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71st Annual General Meeting

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1 71st Annual General Meeting
71st Annual General Meeting Monday 30 August 2010

2 VBA Council and Executive Staff Your First Point of Contact

3 AGM Agenda Welcome from the Chairman Apologies and Obituaries
Council & Office Bearers for 2010/11 Confirmation of 2009 AGM Minutes, Business Arising out of Minutes 2009/10 Financial Accounts incl. Balance Sheet & Statements (circulated), Discussion and Confirmation VBA Membership and Turnover Statistics General Business Luncheon

4 Welcome from the Chairman
Welcome from the Chairman Welcome to all Members to the 2010 VBA 71st Annual General Meeting

5 Apologies / Obituaries
Apologies / Obituaries Apologies…G Ryan, K Read, P Girke Obituaries…a moment to reflect on the passing of old friends and colleagues: Max Elliott Victor Ma Oakie King John Attridge Ned Wallish Brian Kerr John Rowlands William Humphreys A Minute’s Silence

6 VBA Election and Council Positions
VBA Election and Council Positions Announcement of Council & Office Bearers for 2010/2011

7 Council & Executive Staff
Council & Executive Staff Changes to VBA Council VBA Council Members and Bearer Positions Resignation(s) John Bull Lisa Eskander Nomination(s) Greg Engellener Alistair Kennedy Lyndon Hsu – Chairman, Finances & Guarantee Fund, 24/7 Reforms Darren Gilham – Vice Chairman, Country Racing Harness Greyhound Greg Engellener– Rails Bookmakers Michael De Campo – Internet, 24/7 Reforms Alistair Kennedy – Bookmakers’ Development Fund Gavin Marantelli – Nat. & State Regulatory Affairs Norm Short – Internet, 24/7 Reforms, Sports & Futures Betting Norman Oke – City Racing Executive staff John Clancy – Chief Executive Officer Rhoda Jenkins– Office Manager

8 Confirmation & Business arising out of Minutes
2008 AGM Minutes Minutes of 2009 AGM: Confirmation & Business arising out of Minutes

9 2009/10 VBA Annual Financial Statements Discussion and Confirmation
Financial Statements 2009/10 VBA Annual Financial Statements Discussion and Confirmation

10 VBA Financial Performance
VBA’s operating performance has been strong in a difficult financial market. Total income decreased to $280k (2008/09 : $316k); Total expenses decreased to $280k (2008/09 : $304k), reflecting VBA’s tight control of expenditure Operating deficit of $2k (2008/09 : surplus of $9k), resulting from a significant decline in investment income due to lower interest rates and a one-off employee termination expenses. Excluding one-off expenses, there was a surplus for 2009/10. Accumulated Members’ Funds $456k: (2008/09: $458k) VBA is confident with a return to higher interest rates in 2010/11, a surplus is achievable.

11 VBA Financial Performance (cont’d)
Council’s investment policy: In 2009/10, the VBA investment policy remained conservative with investment in high quality asset classes Money Market (ANZ, CBA) Residential 1st Mortgages (AMS lawyers) Ensure returns on asset portfolio are maximised by seeking highest returns across qualifying asset classes In 2009/10, portfolio largely constant in capital terms but lower interest rates have significantly impacted on returns. For 2010/11, the VBA will review asset allocations to maximise investment income Key investment note: VBA policy has ensured no member’s funds were lost as a result of the Global Financial Crisis.

12 Bookmakers’ Development Fund
Highlights for the Bookmakers’ Development Fund are as follows :- The Statement of financial performance of the fund as forecast income for the year was $398,254 The reduction in bookmakers turnover has resulted in lower BDF receipts (approx $103k reduction). The major expenditure items for 2009/10 were: Bookmakers Telephone System ($36k), VBA Annual Dinner ($25k), Internet Licence Fees ($72k), Internet Wagering IS Charge ($76k), Advertising & Promotions ($20k).

13 VBA Membership and Turnover Statistics
VBA Membership and Turnover Statistics VBA Membership and Turnover Statistics

14 VBA Membership Base Membership data as at 31/5/2010 is highlighted as follows: Membership numbers reduced by 4. Resignations: Neil Slater, Doug Macauley, John McKay, John Conole, Paul Johnson, Paul White, Rick Macciotta and Kevan Ward. New Members: Peter Lawrence, Graeme White (Citybet), Ian Humphries, Daniel Mills, Adrian Marantelli, Jonathan Walsh, Terry Lillis, Neil Wilson and Siobhan Coster. Membership applications: In 2010/11, the VBA is in receipt of several applications currently being processed by the VBA and VCGR. Female membership: 14 in total.

