Tatts agrees new 30-year framework for wagering in Queensland30th June 2014 7:59 am GMT
Australian gaming giant Tatts Group has agreed a multi-billion dollar thirty-year agreement with the Queensland Government and Racing Queensland (RQ) to establish a new framework for the conduct of race and sports wagering in the state of Queensland.
Subject to legislative amendments, the new arrangements will see the term of Tatts’ sports wagering licence extended 61 years and brought into line with the company’s race wagering licence, with both licences to expire on June 30th 2098. Tatts’ retail exclusivity has also been secured for a further 30 years under each licence (until June 30th 2044).
“We believe the new model builds a true partnership approach between Racing Queensland, the Government and Tatts to drive a prosperous future for racing in Queensland through a sustainable model that recognises the needs of all participants,” said Tatts’ managing director and CEO Robbie Cooke.
Tatts said that the new framework seeks to level the playing field, which to date has enabled out-of-state betting operators to exploit more beneficial tax regimes to target Queensland customers, siphoning significant revenues away from the Queensland industry.
The new Queensland regime will see the tax rate on pari-mutuel betting reduce from 20 per cent to 14 per cent of commissions, whilst the rate applicable to fixed-price betting will decrease from 20 per cent to 10 per cent of gross revenue.
“Our wagering franchise is now well positioned to fight back against the predatory operators who have for too long exploited the fiscal imbalance that has existed in the Australian wagering landscape,” said Cooke.
Existing product fee arrangements with the racing industry will be maintained with the continuation of the current variable product fee at 39 per cent of gross wagering revenue. Tatts’ right to directly offset race field fees from the product fee payable will continue as has occurred in the past, except in the event that the offset exceeds RQ’s race field fee receipts from other operators.
A new $15m annual fixed product fee will be paid to the racing industry, together with a 2.5 per cent share of fixed-price sports betting revenue generated from ‘bricks and mortar’ retail outlets (capped at a maximum of $5m per annum).
Tatts will pay the state $150m as a license fee, to be paid in four equal instalments in July 2014, July 2016, July 2020 and July 2023. In addition RQ and Tatts have agreed to form joint ventures in the future on a number of initiatives that will generate potential additional revenue for the racing industry.
In announcing the new deal, RQ and Tatts have also agreed to end the current litigation with respect to the treatment of race field fees on the basis that each party release each other from all claims and meet their own costs.
RQ chairman Kevin Dixon said the thirty-year deal guaranteed the industry’s sustainability in Queensland and provide the industry’s 30,000 participants with confidence in their future.
“This deal sees Tatts Group contribute an additional $850m to the racing industry, including a share of fixed-price sports betting revenue, which will deliver increased returns to participants as soon as the start of the new racing season.
“But the clincher is the longevity of the deal. A 30-year agreement is an unparalleled commitment to racing’s future in the state. We are in the unique position of being able to deliver sustainability for the life of the agreement, making the industry an attractive long-term investment proposition for current and future participants.”
Dixon said now the negotiation had been completed, RQ would allocate funding based on the key priorities of the industry.
“What I will say is there will be an increase in returns to participants; there will be improved industry infrastructure; and there will be money allocated to make Queensland’s racing product more compelling than it has ever been before,” he said.
“Today’s announcement marks a new era for racing in Queensland which will be defined by significant investment in the industry, innovation and collaboration.”
In a separate announcement Friday, RQ has increased its race information fees structure, with the new arrangements to come into effect on July 1st.