A blog on issues affecting Australia's newsagents, media and small business generally.

Tabcorp decides against an increase remuneration for small business lottery retailers

In a blow for small retail businesses confronting annual increases in rent of at least 5%, in wages of 3% or more and in other operating costs of between 5% and 10%, Tabcorp has decided to not increase the commission paid to its lottery retailers. Here is a letter sent to retailers. Happy end of financial year folks.

While they thank parties for their submissions, the letter shows that it was all wasted effort by all who made submissions, just as it is for most who object to new outlets being approved near them. Tabcorp is great at telling retailers who much they care and great and doing very little to put the words into action in my opinion.

Tabcorp shareholders have every reason to be happy. Small business retailers will keep working, for less in real terms, because some do not see an alternative and because some see the commission as icing on the cake for whet else they dip in their business.

The lowest paid is the lottery food chain are locked in to be paid less in retail terms.

What frustrates me is that this giant of a company punitively controls so much of what the agent retail businesses can achieve – in such a way as to hinder good and fair retail management.

28 June 2021

Dear Retailer

Subject: Commission Review Determination

As a proud operator of lotteries across Australia, Tabcorp recognises and appreciates the critical role retailers have played and will continue to play in the future, in the success of the Tabcorp Lotteries business.

As you are aware, in Victoria, Tatts is required to formally review the commission for retailers no less than three times during the period of the Victorian Public Lottery Licence. Although this is not a requirement across all jurisdictions, Golden Casket has elected to extend this review to include all of the jurisdictions in which we operate. After an extensive consultation process, we have now concluded this review.

As part of the current commission review and consultation process Golden Casket has:

  • considered all of the factors listed in our letter to retailers in November 2020;
  • actively engaged with Industry Associations that hold a current collective bargaining authorisation under section 88 (1A) and (1) of the Competition and Consumer Act 2010 in accordance with 3.3 of Schedule 4; and
  • invited retailers not associated with the Industry Associations to make individual submissions.We would like to thank ALNA and NLNA for their detailed submissions and subsequent engagement, as well as thank those retailers that are not members of ALNA or NLNA, for taking the time to provide us with their submissions.Following our extensive review and consultation process, Golden Casket advises that no changes are proposed for the maximum commission rates and the current commission rates will be retained.

1. Rational for retention of current commission rates

As you are aware, the current commission rates were adjusted on 19 August 2019 as part of the Omni- Channel Remuneration Program. Golden Caskets analysis demonstrates that these commission rates reasonably reward retailers for their role as a stakeholder in the conduct of Public Lotteries in Queensland.

Total commissions paid to Golden Casket retailers collectively have increased and are projected to continue growing. Through the successful management of the lotteries portfolio, coupled with the implementation of the Omni-Channel Remuneration Program, Golden Casket has delivered to retailers a steady increase in commissions, above the CPI during the term of the Current Licence, noting fluctuations related to jackpot activity.

2. Benefits delivered to retailers as a result of the commission review

Although Golden Casket does not support an increase in commission rates at this time, we will continue to regularly evaluate and seek to improve the net remuneration paid to retailers via competitive rate and fee structures. We will also continue our investment in product and marketing initiatives that drive growth and sales for retailers.

The Omni-Channel Remuneration Program which commenced on 19 August 2019 with enhanced remuneration arrangements for retailers, has delivered over $21M in FY20 in additional income to retailers, with a further $8.9M invested by Tabcorp in the DigiPOS buyback program.

Outside of the formal review process established by the government, Golden Casket regularly reviews methods to help reduce the costs for retailers and will continue to do so. We consider that this dynamic regular review process, which considers relevant and current factors, delivers better outcomes than simply operating a system with prescribed fixed / regular commission adjustments.

Golden Casket also has a strong pipeline of planned initiatives which are focussed on delivering ongoing benefits to retailers and building a stronger retail network. Such initiatives include:

  • exploring ways to drive new foot traffic for lotteries retailers;
  • training programs for our retailers;
  • the provision of retailer syndicates via The Lott Website and app;
  • terminal enhancements to bring the retail and digital experiences closer together; and
  • The Lott rebranding program that will see a single master channel Omni-Channel brand across boththe digital and retail networks.

