The Commerce Commission has reached a preliminary view that it should grant authorisation to the New Zealand Racing Board (NZRB) to allow it, subject to certain restrictions, to commingle totalisator horse and greyhound racing betting pools with Tabcorp Wagering Manager (Vic) Pty Ltd (Tabcorp) in Australia.

The NZRB has asked for authorisation for specific provisions of proposed arrangements with Tabcorp, which include restrictions on participating in commingled pools. The restrictions under the proposed arrangements relate to the NZRB’s and Tabcorp’s take-out rates from commingled pools and the rebates or commissions that the NZRB and Tabcorp pay high volume customers.

The Commission’s preliminary view is that, while the provisions of the proposed arrangements lessen competition, the reduction in competition is likely to be outweighed by the public benefits.

“There are public benefits to commingling between the NZRB and Tabcorp. These include benefits from allowing NZRB to offer an increased number of Australian races to New Zealand residents, plus benefits to customers from having higher value pools,” said Commerce Commission Chairman Dr Mark Berry.

“In contrast, the detriment is limited and confined to a small portion of customers that engage in high volume betting,” said Dr Berry.

For these reasons, the Commission’s draft decision is that it should grant authorisation to the NZRB.

Interested parties are welcome to make submissions on the draft decision. Submissions are due by 17 August 2016 and can be sent to registrar@comcom.govt.nz, with the reference “NZRB/Tabcorp” in the subject line.

You can read the draft determination here.

Background

The parties and commingling

The NZRB is a statutory body established under the Racing Act 2003. Its primary purpose is to promote the racing industry, facilitate and promote racing betting and sports betting and to maximise its profits for the long-term benefits of New Zealand racing.

Tabcorp is one of the three major wagering operators in Australia with a licence to operate totalisator pools. It offers totalisator and fixed odds betting on racing and sporting events.

Since 2007, the NZRB and Tabcorp have had arrangements that provide for the commingling of totalisator horse and greyhound racing betting pools. These arrangements allow customers to place bets on Australian (and other overseas) racing through the NZRB, and similarly for customers to place bets on New Zealand racing through Tabcorp. The application relates to new arrangements that the NZRB and Tabcorp propose entering into to replace existing commingling arrangements.

Tabcorp in Australia has been granted authorisation from the Australian Competition and Consumer Commission (ACCC) to enter into international commingling arrangements with overseas wagering operators including the NZRB. The ACCC’s decision is available at: http://registers.accc.gov.au/content/index.phtml/itemId/1178280/fromItemId/401858/display/acccDecision.

Authorisation requirements

The Commission may grant authorisation under section 58 of the Commerce Act for certain agreements that may otherwise breach the Commerce Act if it is satisfied that the public benefits of the agreements outweigh the detriments arising from the loss of competition.The granting of a restrictive trade practice authorisation protects the applicant from court action under the Commerce Act by the Commission and private individuals.

Under section 62(1) of the Commerce Act, the Commission must prepare a draft decision before determining an application for authorisation of an agreement. The draft decision sets out the Commission’s preliminary view on whether or not we are likely to grant an authorisation, and the reasons for that view.