Fears Advertising Ban Will Lead To $300m ‘Black Hole'

RACING officials and wagering operators are bracing for a 20 per cent "black hole" if the federal government implements its proposed reform measures to wagering advertising.

Early indications suggest that as much as $300 million in annual funding could be lost to the racing industry between both race field product fees and taxes.

The wide-ranging advertising restrictions come in response to the government's inquiry into the online wagering industry, which following a year of animated public hearings, concluded in June, 2023.

Chaired by the late Peta Murphy, 31 recommendations were ultimately tabled for consideration from the inquiry, many of which honed in on the future of wagering advertising, calling for a phased approach to a blanket ban.

Late last week, representatives for Communications Minister Michelle Rowland briefed racing executives, media companies and wagering operators on the government's proposed response, more than a year on from the report first being tabled.

It's understood that response included a total ban on social media advertising, as well as stringent caps around broadcast television and streaming services advertising.

A ban on mainstream advertisements before, during and after live sporting events was also part of the proposed overhaul, as was any advertising which proposed any form of incentive or inducement.

Interestingly, stadium signage and jersey sponsorships were said to be excluded from the proposed roll out of restrictions at this time.

The briefings – conducted under a shroud of secrecy – saw those involved sign nondisclosure agreements, meaning details emanating from the discussions have been limited.

However, since the briefings, racing officials and major wagering operators have been scrambling in an effort to better understand what the proposed changes would mean to wagering turnover, the lifeblood of the racing industry ecosystem.

"Early modelling suggests we would wave goodbye to 20 per cent of annual wagering revenue – it's potentially catastrophic," said one racing executive speaking under the condition of anonymity given the sensitive nature of the matter.

"It essentially stops the racing industry in its tracks from not only procuring new customers but also consolidating and fostering its current base.

"With the softening of wagering post-Covid and costs escalating, racing is already facing a battle with its bottom line. Potentially slashing a further 20 per cent would put untold pressure on the codes.

"It starts at the top but filters right the way down to the lifeblood of the three codes which are the participants and racing's hundreds of thousands of employees.

"In essence, it would stunt any opportunity for innovation and growth across all facets of the industry. We will be in decline."

While parts of the Albanese government's response to the inquiry has come to light, the full fallout can't be understood until a position on the full 31 recommendations is disclosed.

Privately, wagering operators remained hopeful that the advertising response would be tempered given that in the past 18 months, the sector had organically reformed by a significant margin.

Mainstream wagering advertising had already dropped by 18 per cent following pushback from the wider community about the saturation of advertisements, predominantly during major sporting events.

Last year, almost $41 billion was wagered on the three codes of Australian racing.

If early industry projections materialise, it could mean as much as $7.5 billion in turnover could be lost each year, resulting in less taxes to state governments and funding to industry stakeholders.

Stakeholders consulted by the government had until Friday to provide formal responses to the proposed moves.