While Tabcorp will be celebrating after its merger with Tatts was given the go ahead, the Australian Competition Tribunal's decision on Tuesday comes as a blow for Racing.com and corporate bookmakers.
The racing broadcaster and bookmakers Sportsbet and CrownBet had objections to the merger in submissions to the Tribunal along with Racing Victoria and the Australian Competition and Consumer Commission.
Racing.com's ability to secure the rights to South Australian racing for the next seven years, a deal that was wrapped up after submissions to the Tribunal, has taken on even greater significance.
Racing.com Chief Executive Officer Andrew Catterall said on Tuesday they had sought for the merger's approval to be conditional on changes around media rights.
"We sought conditions on an approval of the merger to restrict Sky Racing's ability to control media rights negotiations through their exclusive ownership of the wall-to-wall channel and the national retail market, restrictions of competitors' access to Pay TV and holding last rights in bidding processes," Mr Catterall said.
"Put simply, we sought conditions that would allow racing rights holders to provide their rights to Sky Racing for the wall-to-wall Pay TV channel and not be punished if they also sought the broader benefits of free-to-air and streaming distribution."
"These conditions have not been realised. We will wait to get a full briefing on the Tribunal's rationale on Thursday."
Racing.com had hoped for changes regarding media rights in the Tribunal's decision. Image: News Corp
The decision handed down by the Tribunal is likely to have an impact on the broadcaster's long-term strategy of incrementally building on their content which began with solely Victorian racing.
Racing.com told the Tribunal that if the merger was to proceed, the predicament for Racing.com was 'far more dire', in terms of its ability to acquire more rights and build a credible alternative to Sky’s offering.
It said the volume of Victorian racing was sufficient to establish a baseline audience, but the broadcaster needed more meets from other jurisdictions for long-term viability.
A primary concern outlined by Racing.com in its submission was the power Tabcorp/Tatts would have through Sky Racing to leverage its wagering joint ventures with the Principal Racing Authorities to obtain more favourable media rights deals in seven of eight of Australia’s racing jurisdictions.
While Racing.com's have since secured the rights to South Australian racing until 2024, the broadcaster would have had high hopes in adding Queensland racing content when Sky's current deal with the state concludes in 2020.
"We sought conditions on an approval of the merger to restrict Sky Racing's ability to control media rights negotiations through their exclusive ownership of the wall-to-wall channel"
Racing.com Chief Executive Officer Andrew Catterall
Vision rights were also identified as an issue by Sportsbet, who said a Tabcorp/Tatts owned Sky would have a significantly increased ability to pay more than any other potential bidder for content rights.
The bookmaker also proposed that the elimination of Tatts as a competitor to Tabcorp would have an adverse impact on pricing and product, with the merged entity having an estimated market share by turnover of 49.9 per cent.
The impact of the merger on punters, either positively or negatively, is a bit of an unknown.
The deal provides a pathway to national pooling of the totes, but it's the take out rate which will have the biggest impact on punters.
Sportsbet said the removal of competition between Tabcorp and Tatts took away the potential for price based competition in respect to pari-mutuel wagering while a national pool would mean corporate bookmakers could no longer offer best tote products.
The Tribunal is set to deliver its full reasoning for the decision on Thursday.