The horse and sports betting industry is undergoing significant change, as governments abandon their holdings in state-based TAB operations to effectively develop a national wagering market.
Private betting websites are also gaining a greater foothold in the market, due to changing consumer demand and preferences, and improved access to betting websites. This is particularly relevant to the Northern Territory, which provides favourable legislation and has attracted many large domestic online betting operations.
Sports and events betting, while still low in revenue terms compared with racing, is now the fastest-growing segment in the industry. The segment provides sports and events fans and professional punters the opportunity to wager on a wide range of sports and events, which has opened up a new market for these providers.
Industry revenue is expected to grow an average 1.8% per year over the five years through 2011-12 to reach $23.9 billion – up 3.4% on the previous year. Sports betting in particular is growing robustly, and this is expected to continue over the next five years, particularly among online businesses. As a result, industry revenue is expected to increase 3.1% per year to reach $28.8 billion in 2016-17.
Over the next five years, horse and dog betting will experience low growth, while sports and events-based betting will continue to excite punters’ interest and wagering to record robust growth. With online operators providing odds on events such as elections, there is vast opportunity for new markets. This will be assisted by robust growth associated with the transfer of betting online. However, competition from casinos for a share of overall household gambling revenue will intensify, as they also face a low revenue growth.
Over the five years through 2016-17, it is expected that many niche wagering products will be developed to attract newer, more frequent and higher-spending clients. The closer linking of these products to existing and emerging digital technology will be the key to future growth. Recently, betting exchanges and tote-odds betting have been developed. For tote-odds, online bookmakers match the best odds and payout offered by any TAB on race winners. All industry segments will need to remain vigilant, progressive and innovative to attract and hold their fair market share of gambling revenue. This is particularly the case as competition from domestic and international gaming websites escalates. One of the largest competitors is domestic and international poker gaming websites, which attract younger and higher-expenditure clients away from this industry.
Industry revenue is expected to rise an average annual rate of 3.1% over the five years through 2016-17. This will largely result from increasing sports betting, some growth in attendances at major horseracing events, increasing wagering online and through interactive pay-TV sites, and the use of betting exchanges. Competition from other gambling forms, particularly casinos, is expected to remain high over the next five years.
Despite higher revenue, industry employment is expected to fall over the next five years. This will be the outcome from a number of trends including the previous industry consolidation activity (particularly in the TAB segment), the continuing decline in the traditional bookmaker segment and increasing use of digital technology. Industry profitability is expected to improve due to declining employment, significant improvements in productivity through the increasing use of technology and increasing consolidation activity.
It is projected that in 2012-13, the forecast of a further acceleration in economic growth will lead to solid growth in industry revenue. Sports betting will escalate at a far stronger rate than other industry segments. The gambling market will remain highly competitive, and competition will particularly remain strong from casinos. Major operators are expected to search internationally for further growth opportunities given that the domestic gambling market is saturated.
From 2013-14 through 2016-17, stronger revenue growth is expected as the economy strengthens. The stronger economic conditions will result in strong growth in household disposable income and improved consumer sentiment. However, throughout this whole period, the industry will face significant competition from casinos and venues with gaming machines. Additionally, competition within the industry will intensify from betting exchanges and other betting websites. A national domestic TAB organisation has now effectively emerged, but it still faces fierce competition resulting from international players, particularly across wagering and gaming websites.
A Productivity Commission report recommended that the exclusive retail monopolies in each state be disbanded. The recommendation came since the exclusive retailers no longer serve any useful purpose given the prevalence and consumers’ attraction to other technologically linked betting avenues. The Federal Government is still to act on this. Currently, both Tabcorp and Tatts Group are bidding for their Victorian wagering licences to apply from 2012, with Intralot recently advised that its bid was not accepted. However, at the time of publishing, it appears unlikely that Tabcorp’s monopoly over the Victorian market will be broken.
Smart Company is the leading online publication in Australia for free news, information and resources catering to Australia’s entrepreneurs, small and medium business owners and business managers.
