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TROA Says Boston "Totally Discredits" Racing Vic Model

Thursday, 16th December 2010

Andrew Lafontaine also revealed the contents of a TROA letter to Racing Victoria chief executive Rob Hines amid "much public debate about the Race Fields Product Fee model" & notes the RV Board's recent decision to engage an independent consultant to compare our preferred turnover model against RV's preferred existing gross profits model". He continues: "There is already a publicly available Boston Consulting Group Report provided to Racing NSW in 2008 that totally discredits your preferred gross profits model & the unsubstantiated price 'elasticity' analysis basis for that model promoted by RV & the corporate bookmakers. This seems to be borne out by the actual experience with the gross profits model in Victoria, where we understand that in the past year $1.2 billion of turnover by bookmakers has yielded only $5 million which reflects a paltry 0.4% of turnover paid by corporate bookmakers. To assert that price elasticity will make up the difference of almost 400% more under the NSW turnover model priced at 1.5% of turnover is just nonsense. If the amounts paid by the totes under the gross profits model are subsidising the corporate bookmakers, the return from the totes can be maintained under a turnover model by setting a more appropriate product fee level. In our opinion, Victoria has easily the best product with the Spring Carnival being a feature & should be charging a higher fee. We believe that a fee should be up to 3% of turnover."

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