15 Partnerships & Incorporation
In 2009/10, further take-ups in partnerships / incorporations, and consolidation (sale and transfer) of licenses… Family Self-incorporation Independent Kingbet, A & A King Sampieri, G & M Fonebet, A & R Schwarz Saber, K & M McGrath, D & A De Campo, M & M Elliott, M & W Dorrington, J & J Nott, P & C Eskander, L & M Galvan, D & S Wright Odds, R & M Wright & Carly Crowe Bickerton, P & D Gallopbet, L Hsu, A Sampieri Marantelli, G & A Betstar, Alan Eskander Turf Accountants, Steve Stoios Kenson Bookmakers, A, J & K Kennedy A Bell & M Manning Surebet, S Ash, S McHenry Winbet, R Killian, G Engellener, M Filgate Turf Bet, D Kilmartin, T Lillis Flemington SportsBet, N Short, J. Sylvester Your Best Bet, G Donald, M Cramp Lucky Bet, G Hyland, A Baker D Crimmins, S Lynn D McHenry, G Nagle Boolbet, M. Lucas, M. Atchison Gee Gee Racing, D. Gilham, B. Grindal G Fitzpatrick & D Mills Disposal of Bookmakers’ Business 2009/10 Victor Ma & Co to M Cramp R Quinn to P Bickerton D Macaulay to W Hay R Macciotta to G White (CityBet) R McGowan to Gee Gee Racing Partnerships and Incorporation actively used by Bookmakers as an effective tool to manage succession planning, 24/7 internet and telephone and race meeting attendances (continuity)

16 Bookmakers’ Turnover, Telephone and F2F
YoY total thoroughbred turnover was $362.7m City: $240.5m down 40.1% Country: $46.2m down 30.2% Telephone: $128.3m down 52.9% HRV: $4.3m down 2.4% GRV: $2.1m even Sports: $19.3m down 49%

17 Bookmakers’ Turnover, Internet
Internet turnover increased by 71.3% to $50.5m Presently, 11 bookmakers are operating on the internet: Your Best Bet PlaceABet Top Fluc VicBet Lisa Eskander Double Bet Flemington Sportsbet Boolbet Tom Waterhouse Cricket Bet Domebet Internet turnover now represents 14% of total bookmaker turnover (2008/09 $14.4m or 3%) With approvals to lay on Betfair and to accept derivative tote wagers, now before the RVL Board, the VBA considers internet based turnover will continue to rapidly grow once these initiatives are approved. A full internet report is attached.

18 Sports, Harness, Greyhound Turnover
YoY sports turnover from Victorian bookmakers was $19.3m The decline in sports turnover was consistent with the decline in thoroughbred racing. Four bookmakers operated as sports bookmakers: Domebet, Flemington SportsBet, Boolbet and Phillip Nott. Harness Racing: VBA / HRV Consultative Meetings City Turnover/Country Turnover 31/5/09 City $2.6m +15.6% Country $1.7m % Total $4.3m -2.4% City increase due to transfer of country meetings to Melton. The VBA has assisted in the promotion of Harness Racing at Melton, Maryborough, Horsham, Shepparton and Cranbourne Greyhound Racing: City - $1.6m Country - $410k Total Turnover - $2.1m

19 (Members’ Q&A Welcome)
General Business General Business (Members’ Q&A Welcome)

20 Key Discussion Points 2009/10
Racing Minister, the Office of Gaming and Racing and the VCGR Responsible Gambling Code of Conduct, Advertising Standard & Inducements RVL Member Consultative Committee Racing Legislation Amendment (Racing Integrity Assurance) Act 2009 Bookmaker Guarantees Amendments to Rules of Racing Country Racing Improvements Racefields Legislation Picnic Race Clubs Australian Bookmakers’ Association Conference Metropolitan Stand Allocation 2010/11

21 Racing Minister, Office of Gaming and Racing and the VCGR
VBA representatives met on a regular basis with the Office of Gaming and Racing including Ministerial advisors, the Racing Minister and the VCGR including their Chairman and other officers. These meetings discuss a range of Bookmaker matters including VBA claims but also to ensure these representatives are provided with an overview of developments and issues impacting on the Victorian Bookmaking profession. The key matters that have been the subject of ongoing discussions include VBA 2010 Wagering and Bookmaker Reform Package Product offerings (tote based), now before the RVL board for approval, including tote derivatives Laying on Betfair, now approved by Government and subject to RVL board approval Bets back: deductibility with interstate wagering operators TABCORP stand positions / Bookmaker stand allocation system Revised levy regime, racing and sports and gross profit Offcourse offices, denied by Government Victorian bookmakers right to stand at sporting events The ability of Victorian bookmakers to operate on a level playing field VCGR registration procedures, code of conduct and responsible gambling. AUSTRAC Interstate based turnover levy. RVL has confirmed it will not seek to “double tax.”

