Prioritising the problems with the Minister’s legislation and delivering a united racing industry rebuttal
by Brian de Lore
Published 17 January 2020
The racing industry currently faces the biggest challenge of its existence because it has only until February 11th (25 days from the day I write this blog) to unite in every sense of the word and issue the strongest possible objection to the most draconian aspects of the Racing Reform Bill No.2.
The keyword is ‘unite’ because, without an agreed and united approach, it’s unlikely a fragmented ‘herding cats’ response to the issues will produce the desired effect and prevent racing from sinking further into the mire from its already ignominious position of frailty – to an irreversible decline.
Club committees proposing to write submissions that defend only their district, club or racecourse, will be hindering the possibility of change rather than helping it. Self-interest above the national interest will do nothing more than squander this small window of opportunity to change or snuff out the legislation because only the weight of a united document with an unequivocal rejection of the main injustices will achieve a positive result.
The codes together must unite unilaterally and lead a charge to rebut this legislation and demand that racing is allowed to control its own destiny
The codes together must unite unilaterally and lead a charge to rebut this legislation and demand that racing is allowed to control its own destiny rather than have it forever in the dubious and possibly nepotistic hands of an unknown incumbent Minister of the future and his unknown government. Why would anyone even consider this outcome for racing?
The Magna Carta (Great Charter) was famously introduced in the Middle Ages with 63 grievances against the then rule of King John of England, which challenged his autocracy and was seen as a cornerstone document for a practical solution to the crisis. Racing is in crisis and needs its own Magna Carta to challenge the proposed 64 instances of Ministerial domination in the second Racing Bill.
Can you believe the autocracy proposed by Winston Peters is outdoing King John’s autocracy of 800 years ago? The core principles of the Magna Carta are now echoed in documents such as the US Bill of Rights and the Universal Declaration of Human Rights – racing is entitled to its basic right of self-determination and ownership of its intellectual property (IP).
The document contains so many issues unacceptable to all racing’s stakeholders
The legislation is long and complicated and to read all of it, and absorb all of it, will bring side-effects remedied only with Panadol x 2, a cup of tea, and a lie-down. The document contains so many issues unacceptable to all racing’s stakeholders, it’s hard to know where to begin but, nevertheless, here’s how The Optimist views the most critical issues:
- Clause 46 gives the Minister the sole right to appoint the seven members of the TAB board and appoint the Chairperson. That edict is completely unacceptable as it leaves the codes in the worst-case scenario with zero representation and opens the door for Sport to infiltrate and take a bigger share of the pie. It’s contrary to the recommendation in the Messara Review, which said automatic code appointees and a panel for appointing remaining members.
- Clause 81 gives the TAB NZ exclusive rights to the IP (Intellectual Property) associated with racing betting information, racing betting systems, and any audio or visual content derived from a NZ race. These items are the rightful property of the clubs and codes and should be managed by them and not the possibility of seven non-racing people appointed by the Minister. Clause 81 is straight-out theft.
- Clause 63 replaces Section 16 of the old Racing Act 2003 which, provided a formula for the distribution of funds for prizemoney and the running of the three codes. Contrary to the Messara recommendation, no formula now exists in this legislation, but it allows for the writing of a regulation that can be changed by the Minister at any time (just as the Minister may be changed at any time) – no guarantees, and it provides the Minister with an easy path to water down money the racing codes receive in favour of sport. Total Ministerial control of the distribution of money to the codes is not acceptable.
- Clauses 8, 45, 46, 47 and 48 of the new Bill all give TAB NZ too much power which conflicts with the Messara Review recommendation of devolving the power to the codes to run themselves. Under this arrangement and taking into account Clause 46 mentioned above, racing is exposed to the possibility of coming under the control of seven non-racing, political or nepotistic appointees to run racing’s business.
- Clause 45 (4) requires the Minister to approve any partnering arrangement made by the TAB. Because a partnering/outsourcing arrangement could provide the single biggest financial windfall for NZ racing, you cannot have the power of veto available to a Minister that does not understand the business of wagering. Commercial business decisions such as this are not the domain of politicians and bureaucrats.
The five points above and much of the rest of the proposed legislation is not about reform; it’s about total control by the Minister with Marxist-type bureaucratic regulatory conditions for an industry that simply needs to get government out of its life, as the now Minister Winston Peters promised would happen.
the base-power for industry decision-making is not devolving down to the codes as the Messara Review recommended
Points one and four above are a double-edged sword. You don’t have to go as far as playing the devil’s advocate in analysing those clauses to realise that the result will be that racing will be run by people fundamentally unacceptable to the stakeholders of the industry. And because the power-base for industry decision-making is not devolving down to the codes as Messara recommended in his review, points one and four together place the codes in a very weak position.
