Zealanders betting offshore were doing so because the New Zealand TAB did not offer the betting options they were seeking.”

 In race betting, novelty events, virtual gaming machines like poker and online table games like blackjack are not offered.

 Offshore operators are offering odds 5 percent higher than New Zealand operators, although this was important to only 13 percent of those who regularly bet offshore, according to the Nielsen research report.

 However the report of the working party also makes it very clear that the TAB’s performance needs to improve, and this in itself has caused increasing numbers of New Zealanders to turn to offshore operators (mainly Australian) to get better odds, a wider range of sports to bet on, and more products.

 When releasing the findings of the working party Racing Minister Nathan Guy cited the betting options for Game 1 of the State of Origin (Rugby League) competition in May 2015. There were 45 betting options available on the New Zealand TAB, compared with 203 with the Australian domiciled betting agency Centrebet.
In Australia, the report from former New South Wales Premier Barry O’Farrell, Review of Illegal Offshore Wagering is due shortly with the issue of in play betting being hotly argued. While the focus of the review is on technological and legislative options that may be available to mitigate the costs of illegal offshore betting, various parties have taken up the in play issue.

 AGB reported earlier this month on a submission from Australia’s leading sporting organizations warning that a ban on licensed bookmakers offering in-play betting has allowed illegal offshore bookmakers to flourish, threatening the integrity of their competitions.
The Coalition of Major Professional and Participation Sports (COMPPS) believes that combatting the existing threat of offshore-unregulated betting ­operators would be helped by removing the ban on online in-play sports betting.
This view was supported by betting company, Sportsbet, but opposed by the Australia Hotels Association and Clubs Australia who have argued that money would flow away from horse racing to other sports to the detriment of the racing industry and their own betting operations.
In its submission to the review, ESSA, which represents the majority of the major European licensed on and offline private betting operators said “evidence does not support the claim that live betting, in comparison to pre-match betting, significantly encourages corruption in sport.”