Tote Tasmania to be Put on the Block

The Tasmanian government has proposed legislation in the state parliament that would see its lucrative betting agency, Tote Tasmania, put on the selling block.

Tote Tasmania was founded in 1999, and holds the exclusive right to conduct pari-mutuel wagering on the island state. According to the Australian Associated Press, it generates turnover of 750 million Australian dollars. Citi analysts, the AAP said, recently valued the operation at between 210 and 240 million Australian dollars.

The legislation, called the TOTE Tasmania Sale Bill, was introduced Tuesday by Michael A. Aird, Tasmania's treasurer and racing minister, in the state's Legislative Council.

Along with the sale bill, Mr. Aird has proposed amendments to Tasmania's Gaming Control Act of 1993 that, among other things, would bring Tote Tasmania under the regulatory oversight of the Tasmanian Gaming Commission.

"The legislation tabled today is designed to attract new offshore and domestic investment in Tasmania and create jobs which will benefit the economy," Mr. Aird said in a prepared statement.

Betfair, the United Kingdom betting exchange, which, in April 2008, inked an agency agreement with Tote Tasmania, is among a number of operators expected to make a bid.

"We've registered to receive a copy of the sale documentation (Information Memorandum, etc), which is apparently due out at the end of the month," a Betfair spokesman told IGamingNews Thursday. "We'll make a decision as to whether or not we participate in the sale process once we've had a chance to consider that material."

Under Mr. Aird's proposals, the new buyer of Tote Tasmania would receive a 15-year exclusive license to operate pari-mutuel wagering.

The buyer would pay an annual flat wagering tax of 6 million Australian dollars but would have no funding obligations to the Tasmanian racing industry. Moreover, the government is offering Tote Tasmania free of wagering tax on pari-mutuel and fixed odds betting.

Citi analysts quoted by the AAP said the government's decision to sell Tote Tasmania levy-free means the betting agency would likely offer the best margins of all jurisdictions in Australia.

"The growth that smaller jurisdictions are experiencing must come at the expense of larger states," the analysts said in a research note. "Punters will likely continue to migrate to the smaller states due to better pricing, leaving racing significantly underfunded at current race fields charges."

Craig Coleman, the chief executive of Tote Tasmania, welcomed the prospect of a sale in a prepared statement this week.

"The time is now right for the business to move from the Government’s hands to the private sector to enable it to fully capture the growth opportunities available in the market," he said.

Expressions of interest for Tote Tasmania, the AAP said, are expected to be called by May 2009 and the sale completed by August 2009.