Racing Crowds Scratched, But Race Goes On

Victoria is preparing for a different spring racing carnival this year, due to ongoing restrictions on major public gatherings. Although the 2020 Melbourne Cup is unlikely to have a crowd, the gradual reopening of gambling outlets and the rising popularity of online gambling platforms are expected to limit declines in Melbourne Cup revenue for betting establishments.

‘The Horse and Sports Betting industry is expected to grow by 7.1% in 2020-21, to reach $5.1 billion. Despite restrictions on venue capacities, the reopening of sporting leagues and retail outlets is anticipated to drive growth during the year,’ said IBISWorld Senior Industry Analyst Matthew Barry.

While COVID-19 restrictions have jeopardised Victoria’s Melbourne Cup, new opportunities are emerging for the Everest racing event in New South Wales. The Everest has grown in popularity over the three years through 2019-20, and this year’s prize money sits at $15 million compared with $8 million for the Melbourne Cup. The Melbourne Cup typically hosts a crowd more than double that of the Everest. However, the Melbourne Cup will likely not have a crowd at all this year, while the Everest is expected to be partially open to the public, with a maximum of 11,000 people relative to the previous year’s crowd of 40,000 people.

‘While the major racing events are expected to have limited attendance this year, the ease of access and popularity of online gambling platforms, alongside promotional deals and marketing, are anticipated to drive up total gambling expenditure. We may see the Everest surge in popularity this year, as Victoria continues to grapple with the COVID-19 pandemic,’ said Mr Barry.

Despite early disruption, gambling industries post a strong recovery

The COVID-19 pandemic has significantly disrupted the Horse and Sports Betting industry over the past six months, with the industry still recovering from disruptions experienced earlier in the year. Tabcorp, which holds a market share of 43.7% in the industry, reported an 84% decline in retail turnover in Q4 of 2019-20, primarily due to COVID-19 restrictions. The temporary closure of sporting leagues sharply decreased gambling expenditure on sport, with Sportsbet reporting a fall of over 90% in average daily active users gambling on sport in April 2020 compared with April 2019. Paddy Power Australia, the owner of Sportsbet, maintains an 18.3% market share in the industry.

In contrast, the Horse and Dog Racing industry has remained operational during the pandemic. Consequently, many customers have shifted gambling expenditure to horse and dog racing markets while sporting events have been limited. Sportsbet recorded a 30% increase in active users gambling on racing over the six months through June 2020, reflecting a change in consumer’s gambling behaviour.

‘This positive shift in gambling expenditure towards racing has limited disruptions relating to the COVID-19 pandemic for the overall gambling sector, and is expected to continue supporting demand for racing leading up to this year’s spring carnival,” said Mr Barry.

Outlook for the gambling sector

Revenue for the Horse and Sports Betting industry is forecast to rise at an annualised 3.9% over the five years through 2024-25, to $5.7 billion. The rate at which the industry grows will depend on how Australia manages new COVID-19 outbreaks, and when governments around the world ease their restrictions to allow sporting events to resume.

‘Wagers placed on thoroughbred and harness racing at TABs are the industry’s main sources of revenue, but these segments are projected to decline as a proportion of revenue over the next five years, as sports betting continues to grow significantly,’ said Mr Barry.

The continued rise of sports betting is anticipated to support per capita gambling expenditure over the next five years.

‘Annual per capita gambling expenditure is expected to rise at an annualised 3.7% over the five years through 2024-25, to total around $1,220. Sports betting will primarily drive this increase, although new regulation to counteract the negative social effects associated with gambling may limit growth,’ said Mr Barry.

IBISWorld reports used to develop this release:

For more information, to obtain industry reports, or arrange an interview with an analyst, please contact:
Jason Aravanis
Strategic Media Advisor – IBISWorld Pty Ltd
Tel: 03 9906 3647
Email: [email protected]

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