Entain’s Takeover of the TAB: Winners & Losers

By Richard Gordon

The TAB was today given the green light by the Minister for Racing, Kieran McAnulty, to outsource its operations to Entain, one of the world’s largest gambling operators with brands including Ladbrokes, PartyPoker, and bwin. This is a significant deal that will have ramifications across the betting and gambling industry in New Zealand.

Also announced yesterday was potential new legislation which would ban any other overseas operators from offering betting services to New Zealanders. Currently, the TAB is the only betting entity permitted to operate brick-and-mortar stores and to advertise within NZ. This effectively gave the TAB a monopoly over the market, until more recently when the internet made it much easier for NZ punters to bet through overseas operators offering a significantly better product and better odds. The potential new legislation would seek to prevent NZ punters from searching for a better deal elsewhere, through the use of geo-blocking.

So, who are the winners and losers out of this deal?

Winners

Entain. Entain will not only take over the TAB’s monopoly of physical stores and advertising within NZ, but now will also be granted a legislative monopoly over any online betting by New Zealanders. Entain essentially paid for this legislation, not likely to be in place until 2024, by offering a significant upfront payment. Whether the NZ Government should be allowing gambling operators to “buy” legislation is another matter, but this is a significant win for Entain.

NZ Government. The move to prevent any other betting operators from offering online services to Kiwi punters is a big win for the NZ Government, as it currently benefits financially from money bet through the TAB in the form of gaming taxes. The more revenue clawed back from other operators and now bet through Entain, the more money the NZ Government makes.

National Sporting Organisations (NSOs) and Racing. A little known fact is that each NSO, and the Racing Codes, in New Zealand takes a small percentage of revenue bet on the particular sport they are associated with. For example, Basketball New Zealand does very well from the large sums of money wagered on the NBA by Kiwis. Similar to the NZ Government, the more money spent through Entain, the more money the NSOs will make. This is a good thing for sport within New Zealand.

Problem Gambling. Restricting punters to one entity should make it easier for Entain to monitor and prevent problem gambling. However, this will not prevent punters from gambling overseas through the use of a VPN, or through some overseas operators who will ignore the new legislation.

Losers

NZ Punters. The reason Entain is so keen to solidify the monopoly in NZ is that the TAB has historically offered an inferior product, and a significant percentage of punters in NZ have been looking elsewhere recently. Now with a near complete monopoly, there is little incentive for Entain to offer a product and odds consistent with what is available overseas. Indeed, Entain can simply milk NZ punters dry without investing in its offering, and without having to provide competitive odds. NZ punters determined to get around this will find a way, as VPNs will likely get around the geo-blocking, and it is likely that some overseas operators will ignore the new legislation and continue to offer their product to punters.

TAB Staff. While Entain has promised not to make TAB staff redundant for at least two years, the fact it had to make that promise in the first place suggests that most TAB staff will be made redundant in two years and one day, with those jobs lost to NZ for the next 25 years.

Entain’s Competitors. Most other overseas operators will be forced to geo-block their offerings from New Zealand punters. Some operators willing to take risks and operate in “grey markets” will rely on the fact that enforcement of the new legislation will be difficult – it is hard to imagine a company operating out of Curacao being prosecuting in New Zealand, and it is harder to imagine successful enforcement of any prosecution. Nevertheless, the largest operators will likely abide by the new legislation and “turn off” the NZ market.

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