WAGERING EXPERIENCE A KEY REQUIREMENT FOR TAB
Posted by Brian de Lore | Feb 14, 2019 | Gallops
When the NZRB talks about the final capital cost of the Fixed Odds Betting platform coming out at $40.8 million, in this writer’s view the figure they have settled on is only the one that emerges after the mirrors have been removed and the smoke has dissipated.
The smoke and mirrors reference is because NZRB have assigned the FOB a capital cost of $40.8 million. But this weekly column has been saying the all-up cost, in reality, is $50 million plus. And the FOB running costs of $17 million annually payable to Paddy Power-Betfair and Openbet are committed.
“Commissions to both are payable. Openbet is a 10-year contract and Paddy Power is five years,” explained NZRB CEO John Allen. “Openbet is a licensing agreement so we pay a licence fee to access the technology and with Paddy Power it’s a base fee but mostly is a profit share based on the performance of the platform.”
In my Waitangi Day interview with NZRB CEO John Allen, the question was posed as to why the total NZRB expenses shown in the 2018 Annual Report had risen from $204.6 million in 2017 to $213.3 million.
Allen responded, “You’re right, costs have increased overall but most of the increases relate to the strategic initiatives, particularly the work on the FOB platform and our customer acquisition programme – to take those two out is appropriate because they’re really investments for the future.”
That answer was drawn from my comment that in simple terms, costs have blown out considerably in one year while this industry’s contraction has been well chronicled at last week’s Karaka yearling sale.
All this on a turnover that’s down a couple of million dollars a month and a platform that’s about $1.5 million a month more expensive to run. Will the final result be any different to about seven years ago with the Typhoon betting platform debacle?
That was written off without ever being turned on but the true cost was never actually known because some of it had been assigned as operating expenses and estimates by some observers of a final debit were in range of $25 million to $30 million.
‘Déjà vu’ some will be screaming, and not without justification, except inflation has kept pace, and then some. It may also have also been ‘déjà vu’ for NZRB General Manager of Technology Dianna Taylor, who resigned from her position soon after the FOB was launched on January 7 and after only two years in the job.
Taylor had been previously employed at Kiwibank, which had an association with NZ Post, and on the NZRB’s website her brief biography read, in part, “…at Kiwibank Dianna led the consolidation and streamlining of Kiwibank’s operational banking functions, headed the development of the strategic technology roadmap that underpins Kiwibank’s strategy, and as CIO was accountable for enabling Kiwibank to continue to deliver its strategic business objectives, which are heavily predicated on technology deliverables.”
‘Technology deliverables’ is an interesting term. Taylor had left Kiwibank in 2017 but in that same year the new computer system she helped establish had to be mothballed and written off after being deemed unfit for purpose after just six months’ use, at a cost of between $90 million and $100 million.
“Dianna Taylor hasn’t left but she has announced she is going to leave,” John Allen said. “Nothing to do with the website; she’s terrific and has been one of the key drivers in getting this done and it’s been a hugely complex task and people really don’t understand how significant a change this has been.
“It would be the largest technology project this board has ever done and Dianna has just been a tower of strength in terms of doing all that.
“Glen Saville was the project leader for the FOB,” continued Allen, “as he’s our head of betting and leads a small executive team that included Dianna and Stephen Henry plus a lot of people working on this from both our team and our partners involved.”
Glen Saville (top) and Dianna Taylor headed the team developing on the TAB’s fixed odds betting platform.
According to his NZRB website profile, Glen Saville has worked for NZRB since 2014 and although his title is General Manager of Betting, very little has been heard publicly from Saville until last Sunday when he participated in a 20-minute interview with Des Coppins on Trackside Radio.
Saville’s NZRB bio states, “…was Head of Product with a corporate bookmaker in Australia, responsible for product development including betting products and channels – mobile and website.
“Glen also has 15 years’ experience in the financial services industry, working in product and project management roles, mainly in superannuation.”
To suggest that Saville’s biography fills one with confidence as the General Manager of Betting is a stretch, while to consider he is the person next in line to Allen on wagering decision-making is of major concern.
