Australian Horse-Betting Operators Hit Hard as Equine Flu Outbreak Shuts Down Industry

28 August 2007

Australian horse-racing is in dire straits, after the country's first outbreak of equine influenza forced the government to put the multi-billion dollar industry on lockdown, indefinitely.

Australia's Agriculture Minister Peter McGuran told the Australian press last weekend that the virus had spread from Sydney to five locations in rural New South Wales (NSW) and across the state border into Queensland.

"If we're racing next Saturday, then we should all breathe a sigh of relief," McGuran said at a news conference on Sunday. "If there's any racing in Australia before then, it will be a minor miracle."

The horse flu outbreak comes at an inopportune time for the industry, with the Australian breeding season set to begin this weekend.

Moreover, concern has arisen over an extended shutdown--which could mean the postponement of the country's most lucrative and famous race, the Melbourne Cup, scheduled to run this November.

According to Reuters, the race attracts some of the best stayers from Britain, Europe and Asia, although bookmakers have reportedly begun freezing betting markets on the race amid speculation that the outbreak will scare off most of the international contenders.

So far, the responses from Internet horse-book operators have been mixed.

Sportingbet Australia has said that it expects racing to resume over the coming weeks, and that a short-term suspension of the industry would not materially impact its full-year performance.

The outlook is not as rosy for Australian operators Tabcorp and Tattersall's, which, together, lost more than A$100 million last Friday, after experiencing a collective sell-off spurred by warnings that earnings could be affected by the shutdown.

"Based on its experience to date, if Australian racing (thoroughbred and harness) were not to resume until next weekend, Tabcorp expects that the loss in turnover will be in the order of A$150 million," the company said in a prepared statement.

Shares in Tabcorp opened down 4.6 percent yesterday following the announcement. The stock recovered slightly to trade down 2 percent at A$15.51 by mid-afternoon, while shares in rival Tattersall's fell 2.4 percent to A$4.83 against a benchmark index that was up 1.8 percent.

Shares in online betting firm Centrebet International--which lost A$7.9 million last Friday--dropped 4.7 percent to A$1.81 after the company said the outbreak may gouge its full-year post-tax profit by A$400,000 if the ban were to continue for a month.

With the stall in horse-betting, operators said interest in greyhound racing has taken off.

Tabcorp reported that betting on greyhound racing was up 87 percent, while Sportingbet (30 percent) and Darwin Sportsbet ("five-fold") have also reported marked increases in dog-racing turnover.

Centrebet estimated turnover on greyhound racing had increased 150 percent since the suspension. Company analyst Neil Evans told Australian daily Herald Sun that two weeks ago, $40,000 was bet on greyhound racing on a Saturday--but that last Saturday, the figure jumped 60 percent to $100,000.

Incidentally, the suspension--which includes a ban on horse movement--threatens to affect September's Asia-Pacific Economic Corporation (APEC) summit meeting in Sydney, which will be attended by more than 20 international leaders, including U.S. President George W. Bush.

According to Reuters, authorities were planning to bring in mounted police to deal with the "major protests" planned for the streets of Sydney, but may have to "review their plans for crowd control."