Thursday 16th October 2014
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The New Zealand Racing Board lifted annual profit 0.2 percent as record turnover on the Football World Cup, which trumped its rugby equivalent in 2011, was offset by a strong local currency and the cost of its new digital and online gambling offerings.
Profit rose to $137 million in the 12 months ended July 31, from $136.7 million a year earlier, the Wellington-based legislated bookmaking monopoly said in a statement. Turnover climbed 6.7 percent to $2.09 billion, the first time the board's income has exceeded $2 billion as bets on the Football World Cup brought in $32.3 million, eclipsing $30.2 million of punts placed when New Zealand hosted the Rugby World Cup in 2011.
"The Football World Cup was very successful for us - it's been a record single event in terms of betting surpassing even the Rugby World Cup," acting chief executive Stewart McRobie told BusinessDesk. However the cost of the board's expanded digital offerings and the appreciation of the New Zealand dollar against the Australian currency weighed on its profit, he said.
The Racing Board is a legislated monopoly and must return any profits back to the sporting and racing industries, and distributed $137.4 million to the racing industry in the year. The board paid out or provided for $5 million to the National Sporting Organisation, and $2.3 million to other sporting bodies from its gaming activities.
The board is looking to secure its monopoly against foreign, online bookmakers, with its own push into digital betting to re-capture kiwis heading online to have a flutter. It launched a sporting app late in its year, and will bring out a racing one as well, McRobie said.
"Our move into digital is very much about meeting our customer needs and ultimately it will be about protecting our business," he said. "Unless we move into digital we've got offshore competitors that are competing for New Zealand customers. They're offering odds on New Zealand sporting events, odds on New Zealand racing events, and New Zealand customers, by virtue of the internet, are able to go and bet with those offshore providers."
International bookmakers can't advertise here but get around the rule through sponsoring international sporting events, which are then screened here. As there is no requirement to deliver cash back to the sporting industry they're able to offer highly favourable odds.
"Particularly in Australia, there are quite a number of large corporate bookmakers," McRobie said. "They've all got online sites and it's easy enough for a New Zealand customer to open an account with them and to start betting."
The appreciation of the New Zealand dollar against its Australian counterpart, which peaked at about 95 Australian cents in January from 88 cents at the start of the Racing Board's financial year, further weighed on profit. The Racing Board earns some of its income from Australians betting on local racing events.
Betting income rose 6.8 percent in the year, while gaming, which is the income it gets from poker machines in its TAB outlets, gained 6.5 percent. The Racing Board expects to give further detail when its annual report was released in late November, McRobie said.
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