NZRB head hits out at criticism in Deloitte Report

New Zealand Racing Board head John Allen has hit out at claims international financial agency Deloitte has made about future TAB profitability.

A summary of the document known in horse racing circles as the Deloitte Report was circulated to thoroughbred clubs and industry organisations earlier this month.

The report, dated May 2017, was commissioned by New Zealand Thoroughbred Racing to investigate the New Zealand Racing Board's blueprint for the future.

Until the release of the summary, none of the report's findings had seen daylight.

The report's summary showed Deloitte was critical of the NZRB's inability to secure or enhance its future.

It was also critical of the anticipated rate of return for the NZRB, which runs the TAB, from its soon to be unveiled fixed-odds platform.

The platform, which is set to be rolled out on August 1, is a collaborative project with overseas companies Paddypower Betfair and Open Bet and is estimated by Deloitte to cost from $59 million to $72 million.
An NZRB representative disputed that figure and said in its 2016 statement of intent showed the platform would cost $29-35 million. 

The margins the platform would return to the NZRB have been tested by financial firm KPMG, but Deloitte was critical of the strength of that testing in its report summary.

Allen is at odds with that criticism and is critical of Deloitte for not doing enough research into the fixed-odds platform.

``Deloitte didn't talk to us. This was a desktop exercise that they undertook without actually engaging with us and in our view they have significantly understated the value we are going to create from this.

``Because they have made assumptions about the way in which our calculations were reached which are simply not true.''

Allen is more than comfortable that the NZRB made the right choice in partnering with Paddypower and Openbet and that the partnership will increase his organisation's profitability.

``We are confident that the fixed-odds platform will create the value that we are expecting from it.''

``We went through a very extensive exercise, by bet type, to assess the margin impacts that we expect to be delivered from this particular initiative.''

``There's a lot of analysis, a lot of thinking and a lot of testing ideas that has gone into that process.''

Partnering with Paddypower Betfair and Openbet was one of a range of options the NZRB had when choosing how to expand its fixed-odds business.

It is understood some betting agencies offered the NZRB much cheaper options.

Contracting out part of its core business meant the NZRB had to be thorough in choosing a partner.

Allen was not critical that the Deloitte report was commissioned, and he applauded any move to help boost NZRB income.

``We all want the same thing is which is to substantially increase the amount of funding for the industry.

``I think we can be very confident in the future of our industry. I know there are many challenges and I know as a consequence many people are asking question about that future.

``But I believe there is a lot of confidence.''


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