NZRB Submission on the Messara Report October 2018

15 October 2018

The New Zealand Racing Board has submitted its feedback on Mr John Messara’s Review of the New Zealand Racing Industry.

We agree the New Zealand racing industry faces a number of significant challenges including: rising costs against prizemoney; underinvestment in ageing racing venues, declining oncourse attendance; and increasing competition for the consumer’s discretionary dollar. If racing is to remain relevant and prosper, the collective industry must address all of these challenges head on.

The Racing Board does not consider the status quo sufficient. The Racing Act (the Act) is now 15 years old, and change is necessary to secure the long-term future of the industry. Mr Messara’s report touches on many of the challenges faced by the industry, and we welcome much of the thinking behind his recommendations although in a number of areas we differ from his conclusions.

There are five key areas of recommendation addressed in this submission:

  1. The Board does not support the need for a Racing Industry Transitional Agency (RITA). The Board already has an established mandate that can operate as a transition agency up until legislation is enacted that formalises any new arrangements. There are a number of vacancies on the Board to which new appointments can be made. Furthermore, the Board is leading two existing programmes with all Codes which are progressing venue consolidation and evaluating outsourcing. These programmes would be slowed, and business continuity would be lost by the establishment of a new agency.
  2. The Board supports the separation of the Board into two new entities: ‘Wagering NZ’ and the concept of ‘Racing New Zealand.’ A refined mandate through Wagering NZ to focus on commercial performance of the TAB will lift productivity. Devolving racing regulatory functions from the Board will improve decision-making and accountability at the Codes.
  3. The Board opposes unilaterally proceeding with outsourcing the TAB before a commercial evaluation of this option is complete which has established it is clearly in the best long-term interests of New Zealand racing. Outsourcing is, in practical effect, a sale. There is no real likelihood of reverting back to a New Zealand owned and run TAB once an outsourcing process has started. There are a number of real risks with this type of structure and it is critical that other options (such as corporatisation) are in active consideration, and the status quo is used as a counterfactual.
  4. The Board supports a legislative framework that allows for racefields and modern betting products to help ensure the TAB remains competitive. The TAB operates in an highly competitive online environment despite having a terrestrial monopoly. These changes will maintain the efficacy of New Zealand’s gambling framework, and ensure our racing and sports communities continue benefiting from New Zealanders’ betting.
  5. The Board agrees there is a need for fewer racing venues, but any change needs to be progressed through the already established joint-industry Future Venue Plan. Legally centralising ownership of Club assets is a step too far, and Clubs need to be properly consulted as part of any decisions if they are to support them.

For yet another year under the current management, the Board will deliver on its forecasts. Distributions are up, staff costs are down and we will exceed our operating profit target for 2018 of $153.9 million. The Board supports an independent statutory performance and efficiency audit with a particular focus on costs.

The New Zealand racing industry comprises three Codes, and it is important there is equity between them. This report was required to be Thoroughbred-focused, our submission therefore focuses on the implications for the other Codes.

The Board’s acknowledgement of the need for change is reflected in the initiatives underway including the evaluation of outsourcing and the make-up of race venues. Change of any sort has risks and it is the responsibility of Board Members to identify and manage these risks. The processes underway reflect the due diligence the Board has deemed necessary for any decisions to be made in the best long-term interests of racing. We strongly recommend they are continued.

Read the submission outlining the Board’s position on each of the recommendations in the executive summary of the report, and a more detailed appendix outlining the Board’s position on all other recommendations included in the report.


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