NZRB sees net loss grow despite improved TAB performance

The New Zealand Racing Board (NZRB) has hailed the success of efforts to revitalise its TAB betting brand, despite distributions to the country’s racing industry leading to the body’s net loss for the 2017-18 financial year widening.

Turnover for the year ended July 31, 2018 was up 2.1% at NZ$2.7bn (£1.5m/€1.7bn), with a 5.0% decline in Tote turnover offset by growth across fixed odds sports and horse racing betting.

Fixed-odds horse racing turnover climbed 5.7% year-on-year to $702.6m, complemented by a 5.1% rise in sports betting turnover to $608.6m. This was driven largely by an overhaul of the TAB brand, which offers sports and horse racing betting both online and over-the-counter, as well as operating gaming machines.

Over the year the NZRB repositioned the brand to attract a wider audience, and ran a series of successful acquisition campaigns. This led to a strong increase in the number of active monthly account customers, which averaged 114,500 over the year, up 16.8% from the 2016-17 financial year.

These efforts also helped drive a significant increase in the underlying active account customer base, which was up 20% year-on-year at 230,000. This contributed to a 3.6% year-on-year increase in net betting revenue, which rose to $287.6m.

“When we started [the TAB brand revamp] in 2016 we had approximately 90,000 active customers and now average around 113,000 active customers per month,” NZRB chief executive John Allen said. “That is a phenomenal rate of growth for a wagering business and demonstrates real opportunity.”

“Improvements to our digital channels have been extensive as we’ve worked to dramatically enhance the experience for customers,” Allen continued. “The TAB mobile app has had a complete redesign and has seen the total betcount reach 11.7m, up 56% or 4.2m bets on last year. The total number of unique users is 47,000, up 37%.”

Gaming turnover, meanwhile, was up 9.1% at $476.0m, with net gaming revenue growing marginally to $27.0m. NZRB also generated $44.7m in additional income relating to New Zealand horse racing being broadcast overseas.

Total expenses for the year grew to $213.3m, with a marginal increase in turnover-related expenses accompanied by growth in operating costs to $144.4m, largely as a result of increased communication and technology expenses. This was due in part to higher merchant fees resulting from an increase in customer account deposits, as well as higher costs relating to the Payment Credit Card Industry (PCI) compliance programme.

This left the business with a net profit of $145.9m for the year. As a result of distributions to the New Zealand horse and greyhound racing industry of $150.8m, coupled with an $8.3m distribution of gaming profits and a $3.3m provision for undistributed gaming net profit, the NZRB posted a full-year loss of $16.4m. This was improved slightly by a $575,000 positive movement in the value of cash flow hedges, for a net loss of $15.9m.

“In many regards it has been a challenging year for the Board, which makes it particularly pleasing to report an increase in net profit and distributions to the Codes driven by growth in customer numbers and disciplined cost management,” NZRB chair Glenda Hughes said.

“There has also been significant progress in our strategic initiatives which will set us up well over the next decade or so,” Hughes continued. “Our customer focus is driving real value for our industry and better outcomes for our punters, racing product is looking great through our vision capture initiative and progress was made toward our fixed odd betting platform and our Anti-money-laundering requirements.”