AusTOTE Goes Live under Fire

3 May 2004

Amid legal threats from Australian racing interests, Australia's newest TAB is calling its launch a major success. AusTOTE opened up for business Wednesday in Norfolk Island, becoming the first new Australian TAB in decades.

CEO Mike King showed a sense of adventure by launching on April 28--the same date that the crew of His Majesty's Ship Bounty established a base in Norfolk Island following its now world-famous mutiny more than 200 years ago.

Two centuries later, a different state of unrest could be on the horizon.

When the Norfolk Island Gaming Authority issued AusTOTE a TAB license a few months ago, Australia's leading TABs, Tabcorp, NSW TAB Ltd., and Unitab, immediately voiced their disapproval. The Australian Racing Board subsequently threatened legal action (based on an infringement of copyright and intellectual property rights) against AusTOTE if it went forward with its plan.

The main point of opposition is AusTOTE's "lay-the-favorite" option, a controversial feature typically offered by betting exchanges. King insists, however, that AusTOTE does not fall into the same category as exchange betting.

Seeing the TABs as his chief competition, King said AusTOTE returned an average of 95 percent of the pool back to punters, compared to less than 85 percent for the leading TABs. Regardless of how people view AusTOTE, King said the first four days of business produce some telling facts. The pools, he said, have increased each day.

After the first 90 races, AusTOTE had paid better odds than the Big Three on 45 of the races and equaled their odds on three of them.

Once a 4 percent commission was factored in, King said, total dividends for AusTOTE were well ahead of its leading competitors.

King said AusTOTE was at $870 while Tab Ltd. was at $703.20, Unitab at $676.20, and Tabcorp at $653.60. That averaged out to a 28 percent higher dividend for AusTOTE when compared to the Big Three.

"Whatever interpretation is placed on the words we use to describe our product," King said, "the results speak for themselves."

Nevertheless, in a message to users posted on the AusTOTE Web site, King said there will be some tweaking done to the system, addressing some legitimate criticism. He said some questioned exactly what the TAB was offering and others, mainly competing TABs, said the commission structure in place was illogical.

"We want to be confident our clients understand that commission is deducted from the total amount returned from a winning bet and not just from the net winnings," King said.

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