22 Responsible Gambling Code of Conduct, Advertising Standards & Inducements
The Justice Legislation Amendment Act 2009 which amended the Gambling Regulation Act 2003 introduce a number of responsible gambling changes which affects Victorian Bookmakers Responsible Gambling Code of Conduct The Act introduced a requirement for bookmakers registered in Victoria to implement a Responsible Gambling Code of Conduct approved by the VCGR. The requirement became a condition of registration as a Victorian Bookmaker from 18 December 2009. Advertising Standards The Victorian Government introduced advertising standards that wagering service providers must follow including a prohibition on any form of gambling advertising that : Encourages a breach of the Act Depicts children wagering Suggests that winning will be a definite outcome Suggests that participation in wagering is likely to improve a person’s financial prospects Promotes the consumption of alcohol while engaged in wagering Inducement to Open a Betting Account The Victorian Government has also made it illegal for a wagering service provider to offer any credit, voucher or reward as an inducement to open a betting account.

23 RVL Member Consultative Committee
The VBA is a representative member of the RVL Member Consultative Committee, the Committee meets formally every six months. The RVL Constitution provides that the Committee comprises three representatives of RVL and one representative of each RVL member. The following matters were dealt with by the Committee during the year: Post 2012 Wagering Licence Race Fields Litigation and Policy Review RVL Annual Financial Result & Current Year Budget Infrastructure Plan Implementation OHS & Risk Management Strategy End of Season Review of Victorian Jumps Racing National Race Fields Product Fees Directions Paper Consultations / Infrastructure Plan Management of Racing’s Media Rights Australian Racing Board Issues Review of Whip Use

24 Racing Legislation Amendment (Racing Integrity Assurance) Act 2009
The Racing Act 1958 and the Gambling Regulation Act 2003 has been amended to implement a number of key recommendations contained in the Report on Integrity Assurance in the Victorian Racing Industry prepared by Judge Gordon Lewis, the legislation introduces the following: Establish a Racing Integrity Commissioner, located within the Department of Justice to provide independent oversight of racing integrity, assurance and improve the exchange of integrity related information between regulatory bodies and bookmaking authorities such as the VBA. Establish separate and independent Racing Appeals and Disciplinary Boards (RADBs) for GRV and HRV based on RVL’s existing model for thoroughbred racing. Abolish the Racing Appeals Tribunal and transfer its jurisdiction for hearing appeals against decisions of the three RADBs to VCAT. Repeal the ban on the transmission of betting odds from racecourses. The VBA Council met with the Racing Integrity Commissioner Mr Sal Perna at the May Council Meeting.

25 Bookmaker Guarantees On 7 October 2009 the Governor In Council advised approval of amendments to the Guarantee of bookmakers against defaults of wagers under Section 94A of the Racing Act 1958. The order introduced a number of amendments The amount of the bond referred to in section 94A(i) of the Act is $1,000,000 Betting by electronic device including Internet Wagering will require a minimum guarantee consistent with the application of a telephone guarantee ie $100,000 That non-future sports wagers be deemed consistent with non-future race wagers The race day guarantee will apply to a bet where the result is to be decided less than 14 days after the day on which the bet is placed. Guarantee levels have been varied as follows Annual Turnover Guarantee Level Turnover Previous Qtr in Financial Year $10-$20 million $250,000 >$2.5 million but <$5 million $20-$30 million $400,000 >$5 million but <$7.5 million $30-$50 million $500,000 >$7.5 million but <$12.5 million $50-$70 million $600,000 >$12.5 million but <$17.5 million $70-$100 million $750,000 >$17.5 million but <$25 million $100-$150 million $900,000 >$25 million but <$37.5 million Bookmakers recording an aggregate betting turnover in the previous financial year exceeding $150 million will require a $1 million guarantee with an increase of $100,000 for every additional $50 million in annual turnover recorded above $150 million Guarantee levels above $500,000 would not be provided within the Joint & Several arrangement. Acceptable personal surety will apply to the value of the guarantee above $500,000. In June 2010 the VBA has put a submission to the Racing Minister seeking approval to amalgamate the future guarantees into a single $100k future guarantee. The VBA is also seeking approval to extend the definition of a future bet from 14 days to 35 days to accommodate racing/sports special events.

