Peters will be ‘kingmaker’ over sports funding
Fears that millions of dollars in sports funding from sports betting could be redirected to horse racing have not been allayed by recommendations from a select committee which reviewed the proposed Racing Amendment Bill.
The draft legislation is designed to revitalise a racing industry in decline and, according to a report commissioned by Minister for Racing Winston Peters facing potentially “irreparable damage”.
It does away with a formula currently used to calculate the share of funding national sports organisations (NSOs) receive from the profit on over $600 million in annual fixed odds sports betting at the TAB.
The legislation instead places the responsibility for sports betting funding distribution at the sole discretion of the Minister for Racing - Peters.
The potential for the Racing Minister to not only fail to address what is perceived by many sports codes as an historical shortfall in gambling distributions, but divert money away from their sports entirely, raised concerns across the sporting sector, with New Zealand Rugby, New Zealand Cricket, Netball New Zealand, New Zealand Football and Tennis New Zealand all tabling submissions opposing the legislation.
Sport New Zealand and the National Sports Organisation Leadership Group, a collective of sports chief executives, also raised concerns.
The submissions called for measures such as NSOs having direct involvement in the process of distributing the funds, and the Minister for Racing and Minister for Sport being granted joint responsibility for determining funding disbursements.
However the Transport and Infrastructure Committee, chaired by New Zealand First MP Darroch Ball, that studied the bill stopped well short of recommending those measures. It instead suggested in a report tabled in Parliament on Tuesday that the legislation should include a requirement the Minister of Racing “consult” the Minister for Sport before making any changes to the current system.
NZ Rugby chief executive Steve Tew said his organisation “remained unsupportive” of the recommendation following the committee’s report.
“There is significant uncertainty being created for sport and by allowing the Minister of Racing alone to specify the formula, the proposed change could see sport impacted negatively in order to uplift racing,” Tew said is a statement to Newsroom.
NZR’s submission on the bill, which would see the current formula of 1 percent of fixed-odds sports betting turnover and 5% of gross betting revenue on each sport distributed to that sport’s national governing body replaced by a method to be decided at the Racing Minister’s discretion, pointed out that sports betting amounted to 26 percent of wagering turnover at the TAB “however the 34 NSOs collectively received only 6 percent of the pay-outs”.
The submission says: “While there has been a suggestion that moving the distribution formula into regulation could provide an easier route to increase the redistribution to sport, NZR believes that this could negatively impact returns to sport by prioritising returns to racing.”
That fear was echoed in the submission by the national cricket and netball bodies.
Netball NZ’s submission said the proposed legislation created significant uncertainty for sport.
“By allowing the Minister of Racing alone to specify the formula, the proposed change could see sport impacted negatively in order to uplift racing,” it states.
Cricket's submission described the current method of funding distribution as “inequitable”, and also cited “significant concerns regarding this recommendation in its current form, in particular the lack of clarity and certainty regarding redistribution to sports”.
“NZC acknowledges there has been a suggestion that it may provide for an increase in the redistribution to sport, but we believe that it could equally have the potential to negatively impact sport by prioritising returns to racing, given the Minister of Racing will have the power to specify the formula.”
NZC’s manager of public affairs Richard Boock welcomed the proposed inclusion of the Minister of Sport in the process for allocating funds, but said the committee’s recommendations had not addressed many of the concerns raised by the sport.
“NZC appreciates the opportunity to be heard and acknowledged through the process and is pleased to see the inclusion of the Minister for Sport and Recreation in decisions around the distribution of funds,” Boock said.
“We remain supportive of the majority of the Bill and its intent, but are disappointed more of the concerns of the sport sector have not been addressed by the select committee."
New Zealand Football commercial director Carl Jackson said the organisation’s preference was for the Sports and Racing Ministers to be mandated to reach an agreement on funding distribution.
“But that is what it is. We do have confidence in the Sports Minister. And any regulations that are passed have to go through Cabinet, so there is an extra buffer of surety there.”
A submission by Tennis NZ chief executive Julie Paterson highlighted just how dependent many NSOs are on revenue derived from betting on their sports.
In 2018 Tennis NZ received $1.179 million from TAB betting – 40 per cent of the organisation’s total revenue – and a figure vastly in excess of its next two largest revenues sources, $465,589 from affiliation fees and Sport New Zealand grants totalling $438,238.
Tennis New Zealand welcomed the recommendation that the Minister of Racing consult with the Minister of Sport, but it still opposed changing the mechanism for distribution of funds, Ms Paterson said.
"I am really pleased that the feedback and submissions were listened to and that they recognised that there was a risk. However our view would still remain that we are not comfortable with the allocation of funding being taken out of legislation and being out into regulation. That would remain our stance. We've never been happy about it. We see it as a risky option."
Comments to Newsroom from Peters will have done little to assuage the concerns of sports administrators.
Peters accused sports bodies who were seeking an increase in the share of gambling revenue of ingratitude to the racing industry for the role it had played in the provision of sports betting services - although the submissions he had heard showed some sports bodies understood the historic support they had received from the racing industry.
“They also showed a serious grasp that there would be far more money available under a reformed racing industry than if it wasn’t reformed," Mr Peters said.
“That’s the first thing, to get the racing industry on a sound footing. And, b, have more money in the pot for all of the people who continue to be supported by racing. Some of the sporting leaders understand that, and some don’t. And some aren’t able to tell me why we are supporting sport from racing.”
Mr Peters rejected the argument that sports bodies should receive a greater share of the profit from bets on their codes.
“No. They are wrong. Their prognosis will see the end of the industry. Then what are they going to do?
“There is no sin like ingratitude."
Mr Peters also rejected calls for the Sports Minister to have an equal say in the process, and indicated the consultation suggested by the select committee had already taken place.
“The sports minister is the Minister of Finance and he is extraordinarily busy. They [sports administrators] should have regard for the fact that we do things in a collegial way. I have had these discussions with the Minister of Finance, clearly for good reasons as I needed support in his budget. We’ve already done that."
He flatly rejected the suggestion the proposed legislation paved the way for a cash grab by the racing industry.
“That’s humbug and we’ll prove it."
A submission by the New Zealand Racing Board supported the move to place sole responsibility for distribution of profits from the over $600 million wagered annually on fixed odds sports in the hands of the Minister for Racing.
The bill, which contains a raft of measures designed to revitalise the racing industry including replacing the New Zealand Racing Board with a Racing Industry Transition Agency, provisions to charge overseas bookmakers for offering odds on New Zealand events, and the rollback of taxes and duties incurred by the industry, is due for a second reading in Parliament next week and is intended to become law by July 1.
The select committee’s report contains a minority opinion from National MPs that criticises the rushed timeframe for the legislation.
A “truncated” select committee process allowed just five days over a public holiday period to consider “substantive issues”.
“While National understands the importance for the racing industry of implementing changes as quickly as possible these timelines are unreasonable given the substantive matters involved and we note are at odds with the department’s own advice.”'
Peters indicated the bill would have no trouble clearing the House and would become law by July 1 as intended.
“It’ll be through, gone, done and dusted by July," he said.