3. Golden Casket future approach to remuneration of retailers

Given the maximum commission rates were increased in 2019 as part of the Omni-Channel Program launch, Golden Casket advises that the maximum commission rates will remain at the current levels.

Golden Casket will continue to regularly monitor the performance of its retailers including the level of commission paid to retailers and consider whether the commission reasonably rewards retailers for their role in the conduct of Public Lotteries. The implementation of the Omni-Channel Remuneration Program outside of the Schedule 4 requirements demonstrates Golden Caskets absolute commitment to this approach.

Conclusion

Golden Casket is committed to working in partnership with lotteries retailers, industry associations and the government on other programs that can assist retailers in maintaining relevance of their businesses into the future.

Thanks again for your participation and engagement with the Commission Review process and for your ongoing support. Should you have any further queries, please do not hesitate to contact your Business Development Manager.

Yours sincerely,

Antony

Antony Moore
General Manager Lotteries Retail

This letter reflects the challenges of being an agent, of relying on the entity in control to care for you beyond lip-service.

I suspect Fair Work would have decided differently if they were involved and looked at lottery agents as employees.

UPDATE (10:49am): Here’s part of ALNA’s response emailed just now:

What is ALNA’s position on the determination outcome?
Overall, ALNA is very disappointed with the outcomes for our retailers from the CRM process that were communicated today, we hoped and believed Tabcorp would be able to positively respond to our recommendations and deliver a range of improved solutions for retailers. Given the current circumstances, we feel it misses an important opportunity to address key issues and to deliver timely and meaningful solutions for the challenges facing retailers right now, and the broader Tabcorp business, that we had highlighted in our submission, with solution focused recommendations to this CRM process.

By not providing a baseline increase in commissions to retailers in this second review in the CRM which is affordable and already offset by ticket price increases, we believe Tabcorp will not meet its Lottery Licence and CRM obligations to retailers, as it has now been nearly 10 years since the retailer’s baseline commission safety net was increased. As a result, ALNA will be raising our concerns over the outcomes and recommendations from this review with the Victorian Minister for Consumer Affairs, Gaming and Liquor Regulation, as we did previously after Tabcorp’s response to the 2018 Commission Review Mechanism process.

While we acknowledge that since the last CRM, and our subsequent representations to Government, which ultimately resulted in the new Remuneration Program being launched, the majority of retailers have earned additional commissions and these have been very beneficial, they are not guaranteed like a baseline increase is and so they do not provide the safety net that retailers desperately need and that we have justifiably raised in this CRM process. They are ‘at risk’ commissions offset by a rise in fees and ticket prices and conditional on performance measures to discount these.

Our requests in the latter part of these negotiations were calibrated, to be reasonable, measured and affordable for Tabcorp in the economic circumstances, asking that they pass through a portion of the ‘at risk’ component of commissions in the remuneration program and asking that they reconsider their approach to available Omni-channel digital commissions and to improve these.

Furthermore, the opportunity this CRM review provided to adopt recommendations aimed at shifting retailers’ perception of the remuneration program from somewhat punitive and migratory to win-win rewarding and incentivising, should not have been overlooked. We believe this is critical for franchisees ongoing success with their franchisor.

9 likes
Ethics

Join the discussion

  1. Peter

    Gutted. Deflated.

    2 likes

  2. Simon

    Same.

    1 likes

  3. Rod Hurley

    It was probably quite naive of us to think that Tatts would increase our commission payments. With the company likely to sell off its betting arm (Tab) they want their bottom line to look as attractive as possible, and an increase in commission would impact that.

    It is disappointing. We all played a significant roll in the company’s performance over the last 16 months and this does sting.

    Still, I wouldn’t be too disheartened… This is all the more reason for us to focus on improving the other parts of our business to maximise sales and build a greater customer experience!

    2 likes

Leave a Reply

Your email address will not be published. Required fields are marked *

Reload Image