26 Amendments to Rules of Racing
In 2010 the Club Bookmakers Licence Rules 2009 were varied with substantial amendments (including a change of name to Club Bookmakers’ Licence Rules 2010) The RVL Board on 3 June 2010 approved these amendments with effect from 1 July 2010. The RVL Board also approved amendments to the following rules Bookmakers’ Internet Betting Rules 2001 Bookmakers’ Telephone Betting Rules 2001 Bookmakers’ Licence Levy Rules 2009 Bookmaker Sports Betting Rules 2007 The VBA Office has copies of these rules available to VBA members on request. Key amendments were as follows: New Rules have been proposed to cover Jockey Challenge Betting Each Bookmaker in Victoria may be licensed to engage in sports betting, the distinction between sports Bookmakers and Bookmakers is not necessary. Employees may accept and place bets on behalf of bookmaker (previously only key employees) Employees must assist RVL with any investigations Bookmakers are responsible for their employees Bookmakers must use an Approved Betting System Bookmakers must have accurate clocks at all times in the Betting System Bookmakers undertaking Future Betting will be required to have a separate bank account for Future Bets. Rule of Race Betting 3.4 which didn’t allow Bookmakers to offer quinella or 1-2 bets has been deleted.

27 Country Racing Improvements
Capital Project of interest at Country courses – not including track constructions and facilities upgrades Mornington, Werribee: Course Proper upgrade Mornington: Treated Water Supply Kilmore: Drought Proof investigation Geelong, Bendigo: Storm Water harvesting Ararat: Jockey & Officials facilities and infrastructure Ballarat: Dam upgrade Mildura: Swabbing facility Wodonga: Jockey, Officials and bar upgrade facilities Bendigo, Ballarat, Cranbourne, Geelong, Hamilton, Kilmore, Kyneton, Mildura, Moe, Mornington, Sale, Seymour, Swan Hill, Wangaratta, Warrnambool: Plastic Running Rail Warrnambool: Betting Ring Cover Echuca: Toilet upgrade Bairnsdale: Stewards Room Upgrade Tatura: Sewerage Mildura: Purchase of portable equipment Swan Hill: Upgrade Tote facilities Towong: Tote upgrade Warrnambool, Terang, Echuca, Wangaratta, Wodonga, Moe, Benalla, Cranbourne, Bairnsdale: InfoVision replace walls Mildura, Kyneton: Purchase of Market Umbrellas Bendigo, Ararat: Steward Tower Replacements Kyneton, Hanging Rock: Purchase of portable fencing Bendigo: Purchase a cool room Warrnambool: Marquee Mound

28 Racefields Legislation
The long awaited decisions by the Federal Court of Australia (Justice Perram) were released on 16/6/2010 in the cases taken by: Sportsbet Pty Ltd (Sportsbet) against the State of NSW, Racing NSW (RNSW) and Harness Racing NSW (HRNSW); and Betfair Pty Ltd (Betfair) against RNSW, HRNSW and the Attorney General of the State of NSW The claims made It is important to remember that the two cases were argued on quite different grounds. In Sportsbet, the case essentially attacked the way in which the race field approval was determined and implemented by RNSW, and the more general impact that had on all out-of-NSW wagering operators. Betfair, on the other hand, attacked the imposition of a 1.5% turnover based fee on its betting exchange model. Sportsbet decision The Sportsbet decision is that: The race fields law as passed by NSW Parliament is valid, but The way it was implemented by RNSW and HRNSW was not. The judge found the set of measures adopted by RNSW in constructing the race fields approval granted to Sportsbet imposed a discriminatory protectionist burden on Sportsbet. As HWNSW had followed essentially the same course, the judge made the same finding against the approval it had issued to Sportsbet. The practical effect or operation is key The decision makes it clear that the effect of the RNSW structure was to insulate the in-state wagering operators – TAB NSW and NSW on-course bookmakers – from the 1.5% turnover based fee. This was achieved, in effect, by TAB NSW and the bookmakers having their fees refunded. The judge went so far as to describe what RNSW and HRNSW did as a “reckless folly”.

