The Commerce Commission's consideration of the deal for the takeover of the TAB provides the first real forum for public consultation
Despite opposition from online gamblers, New Zealand’s monopoly watchdog has given the manager of state-owned TAB and gambling giant Entain its blessing.
On Wednesday, the Commerce Commission said it had decided to amend a prior authorisation given to arrangements between TAB and its Australian contemporary Tabcorp to combine betting pools to allow for Entain to take over TAB’s betting functions.
Entain’s takeover, which received ministerial support in late May, will see London Stock Exchange-listed Entain control TAB’s operations for 25 years in exchange for a $900m injection into the New Zealand racing industry.
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Cabinet will also extend TAB’s monopoly over sports and race betting to the online environment, where there are currently little to no regulations.
This means TAB's major international competitors such as Bet365 and Betfair, currently operating in something of a regulatory grey area, will be geoblocked from New Zealand.
The area being addressed by ComCom’s amendment is relatively minor, but as one submitter pointed out, it reads as a direct endorsement of the Entain deal.
It is also the first instance of real public consultation on the deal and the first-time users of online betting platforms have had a forum to be heard.
In approving the amendment, ComCom deputy chair Sue Begg said allowing Entain to give effect to the betting rules and revenue leakage provisions would result in a net public benefit compared with the situation if the amendment is not granted.
Entain has suffered reputational issues both in New Zealand and abroad, including a £17m fine from the UK Gambling Commission for “completely unacceptable” safer gambling and anti-money laundering failures.
It has also copped fines in Australia and is subject to an anti-money laundering investigation by Australian financial regulator Austrac.
Monopoly
Submissions on ComCom's amendment were all against its approval.
The shortest public submission on ComCom’s proposal simply read, “Since when are monopolies for private companies a good thing? This stinks of corruption, please don't let it go through.”
The idea of offering the benefit of a statutory monopoly to a private company with a responsibility to provide returns to shareholders was a key theme in submissions, as was a poor-quality offering from TAB/Entain with no motivation to improve it.
“Entain's sole purpose for seeking to set up an exclusive monopoly is to maximise profit. Once other competitors are banned from offering competitive odds to New Zealand punters, Entain can take a larger cut or vig from each transaction,” said a submitter called Raymond.
He said TAB competitor Bet365 generally offered odds on two-way markets of approximately 1.90 each way, while TAB generally offered around 1.85 to 1.87, which is slightly less favourable to the consumer.
“Because the TAB is competing with other bookmakers, the TAB cannot offer odds that are too unfavourable or people will stop using the TAB.
“Once they have eliminated all competition from the market, Entain will be able to offer substantially less favourable odds to the consumers, allowing them to profit off the monopoly they have created. It would not be surprising to see odds as low as 1.78 each way, essentially doubling the 'vig' or average profit for Entain per bet.
“Entain is not undertaking this merger out of a sense of charity; it does so in order to maximise profits,” Raymond said.
Another common issue was TAB’s alleged practice of limiting the stakes of customers who tend to win more than they lose, while allowing those who lose more than they win to continue betting with unrestricted stakes.
'Winning punters'
A submitter called Josh said his TAB account had been limited to stakes of $5 or less for sports betting for being a “winning punter”.
“I’m currently limited to $5 stakes on TAB – without the option for alternate services, I’m unable to take part in something I have done for years and is anti-competitive behaviour to the extreme.”
The right to restrict how much individual users can put down is written into the terms and conditions of many betting providers, presumably to protect problem gamblers, but the argument that it has also been used to protect profit margins is increasingly being made.
Josh isn’t the only submitter to claim their betting limits were lowered to $5 or less.
A submitter called Charlotte said her TAB account had been severely stake-restricted, “My maximum stake ranges from $2.50 to $5. TAB NZ's slogan is 'Now you're in the Game' yet I am no longer in 'any game' with ridiculous stake restrictions.”
She said she had been “fobbed off” by TAB, eventually being told it did not need to give her an explanation.
“I rarely deposit into my account, in fact withdraw more than deposit overall, so hardly appear to be a 'problem gambler'. I could easily back this up with bank statements if needed.”
While TAB limitations on profitable gamblers have been reported on since at least 2014, Charlotte believed it was getting worse with Entain’s involvement.
“Makes me wonder: if they are wanting to limit punters to New Zealand only, why stake-restrict? Is the intention purely to block winning punters purely to exploit problem gamblers?
“That's certainly very concerning and anti-competitive behaviour – not to mention completely unfair!”
She said with geoblocking in place she would have no alternative to TAB/Entain and the $5 maximum bets.