Point Two above addresses Clause 81, which concerns the Intellectual Property rights (IP). Placing the IP in the hands of TAB NZ is straight out theft. No question it belongs to the clubs, and you could make a case for the owners, and nothing but full control by each of the codes should be acceptable.
How this has come about is interesting. The Messara Review said the IP should be assigned to the clubs and the codes, but in the Final Report by MAC (Ministerial Advisory Committee) which went to the Minister at the end of June last year, it said the following:
Legislation required
- If agreement can’t be reached between the domestic betting operator and the three racing codes for the assignment of IP, the Minister may be required to approve the drafting of legislation (Bill No. 2) to allow for the domestic betting operator to have the exclusive right to use all intellectual property generated domestically, to maximise revenue for the racing industry
The agreement wasn’t reached because it was never negotiated
The agreement wasn’t reached because it was never negotiated, and DIA has just written this MAC/RITA recommendation into the legislation. When I questioned RITA Chair Dean McKenzie weeks ago about the reasons for assigning the IP to TAB NZ he said it was because the betting operators wanted to deal with only one NZ body and not three codes. How can you accept that as a reason?
The clubs in particular should be ropable about the IP, and it may be a good point to raise at the coming series of industry conversation meetings with Dean McKenzie starting next week.
Point three is Clause 63 which in the old Act is Section 16. The Messara Review presented a formula to deal with the old Section 16 and although in MAC’s Final Report to the Minister, they say they supported the recommendation principle, the legislation says otherwise. In fact, the legislation sits on the fence in failing to determine any formula and leaves the serious matter of distribution of funds for stakes money completely open-ended and subject of a regulation not yet written.
How could that arrangement be satisfactory to any of the codes? Stake money is for what every owner races to pay the training bill, and with no guarantee of a formula to divide it, and Sport NZ lurking in the shadows, the lack of certainty is yet another worrying aspect of this very flaw-ridden document.
…outsourcing or partnering the TAB to provide the industry with a substantial up-front payment and save the industry somewhere between $50 million and $70 million a year in costs
Point five on the prospect of outsourcing or partnering the TAB to provide the industry with a substantial up-front payment and save the industry somewhere between $50 million and $70 million a year in costs, has never seriously been contemplated. Current and previous ministers, opposition shadow ministers, and MAC/RITA appear conjoined at the hip in their lack of enthusiasm to outsource.
The following quote from MAC’s Final Report contains more written enthusiasm that can be found elsewhere: “The committee considers that the potential to outsource, or not, all or some of the commercial activities of TAB NZ needs more analysis. We have set up a sub-committee, the Racing Industry Outsourcing Evaluation Committee (RIOEC), to do this.
“…outsourcing is not a foregone conclusion. Our terms of reference for the RIOEC included considering the option of retaining these services in New Zealand, as well as considering any joint venture opportunities.”
In the same report it also says:
“The legislation required
- Make legislative provision for outsourcing the NZRB’s commercial activities, or providing for variations on this proposal (Bill No. 2)
- Allow for TAB NZ to have the exclusive right to use all intellectual property generated domestically by the racing industry to maximise revenue for the racing industry (Bill No. 2)”
And further on in the document, it says: “What the RIEOC has to protect against, at all costs, is some future ‘shock’ or ‘event’ not clearly covered in the outsourcing agreement, or the non-performance of the outsourcing partner, which would result in the New Zealand racing industry being left with little control over its destiny and a declining revenue base for both racing and sports.”
Excuse me, RIEOC; can you please wake-up to yourself! It’s us that’s going down the drain, not them!
Excuse me, RIEOC; can you please wake-up to yourself! It’s us that’s going down the drain, not them!
Reading this document on and on, as one learned person told me, has the effect of making you lose the will to live. RIEOC is clearly made up of nerds who have no conception of the racing industry, and their input in this process of reviewing the reviewer is an exercise in time-wasting futility.
If you are having trouble sleeping at night, try reading this: file:///C:/Users/User/OneDrive/Documents/NZRB-RITA/Final-Report-of-MAC-on-the-Review-of-the-New-Zealand-Racing-Industry.pdf
Finally, look at the example of the New Zealand Rugby Union, who have no Minister to govern them, despite the level of betting, and self-ownership of all their own IP property, and deal with it themselves commercially.
NZ Rugby board has a sensible means of appointing its board members
They appoint rugby people as directors using a similar mechanism that John Messara has recommended for racing. Cricket does the same.
The point to be made here is that rugby and cricket appoint rugby and cricket people to make good decisions on rugby and cricket. If racing went back to geographical representation and appointed racing people to make good racing decisions, we would all be far better off than having the bureaucrats making incompetent decisions on racing’s behalf and thinking they know best.
The legislation is not acceptable. Rise up against it, and sign the Racing Magna Carta – someone has to start this decree and get everyone to sign it. Who is it?