John Allen openly admitted in a previous interview that he had never stepped inside a TAB prior to his appointment as CEO of the NZRB in 2015, almost four years ago. It can therefore be assumed that Allen knows basically nothing about wagering and therefore relies on Saville – and the biography of Saville suggests he has had more experience in superannuation than he has in betting.
So why was Saville sent off to Ireland to do a deal with Paddy Power to initiate the whole FOB scheme, on behalf of an ailing New Zealand racing industry which at that juncture needed someone highly experienced to perform a remedial miracle? NZRB Chair Glenda Hughes appointed John Allen, who in turn appointed Saville and Taylor.
Last Sunday on the Coppins show, Saville was less than convincing in responding to the plethora of problems punters were encountering with the new TAB website. At one point Saville said, “the original budget was $37.5 million and in the end we came in at $40.8 million, only eight per cent over budget.”
He appeared to believe he deserved a pat on the back following that statement, which didn’t correlate with a recording made by yours truly early in 2017 at an NZRB industry conversation meeting at Riccarton when Allen clearly stated that the cost of the FOB would be $25 million, and people who believed otherwise were out of order.
Allen was a political appointment. Former Prime Minister John Key didn’t care for racing, especially after a brief bloodstock investment that turned to custard, and his successor Bill English was well known for his disdain towards racing, albeit having a farming background.
Minister of Racing Peters hinted to this writer some time ago that Allen was a political appointment following his previous terms with NZPost and the Department of Foreign Affairs and Trade. This is not talking behind Allen’s back, because in a previous discussion with him which subsequently was quoted in the pages of The Informant, the open debate questioned his suitability to perform adequately in the role of NZRB CEO based on his previous experience.
Allen, to his credit, has always fronted to my sometimes belligerent and less than complimentary questioning and has remained defiant and bullish about his ability to get the job done, but in this writer’s view nothing has happened to persuade the racing and breeding industry that he is about to fire the silver bullet that will save this industry.
Racing NSW CEO Peter Vlandys summed up the New Zealand situation best when interviewed in Sydney last August when he said, “It seems to be a fragmented system in New Zealand where you have the Racing Board overseeing the three codes and from what I can see the management aren’t really racing people, so they don’t understand the business.
“I think you need to have that wagering experience, not just a little bit but whoever is the CEO of the TAB must have a substantial amount of wagering experience– it’s different to any other part of the commercial world. John Messara understands wagering so he will know what I am talking about. He’ll know what to do.
“I think New Zealand has to fix the revenue first. After that, fix the costing. It shouldn’t be that difficult because they will eventually get racefields legislation through. Bookmakers in Australia are betting on Kiwi racing and are getting a free ride – they will get millions out of that, and if you run your TAB properly they will make millions out of that, too.
“New Zealand could be going a lot better with the current revenues. Run your codes separately – everywhere they have tried to combine the three codes it’s a failure and it costs double – run the three codes separately.”
A punter probably summed it up best this week when he stated, “The root cause of the issues with the FOB platform is it doesn’t deliver the key requirements which the previous system did. Unfortunately, this should have been a show stopper.
“This leaves the only option to customise the system. This is very risky and expensive and you shouldn’t do it. The short answer is there might be some ‘tweaks’ that can be done but these will only be minor.
“Sorry to be pessimistic but I believe this to be the truth and the NZRB will know this. The die was cast when they purchased the system which wasn’t able to deliver the key requirements.”
Rule Number(s): 870(3), 1003(2) Breaking Horses RegulationsMr Renault alleged that in Race 2 the MACCA LODGE PACE horse number 1 KIWI BLOKE galloped in excess of 150 metres at the start. Mr Renault sought disqualification of KIWI BLOKE pursuant to r 1003(2). Judges placings were: 1st 5 SHUZI 2nd 10 BOUND TO BE BETTOR 3RD 1 KIWI BLOKE 4TH 3 DELIGHT N GOLD 5TH ... (Feed generated with FetchRSS)View the full article
