RACING Victoria (RV) has today announced that it will trial an incentive program for licensed and approved Wagering Service Providers (WSPs) to service ‘High Volume, Low Margin’ (HVLM) punters and protect turnover from moving offshore to unlicensed and illegal operators.

The HVLM incentive program will run for six months, backdated to 1 July 2014, and cover the key Victorian wagering period including the highly popular Spring Racing Carnival.

It is separate to RV’s new Race Fields Policy for the 2014-15 financial year which has seen total turnover on Victorian thoroughbred racing for the month of July increase by over 5% on the previous financial year, with healthy performance across a spread of WSPs including state-based TABs.

HVLM punters are those with turnover on Victorian thoroughbred racing nearing $500,000 per annum, and generating a margin to WSPs of less than 4%.

They equate to less than 8% of total domestic wagering on Victorian thoroughbred racing and are those most at risk of migrating to unlicensed offshore operators without Federal Government enforcement of legislation making it illegal for these operators to transact with Australian residents.

RV Chief Commercial & Strategy Officer, Andrew Catterall, said RV had been working with WSPs to best understand the wagering market with a view to protecting the integrity and funding of Victorian racing.

“In line with our Strategic Plan, RV continues to build strong working relationships with WSPs as we seek to grow wagering revenue to help fund the growth of the Victorian thoroughbred racing industry,” Catterall said.

“Through provision of race-by-race data across all WSPs over the past 12 months, RV has been able to build an accurate picture of the total domestic wagering market for Victorian thoroughbred racing and develop strategies accordingly.

“RV has recently worked with WSPs to build a deeper understanding of the HVLM segment of the market which is the one most susceptible to moving their betting activity offshore to unlicensed and illegal operators.

“Currently there is no legislation enforced to prevent Australian punters moving their betting activity to unlicensed offshore operators who have a cost advantage relative to approved domestic WSPs, one which can be used to target HVLM clients.

“Unlicensed offshore operators do not pay race fields, and hence make no economic contribution to the sustainability of the Victorian thoroughbred racing industry. These operators also avoid paying Australian state taxes and GST.

“More importantly, such wagering operators do not have information sharing agreements with RV and therefore betting activity being conducted with them is unable to be monitored. This is a heightened integrity concern for RV which needs to be addressed.

“While RV can only estimate the size of the illegal offshore market, evidence from WSPs suggests that this leakage began several years ago, thus weakening the integrity monitoring for our sport and reducing funding for the industry. Unlicensed offshore operators also represent significant risk to punters that have no protections in these jurisdictions.

“It is for this reason that the RV Board has decided to trial an incentive program for licensed and approved WSPs to service the HVLM market, and keep turnover onshore.

“Qualified WSPs will be able to claim up to 1% of turnover from approved HVLM clients, subject to conditions around overall race fields’ performance, audit and transparency protections.

“Through this incentive program RV will be able to continue to work with the WSPs to better understand the HVLM market.  The expectation from the trial is that it will enable WSPs to grow this segment of the market and prevent customers betting offshore with unlicensed operators.

“The level of incentive and expected turnover performance should also produce a positive increase in net revenue to the Victorian thoroughbred racing industry.

“In addition, RV will continue to work with other state racing authorities to lobby the Federal Government to enforce legislation against unlicensed offshore operators who accept bets from Australian residents.”

Catterall added that WSPs will be required to make an application to participate in the incentive program, the full terms of which are confidential between RV and WSPs.

He concluded that the increase in turnover in July 2014 was an indication of the confidence that exists in the Victorian thoroughbred racing product and that there were exciting enhancements for punters on the horizon.

“We’ve got world class equine, riding and training talent; strong field sizes; best in class integrity services and racetracks that provide a fair opportunity for all participants. These are all attractive for racing punters and we’re pleased to see that reflected in our July numbers,” Catterall said.

“We also believe that our outstanding racing product will soon be matched with first class field and form services for all punters with the September launch of – the new digital network for Victorian thoroughbred racing.”