Tote accused of giving away profits

An Australian Financial Review article claimed the syndicate, run by Hobart-born gambler Zeljko Ranogajec, convinced Tote to pay it rebates in return for its betting dollar.

It said these rebates allowed Mr Ranogajec's syndicate to run a system which saw it profit from Tote regardless of whether its bets won or lost.

Tote says the claims are wrong. It would not confirm or deny it had a rebate deal with Mr Ranogajec.

Quoting a source ``with intimate knowledge of the Tote Tasmania business'', the AFR report said Tote paid out an estimated $45 million in rebates in the 2011 financial year, ``most of that would have been to Zeljko (Ranogajec)''.

Tote returned a profit of just $1.7 million in the same year, despite a turnover of close to a billion dollars.

Dick McIlwain, chief executive of Tatts Group, which bought Tote from the government for $103 million in December, told the AFR the business had given its profits away.

``They (Tote Tasmania) rebated the backside out of the business until there was nothing left,'' he said.

Tote Tasmania chief executive Craig Coleman denied this.

Mr Coleman acknowledged rebates were paid to high-end punters but not at a loss.

``Any suggestion that our profit result in 2010-11 was a result of rebates and commissions paid to larger customers is simply incorrect . . . our 2010-11 profit reduced because of increased compliance costs . . . and costs associated with race field fees, core wagering system replacement and labour,'' Mr Coleman said.

``The unsuccessful sale process that concluded in December 2009, that saw a loss of key customers and personnel, also contributed to the fall in profit.''

According to its five-year summary, Tote's expenses increased by 20.7 per cent in 2011, from $82.6 million in 2010 to $99.7 million, while its income rose 3.5 per cent, from $98 million to $101.4 million.

At the same time its turnover increased by 27 per cent, from $745.8 million to $950.7 million, and profit dropped 88.9 per cent, from $15.3 million to $1.7 million.

Mr Coleman said Tote continued to pay rebates this financial year.

Opposition Treasury spokesman Peter Gutwein said the public had a right to know if Tote was giving away millions in rebates.

``I am so concerned by comments from Tatts Group CEO Dick McIlwain that I have spoken to the chair of the committee investigating the sale of Tote Tasmania, urging him to call Mr McIlwain to appear before the committee,'' he said.

A spokesman for Racing Minister Bryan Green said the government was not aware of the rebate deals between Tote and high-end gamblers and would not be drawn on whether the minister supported them.