History repeats for NZ racing board

It took less than a week for the shine to come off the New Zealand Racing Board’s renewed vigour.

At last Thursday’s AGM, new chairman Dr Alan Jackson told NBR ONLINE the industry had hit the bottom, but now was a time for the industry to move ahead.

By the Monday, however, the racing board was back in the headlines – but for all the wrong reasons.

Greyhound Racing New Zealand, one of the board’s three racing codes, had taken issue with Dr Jackson’s appointment as an independent chairman.

GRNZ’s lawyer Helen Cull QC told the judicial review there were two main reasons for Dr Jackson’s lack of independence:

• During his stint on the board between 2010 and 2012, when he replaced a retiring member, Dr Jackson represented the thoroughbred racing code as its member.
• Dr Jackson is a director of the Broadway Racing Breeding Partnership, Broadway Trust and Broadway Operations.

GRNZ general manager Jim Leach told NBR ONLINE he was not questioning Dr Jackson’s “significant ability” but he believes racing minister Nathan Guy misread and misinterpreted the Racing Act when appointing Dr Jackson.

At the AGM, Dr Jackson talked of the buzz, the change of attitude and atmosphere which came with the mid-year clean out of the board.

The management team has also been given a shakeup with a new ceo, general manager of strategy, marketing and corporate affairs and chief information officer.

Ceo Chris Bayliss went further than Dr Jackson with his aspirations and said the board needs to get some early momentum and credibility.

He admitted the board’s weaknesses and said there was no question one of the challenges was to enhance returns to the racing industry and to avoid becoming “a niche sport”.

“Long-term sustainability has not been our strength. Transparency has not been our strength. This is the first AGM In six years. Planning has also not been our strength. We haven’t really had a strategic plan for three years. So we do intend to take some immediate action in all of those.”

“I don’t yet have a plan for the future. My executive team is very new and it would be naïve and arrogant to reveal any such plan.”

This week’s court case is far from the first brush with the judicial system for NZRB.

In 2010, NBR uncovered pub pokie fraud dating back two years earlier, when Waiikato Racing Club chairman David Smith applied to Rotorua-based First Sovereign Trust for a grant of $31,680, plus GST grant (totalling $35,640), falsely claiming it was to upgrade data cable at Te Rapa racecourse.

Attached to the application, approved by the trust a couple of weeks later, was a resolution from the racing club, signed by Waikato Racing Club general manager Tony Enting which again falsely stated the club applied for the grant to go towards data cabling.

The money was, in fact, for an upgrade to Hamilton’s Dinsdale Tavern.

Trust founder and ceo Kerry Bird said at the time the invoice seemed genuine and legitimate on the face of it.

Singling out Mr Enting and club chairman David Smith for special criticism, Judge David Harvey said their evidence was “astonishing”.

He was concerned “that two men [Messrs Enting and Smith] holding responsible positions in a large business operation seemed to be quite happy to embark upon a process that was clearly fraudulent".

“They seemed to have no difficulty whatsoever with the rights and wrongs of altering invoices and getting involved in a process that involved false documentation and a flow of money in a manner that had no legal or moral justification whatsoever,” the judge said.

“Mr Smith seemed to be perfectly happy to provide a number of documents which misrepresented the situation to First Sovereign Trust to obtain First Sovereign Trust funding so that they could make a payment for works that had been done to the Dinsdale Tavern.”

The charges against First Sovereign Trust were thrown out. But that was not the end of the matter for the NZRB.

Earlier this year, the trust and Mr Bird took the racing board to court, alleging they had been defamed.

In response to an NBR article on November 26, 2010, about the fraud and claims of much more within the industry, NZRB sent out a press release wishing "to address implications that either the board or TAB have acted duplicitously or been complicit in pub pokie fraud".

It went on to say the NZRB "was totally dedicated to integrity in all aspects of its business".

"Today’s NBR article does not make it clear that it was as a result of the board’s internal audit processes that the misappropriation of funds involving First Sovereign Trust and the Waikato Racing Club was first identified."

Mr Bird thought the release “was accusing me and the trust of being a fraudster”.

He, the trust and trustee Malcolm Short claimed $750,000 in damages. Mr Bird was awarded $20,000.

If Chris Bayliss’ recent pledge to return momentum and credibility to the racing board sounds familiar, it is.

In 2007, when Auckland insolvency practitioner Michael Stiassny was appointed chairman of the board, he was brought in to clean up the industry.

At the time he admitted racing had been involved “in a number of embarrassing cases” and pledged to improve the “integrity” of racing.

Measures are still continuing today to improve that “integrity.”

In May this year, the Racing Integrity Unit began sending blood samples to leading labs overseas in a bit to tackle drug cheats and it has also begun using hand-held testing machines at racing.

In March, Mr Stiassny attended a harness racing industry forum at Alexandra Park where he outlined some of the issues still facing the industry. He touched on protecting wagering margins distributed to the three codes.

He urged the harness code to look closely at what it is doing to protect (and grow) its share of the wagering market.

And now there’s a new storm brewing for NZRB – the issue of offshore betting agencies.

Racing New South Wales ceo Peter V’landys has estimated the NZRB is losing between $5 million and $10 million a year on revenue to "leakage".

It is where profits go to offshore betting agencies which operate online to try to lure punters in New Zealand, often with bigger prize packages.

Unlike traditional operators, "wagers', as they are called, do not have to pay any product fee to the racing industry.

Mr V’landys recently won a long-running $100 million battle to get two private betting houses in Australia, Sportsbet and Betfair to pay a product fee.

Dr Jackson says other sports are not immune to leakage, but the issue is growing and the racing board will need to start seriously looking at how to combat it in the future.

The board’s management will be hoping it does not lose too much to leakage during this summer season’s racing schedule.

There are 30 race meetings booked around the country for the rest of this month – most of them are part of the Christmas at the races series.

Up to 150,000 people have already registered for the series and for the summer series, heading into January.

The season traditionally provides the most revenue for the industry. In the year to July 31, NZRB generated $1.128 billion from totalisator racing, largely contributing to total betting turnover of $1.622 billion.

bcunningham@nbr.co.nz