RVL under fire for covering bookie's losses PATRICK BARTLEY
May 27, 2010

SECTIONS of the Victorian racing industry were yesterday calling for an immediate review of Racing Victoria Limited's arrangement with corporate bookmakers after a major bookmaking company was forced to bill RVL after recent losses.

The Thoroughbred Racehorse Owners Association joined with Tabcorp and other interested parties in condemning the payment.

Con Kafataris, the managing director of Centrebet, admitted the corporate bookmaking firm had sent RVL an account after a losing month. Centrebet's losses come under the gross profit model it has with RVL for the use of its product.

RVL charges corporate bookmakers a fee of 10 per cent of gross profit — rising to 15 per cent in the spring carnival — but under the system it is also open to sharing the losses.

"The situation with Centrebet invoicing RVL for their losses clearly demonstrates that the gross profits model is fundamentally flawed, which TROA has maintained all along," TROA chairman Andrew Lafontaine said yesterday.

"RVL are putting at risk revenue to the industry, which impacts prizemoney levels, by implementing the gross profits model.

"Regardless of whether RVL are handing over cheques for losses to corporate bookmakers or offsetting losses against future profits, the end result is the same; that is, a reduction in revenue to the industry compared to the turnover model."

Racing Victoria chief executive Rob Hines said Centrebet's

loss did not affect RVL's cash flow because the fee for each bookmaker was estimated at the beginning of the year and paid on a regular basis.

Kafataris said earlier this week that "it has probably happened only a couple of times in three or four years" where RVL was sent an account.

"In the spirit of the agreement they don't have to pay us anything but the next month's payment is adjusted," he said.

A spokesman for Tabcorp said yesterday:

"Racing industry fees should be levied on turnover rather than revenue. The size of the racing industry requires funding certainty that is not dependent on the operator's business model.

"This is one of the fundamental problems with racing industry fees being based on revenue or gross profits."

The Thoroughbred Racehorse Owners Association believes there needs to be an immediate review of the current model. "We strongly believe the turnover model is the only viable option for the racing industry," Lafontaine said.

"The competence of the RVL executive must be called into question given the implementation of the gross profits model."

Racing NSW has fought a protracted court action by two wagering operators over its race fields legislation. The legislation, which came into effect last year, requires all wagering operators to pay a 1.5 per cent fee on turnover for the use of its race fields.

Betting exchange Betfair argues the turnover fee discriminates against low-margin operators while protecting the biggest player, the TAB. Corporate bookmaking firm Sportsbet also went to court to challenge the legislation.

A verdict is due on June 16.