NZ Racing posts H1 growth as customers embrace digital offering

The New Zealand Racing Board, the organisation behind all racing and betting in New Zealand, has reported a 2 per cent increase in total turnover to NZ$1,054.0m for the six month period ended January 31st.

Betting turnover rose 3 per cent to $934.5m, with a 21 per cent increase in turnover from fixed odds betting products offsetting a 4 per cent decline in tote betting. Gaming turnover fell by 4 per cent however due to the impact of business generated from the Courtenay Place, Wellington, site which has remained closed since the earthquake in August of last year.

“We are satisfied with progress to date, the underlying business is performing well,” NZ Racing Board CEO Chris Bayliss. “However the focus has to be keeping our strategy and projects on track while ensuring we closely monitor costs.”

Turnover from New Zealand-based customers increased by more than 4 per cent year-on-year, the highest growth rate for at least six years. The board said that foreign exchange rates led to lower returns from Australians betting in New Zealand. Over the past 12 months the Kiwi dollar has appreciated by approximately 17 per cent against the Australian dollar.

Total income fell marginally by 0.2 per cent to $160.0m, while turnover-related expenses amounted to $23.4m. Total operating expenses rose 5 per cent to $64.0m, with staff expenses increasing 9 per cent to $30.7m.

Net profit before distributions fell by 1 per cent to $72.6m. After distributions to the racing industry of $74.9m during the period, the board reported a net loss of $3.7m compared to a profit of $2.4m a year ago.

H1 2013/14 Results

“It has been a challenging six months, as has been noted by other New Zealand operators in both the entertainment and retail sectors,” continued Bayliss. “The second half of our financial year will prove equally challenging.”

The results included the consolidation of Racing Integrity Unit Limited (RIU) for the first time, in which the NZ Racing Board holds a 25 per cent stake. RIU managed integrity services to the racing industry and is responsible for investigating and prosecuting breaches of the Rules of Racing.

Bayliss said that the NZ Racing Board continues to develop its vision to be the “best entertainment business” for New Zealand, with foundations now in place to transform  the industry and position it for both growth and sustainability.

“It is crucial we remain focused and committed to working together as an industry to increase returns to New Zealand racing and sports; our strategy and innovation are the platforms,” he said.

Forming part of its strategy is the introduction of new products including Triple Trio, which launched in mid-January, which appeals to novice and experienced punters and has already paid out $2.4m in winnings, with two customers winning over $300,000.

Bayliss said that the trend of TAB customer numbers declining over the past decade has been counterbalanced by a 7 per cent increase in active accounts in the past year, as customers embrace its digital offering.

As part of the board’s strategy to digitise the business, it introduced Watch&Bet Racing in December. This gives customers the convenience of watching a live stream of Trackside via its website and on Apple devices.

Customers can now also view the racing board’s second channel, TAB TV, via Watch&Bet Racing, as well as place multiple leg bets as they watch live races online.

“Plus we’ve added to one of our growth areas, sports betting, by offering customers the chance to back their favourite professional surfers on the Men’s and Women’s World Tour of Surfing,” said Bayliss. “These types of innovations will draw in more customers.”

As at January 31st the board held cash and cash equivalents of $12.7m compared to $23.9m a year ago.

The New Zealand Racing Board was established in 2003 under the Racing Act to administer all racing and sports wagering in New Zealand. It currently has more than 148,000 TAB account-holders and a retail network comprising more than 640 outlets.