Commerce Commission authorises commingling of racing betting

Issued 30 August 2016

Commerce Commission authorises commingling of racing betting

The Commerce Commission has granted authorisation to the New Zealand Racing Board (NZRB) to allow it, subject to certain restrictions, to commingle totalisator horse and greyhound racing betting pools with Tabcorp Wagering Manager (Vic) Pty Ltd (Tabcorp) in Australia.

The NZRB asked for authorisation for specific provisions of the proposed arrangements with Tabcorp. The restrictions under the proposed arrangements relate to the NZRB’s and Tabcorp’s take-out rates from commingled pools and the rebates or commissions that the NZRB and Tabcorp pay high volume customers.

After consulting on its draft determination, the Commission has reached the view that, while the provisions of the proposed arrangements lessen competition, the reduction in competition is likely to be outweighed by the public benefits.

Commerce Commission Chair Dr Mark Berry said that the Commission didn’t receive any submissions in opposition to its draft decision to grant authorisation to the NZRB.

“In reaching our decision we found that there are public benefits to combining the respective betting pools such as the NZRB being able to offer New Zealand residents more Australian races. Customers can also benefit from having higher value pools.”

“We found the detriment is limited and only confined to a small number of customers engaged in high volume betting,” Dr Berry said.

The written reasons for the decision are now available.

Background

The parties and commingling
The NZRB is a statutory body established under the Racing Act 2003. Its primary purpose is to promote the racing industry, facilitate and promote racing betting and sports betting and to maximise its profits for the long-term benefits of New Zealand racing.

Tabcorp is one of the three major wagering operators in Australia with a licence to operate totalisator pools. It offers totalisator and fixed odds betting on racing and sporting events.

Since 2007, the NZRB and Tabcorp have had arrangements that provide for the commingling of totalisator horse and greyhound racing betting pools. These arrangements allow customers to place bets on Australian (and other overseas) racing through the NZRB, and similarly for customers to place bets on New Zealand racing through Tabcorp. The application related to new arrangements that the NZRB and Tabcorp propose entering into to replace existing commingling arrangements.

Tabcorp in Australia has been granted authorisation from the Australian Competition and Consumer Commission (ACCC) to enter into international commingling arrangements with overseas wagering operators including the NZRB. The ACCC’s decision is available here.

Authorisation requirements
The Commission may grant authorisation under section 58 of the Commerce Act for certain agreements that may otherwise breach the Commerce Act if it is satisfied that the public benefits of the agreements outweigh the detriments arising from the loss of competition. The granting of a restrictive trade practice authorisation protects the applicant from court action under the Commerce Act by the Commission and private individuals.

Under section 62(1) of the Commerce Act, the Commission must prepare a draft decision before determining an application for authorisation of an agreement. The draft decision sets out the Commission’s preliminary view on whether or not we are likely to grant an authorisation, and the reasons for that view.

ends

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