29 Racefields Legislation
Under the law as it stands, if the practical effect or operation of measures imposed by racing controlling bodies in granting race fields approvals is to impose a discriminatory protectionist burden on out-of-state operators, the approvals will be invalid. The orders made In Sportsbet, the judge found Sportsbet’s approval for 2008/09 was wholly invalid and ordered RNSW to repay funds Sportsbet had paid under protest ($2.06m), plus interest. This suggests to us that Sportsbet may not presently have a valid race fields approval to use NSW race fields if this reasoning is applied to its current approval for 2009/10. All NSW race fields approvals are now in doubt The decision throws into doubt all race field approvals issued by RNSW or HRNSW to all other out-of-NSW wagering operators. In our view, all those approvals must be tainted by this finding. We will have to wait and see what the practical effect will be. Will RNSW volunteer repayment of all other fees to wagering operators, or will it have to be forced to do so? Can RNSW re-issue valid approvals in order to retain the funds paid under current approvals? What will it do for 2010/11 approvals? What next? In the judgment there are some hints given by the judge on how valid race fields approvals can be issued. In NSW, it seems to us that this will require a re-negotiation of the Racing Distribution Agreement between the racing industry and NSW TAB (ie Tabcorp), one way or another. For on-course bookmakers in NSW, existing compensation or rebate schemes with clubs will need to be reviewed.

30 Racefields Legislation
The Betfair decision Betfair was not successful in its claim, but the judge has left a somewhat unusual door open. The judge did not accept that Befair’s arguments were sufficient to establish acts of discriminatory protectionism. He found discrimination, but not of the kind that engages the constitution. In effect, the judge declined to say that the imposition of a 1.5% turnover based fee on Betfair’s Tasmanian betting exchange model gave any in-NSW wagering operator an advantage or imposed a protectionist burden on Betfair. The judge did leave the door open for Betfair to apply for further consideration of its position based on the decision in the Sportsbet case. Betfair has a short period of time to make that application. We can see no reason why Betfair would not achieve the same outcome as Sportsbet. What the decisions don’t do The ongoing war between race fields fee based on 1.5% turnover vs 10% of gross revenue is still alive and well. The decision is Sportsbet has no impact there. The Betfair decision is not decisive either, given it was limited to the arguments put forward by Betfair based on its betting exchange business model. Nor do the decisions cast any doubt over the constitutional validity of the NSW legislation which established the race fields fees. The equivalent laws in other States have yet to be challenged in any similar way, and so remain valid on the surface. Appeal RNSW has appealed the Sportsbet decision. This will prolong the legal uncertainty, but give RNSW an opportunity to re-group and to resist refund claims. This article courtesy of Lander & Rogers Lawyers

31 Picnic Race Clubs Improvements include:
Healesville- Plastic Running Rail – club initiative Healesville – Betting Ring cover Yea – Betting stand cover and power upgrade Mansfield, Drouin, Woolamai, Dederang, Buchan/Omeo/Tambo Valley, Balnarring – Jockey Scales Alexandra – Replacement starting stalls with former Wodonga stalls Tambo Valley – Verandah over Stewards facilities Tambo Valley – Post & Rail Fencing around mounting yard Alexandra – Sections of outside running rail Alexandra – Storm damage repairs Woolamai – Replace 3 steward towers Woolamai – Relocation of old tower Balnarring – Track drainage and vehicle access to the inside of the track

32 Australian Bookmakers’ Association Conference
The ABA Annual Conference was held in Adelaide on 30 November and 1 December 2009 VBA Chairman Mr L Hsu was elected as ABA Chairman Matters discussed by the Conference included The ABA financial and audited report for the year ended 30 June 2009 State reports ABA submission to the Productivity Commission Inquiry into Gambling National Scale of Deductions APN – copyright 24/7 Internet and telephone betting Racefields legislation AUSTRAC – draft compliance guide for Bookmakers ABA Code of Practice ABA Conference 2010

33 Metropolitan Stand Allocation 2010/11
The VBA has reached agreement with RVL regarding a new regime fro the Metropolitan Stand Allocation System for the 2010/11 Racing Season. The policy introduces a new work criteria as follows: Bookmakers may apply for a 12 month Metropolitan Area Allocation with a minimum 50% work requirement at each racecourse. Bookmakers may apply for a 6 month Metropolitan Area Allocation with a minimum 75% work requirement at each racecourse. Bookmakers allocated a 6 month Metropolitan Area Allocation must specify the months or time periods during which that Bookmaker will field during the 6 month period. Outside the nominated 6 month period Bookmakers will not be replaced. Apart from the works criteria the KPI for a Bookmakers rating will be based on turnover regardless of the 12 month or 6 month area allocation. The Policy initiative has been designed to enable greater flexibility for Bookmakers work patterns with the aim of increasing ring viability and ensure recognition for the 12 month Bookmaker in terms of their rating via turnover.

34 VBA Annual Industry Dinner
VBA Annual Industry Dinner Monday 22nd November 2010 RACV Club premises 501 Bourke St, Melbourne All Members and partner/guest are WELCOME

35 General Business and Closing
Members’ Q&A, Comments Close of Meeting Please join us for luncheon and refreshments


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