TAB board displaying an arrogant lack of concern for NZ Racing

by Brian de Lore
 Published 29 December 2022

We have a board at TAB NZ dominated by non-racing people that is now blatantly disrespecting its core business of racing, and its actions over the past month paint a bleak outlook for all three racing codes.

Here is a mounting list of complaints that have accumulated against the behaviour of the TAB over the past month:

• The TAB board has reduced the distribution to the codes by $15 million this season despite having $89 million on deposit.
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• The reduced distribution has caused Harness Racing NZ to reduce stakes by 10% from 1 February, with NZTR under threat to act similarly by season’s end.
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• TAB CEO Mike Tod consistently contradicts himself and displays naivety about the intricate workings of NZ racing and wagering.
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• A TAB NZ board member’s claims of communication between NZTR and TAB NZ reaching a level of excellence is now openly denied by the NZTR CEO and Chair, who last week complained that TAB NZ refuses to communicate and answer questions.
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• The 1951 formation of the TAB to specifically act as an organisation to financially support the thoroughbred and harness racing clubs of NZ has degenerated into a TAB displaying only self-preservation with diminishing concern for racing.
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• The cost-saving measures introduced by RITA to curtail the extravagant costs generated by the NZRB era of Hughes/Allen have gone out the window with a new ‘spend-up big’ regime with apparent impunity under Tod.
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• Tod’s claim in the TAB Statement of Intent 2023-2025 that: “ the 2021-22 financial year was the most profitable in the TAB’s 70-year history” is an untruth when you deduct the ‘racefields’ (BIUC) income and betting duty rebate, which came from Messara Review recommendations into legislation and had nothing to do with the core business of the TAB – all they do is collect it and distribute it on behalf of the codes.
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• TAB NZ produced a poor result last season, with only $140 million in profit from its core business, a figure similar to 2017.
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• The Australian-based Paul Bittar left the TAB board to negotiate the partnering of the TAB through his own company with the reason given as ‘conflicting interests. Does a conflict of interest become ‘insider trading’ if a commission is earned once the ‘partnering’ is finalised?
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• The TAB replacement director for Paul Bittar, nominated by the codes, has been rejected, and the TAB is now recommending its own choice of replacement – a move entirely contrary to Clause 45 of the Racing Act 2020 relating to the appointment of directors.
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• TAB had failed to post its 2022 Annual Report on its website by 28 December despite the fact I received a copy five days ago, and it’s attached.

New Zealand racing has sunk to low depths. Self-interest, lack of knowledge, poor communication, lack of transparency, and mixed messages leads one to believe the serious malaise has developed into paralysis.

At a stakeholders meeting at Te Rapa last week, TAB CEO Tod told attendees that TAB NZ had lost its 18 to 35-year-old customer base to Bet365 because of fashion or trends, citing Bet365’s marketing practice of advertising on porn websites as another reason.

He told me the same thing in an hour-and-a-half meeting in his Auckland office two months ago. He would not accept my assertion that the betting product and odds offered by TAB NZ would not compete with any major betting agency operating out of Australia.

Tod believes that partnering and geo-blocking are the answers to all our woes. Partnering is inevitable, or the TAB will go broke – that’s why they are feathering away a nest egg now amounting to $89 million and not arresting the decline of racing and putting it into stakes.

VPN can by-pass geo-blocking

Geo-blocking betting in NZ will not work with the TAB in its current state. They’re saying it will give them a $150 million windfall, but that’s delusional. Included in the ways to bypass geo-blocking is using a VPN (Virtual Private Network) which gives the user anonymity and hides your IP address as it tunnels information between your device and the remote server.

Tod said at the stakeholders meeting that after consideration of four potential partners for the TAB, they had narrowed it to two. A decision on the successful applicant would happen at a forthcoming board meeting, but the announcement would not come until late March.

Partnering could produce an upfront windfall in the region of $100 million, but in light of recent events, how much of the money would return to racing to revitalise stakes?

Sport is pressing hard for a bigger share of the pie, and the board is sport dominated. The codes failed to get together to draw up a commercial agreement to present to the TAB, as clearly defined in the Racing Act of 2020, and as a consequence, the tail is still wagging the dog.

The commercial agreement could have pressed home The Racing Act’s Clause 57, which says, under the heading Objectives of the TAB, “The Objectives of the TAB are (a) to facilitate and promote betting and its profits for the long-term benefit of NZ racing.”

Without a commercial agreement, the codes gave up their commercial right to enforce the legislation upon the TAB, so no mechanism exists to hold the TAB to account, and that’s why the tail’s wagging the dog. That is what happens with poor leadership and too much time spent in Australia.

That miserable failure is the fault of the code directors, who appear to have failed to read the legislation, leaving the codes exposed. Where’s the accountability?

The TAB is cherry picking the legislation, and the parlous state of racing doesn’t appear to be a concern at the Chair or CEO level at the TAB, and the corporate gobbledygook messages contained in the annual report will not be understood by racing people.

Recent Tod writings might define him as racing’s new Jeykll & Hyde.

On 28 November, the TAB posted its Statement of Intent 2023-25 on the tabnz.org website in which CEO Mike Tod wrote, “TAB has weathered the storm” and “forecasts point to continued growth in distributions and payments flowing through to racing and sports in New Zealand.”

Four days later, on 2 December, Tod wrote to the CEOs of the three codes to inform them the distributions in the current season would reduce by $15 million, from $175 million to $160 million.

Statement of Intent conflicts with letter to codes

The Statement of Intent and the letter conflict; they bring to mind the infamous story of Dr Jeykll and Mr Hyde – a good and positive view on the one hand but a darker reality on the other.

The letter to the codes also warned about the possibility of future reductions in distributions while painting the TAB as the good guys in displaying leniency when considering the reduction.

It said: “The TAB NZ Board considered reducing distributions by $24 million (or 14%) but ultimately determined the balance sheet afforded the opportunity to ease the impact that will be felt by the Codes, whilst still operating in a financially responsible manner as is required under the Act. However, the board considered that a reduction of any less than $15m would likely take TAB NZ below the minimum balance sheet recommendations.”

Distributions get reviewed quarterly these days, so what if the expected downturn in the economy further reduces TAB profits during the third and fourth quarters of the current financial year? Will they further reduce the distributions?

Harness Racing New Zealand has just announced a ten percent cut in stakes commencing 1 February, the distribution reduction for the code lessening its funding by $4.4 million.

It’s laughable but not very funny that TAB NZ has $89 million on deposit because PWC and Grant Thornton advised it to do so, with Tod justifying the withholding of these TAB profits by quoting the legislation, which only says, “TAB NZ must operate in a financially responsible manner.” (Clause 61).

Tod also quotes a clause in the legislation which says the TAB may retain money for ‘harm prevention’ – what a crock! TAB NZ encourages everyone to bet more and more, and the so-called harm prevention clause exists only to satisfy the woke, politically-correct and critics of racing and gambling.

Racing has made no progress through the TAB for a decade and desperately needs Tod to successfully partner the TAB, but don’t hold your breath.

The core business of the TAB of racing is in serious decline, but the TAB continues the camouflaging-window dressing to take the heat off themselves.

Have a read of TAB NZ Annual Report (below), and remember, you read it here first. You will also find it on the Government website, but not on the TAB one, as of today 29-12-2022.