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Agreed tax is the killer but that's not how PoCT works, or how...

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clair.gibbon

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05/10/23

12:49

Post #: 70187916
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Originally posted by robotkad: ↑

This is mostly correct, but calling them a joke is a little unfair, they are running a business and industry conditions have forced them to reshape their business.

State government point of consumption taxes (POCT) and the ever increasing fees from racing and sport codes means that around half of a bookmaker's gaming revenue is paid to these parties. Out of the other half you pay staff, marketing, promotions, etc.

Close your eyes. Imagine you run a business where you allow people to bet on coin flips. You put up the following market;

Head: 1.95
Tails: 1.95

You would expect to make a gross margin of ~2.5% on this market, and 10 years ago, this would have been fine. No POCT going to the state govt. Great little business you got there. Go you.

Ok, now skip ahead a few years. Its 2023 and state governments are taking as much as 20% of your turnover in POCT. The second a customer from Queensland wants $1,000 on tails, you owe the QLD Govt $200.

So for the sake of simplicity, lets imagine we also took $1,000 on heads from another QLD customer. We took $2,000 in turnover and we have a liability of on both outcomes $1,950. $50 profit 10 years ago. Today, its a loss of $350 after QLD gets their tax money. On top of this, if you were betting on racing or most sports, you also have a fee to pay to the governing body (which they deserve, but these rates are also getting excessive).

The only way TopSport can EVER make money in the current environment is to increase their margins. Professional punters wont bet on high margin markets as it erodes their edge. If you are TopSport, your only option is to reduce costs, all those smart people you were paying to price markets are expensive. Since you fired all pricing and risk experts and all the professional punters are gone, markets and pricing are often inefficient/inaccurate, so you are forced to limit how much a customer is able win in an effort to limit losses when the customer has more information than you do.

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Agreed tax is the killer but that's not how PoCT works, or how it's calculated.

In that example, where both customers are from QLD, the sportsbook makes $40 after paying QLD PoCT ($50 less the 20% PoCT). It's paid on gross revenue from residents of that State and not sales.

If only the losing customer was from QLD then the sportsbook would make a $150 loss after QLD PoCT ($50 less $1,000 x 20%).

BET Price at posting: 9.0¢ Sentiment: None Disclosure: Held
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