Sportsbet: The Impact Of New Taxes & How You Can Take Advantage

Australia's biggest bookie is only going to be ramping things up

sportsbet poc taxes

Sportsbet continue to power on as Australia’s biggest bookie, and they’re not planning on slowing down. That could deliver some genuine extra value for you if you play your cards right.

Sportsbet is owned by Irish outfit Paddy Power, who reported their global results last week and gave an update on their strategies for the coming year.

The actual results of Sportsbet are a little difficult to say exactly, given it’s all reported in British currency and the exchange rate has an impact. The following table gives a few clues however, and the column on the right gives the growth stats in Australian dollars.

So we know that raw turnover for the first half of 2018 increased by 22% on the year before, which is very good going. Underlying EBITDA (profit) increased by 18%. As we said, Sportsbet aren’t slowing down.

Net revenue was 9.4% of turnover. That means that for every $100 bet with Sportsbet, $90.60 is paid back to customers in winnings, and Sportsbet gets $9.40 to run their business.

In terms of looking forward, the big item discussed was new taxes in Australia – each of the states having announced a point-of-consumption tax on online bookies. Sportsbet produced a handy graph to show the impact:

What it shows is where each part of their revenue (the $9.40) goes. Given they’re now stung by three taxes on revenue – GST, product fees and the new POC tax – that’s changing.

At the moment, 25% of the $9.40 ($2.35) goes out the door in those taxes. 40% goes to the cost of running their business ($3.76), and the other 35% ($3.29) goes to profit.

With the POC taxes in place, the $2.35 paid in taxes increases to $3.48 (37%). That comes straight off profit, which drops to $2.16 (23%). It’s a pretty big hit.

So what?

Well, they need to do things to counter the impact – basically, they need to increase the dollars they’re bringing in the front door so that the whole equation is increased, and the resulting profit dollars don’t drop off too much.

So how do they do that? Attract more punters, and encourage those already with them to use them more and the competitors less. To do this, they outlined some strategies. Some of it is about maintaining their position as Australia’s #1 punting brand, but it’s also about giving punters more value: particularly through more promos (cash back, bonus bet deals, etc).

So how do they do that? Attract more punters, and encourage those already with them to use them more and the competitors less. To do this, they outlined some strategies. Some of it is about maintaining their position as Australia’s #1 punting brand, but it’s also about giving punters more value: particularly through more promos (cash back, bonus bet deals, etc).

The prevailing knowledge among bookmakers is that most punters (ie, mugs) aren’t that price-sensitive. They don’t shop around to find a slightly better dividend. Hence few bookies really invest in paying better prices, and largely just shadow the competition’s prices.

If you’re here reading this, you’re probably a bit smarter than that, but that doesn’t mean you can’t take advantage of what they’re doing.

What brings the masses in is these promo deals – getting cash back, or getting paid out early. So this is where the investment goes.

Some of these strategies are already plain to see – early payouts for AFL, NRL and Premier League… offering cash-back on all Sydney and Melbourne races on Saturday, rather than just a few… offering cash back on a few races in Victoria every day.

So use your brain and keep an eye on Sportsbet – and indeed the other big bookies – as they desperately chase greater volumes, because there’s a good chance there’s some real value in it for you.

Need help taking advantage of the bookies’ offers? Rod breaks down each promotion and the ‘real’ value behind it to maximise profit.

Over $81,000 profit in less than three years, including 18 straight winning months, is no fluke.