Punters around Australia…READ THIS CON-You may never bet again

Punters around Australia…READ THIS CON…You will be flabbergasted…

AS Aussies we all love a bet…WE bet on the Winner don’t we? I do… I’m not talking about betfair and laying….NO that’s too hard…I cannot comprehend how this has not made NATIONAL HEADLINES…I assure you it will.

The Tassie Government cannot sell the white Elephant that turned over BILLIONS a few years ago

You may not be aware, even care that the Tassie tote (TAB for most of us) has basically gone broke after turning over millions, billions even. So why have they made fuck all,  these last few years?

WHEN WAS THE LAST TIME YOU GOT A REBATE ON YOUR LOSING BET FELLOW PUNTER? Cannot remember, yeah because you never get one…But if you happen to turn over millions like a certain secretive dude known as THE BIGGEST INDIVIDUAL PUNTER THE WORLD HAS EVER SEEN and live in Tassie (But who the hell knows where else) MEANS you are the recipient of massive rebates us stupid AUSSIE PUNTERS can only ever dream about.THAT will make your eyes and LOSING TICKETS jump back out of the BIN…It is ALL about LOSING in this SCAM that our own GOVERNMENT BOOKIES cheated us with…

A rare photo of Zeljko Ranogajec

Just quickly, this bloke Zeljko Ranogajec.was a big punter, and demanded, INSISTED he is entitled to losing rebates because of how much he turned over. Sort of sounds cool…BUT he conned the Government to keep paying rebates on even losing bets. He worked out losing was better than winning with this little tax-free scam happening which happened to be run by the Australian Government in Tasmania. Do not rub your eyes, he turned over wagers worth an astonishing $1 billion on racing each year. He rebates, were a mind-boggling…

From 2007 onwards the government-owned TOTE Tasmania (TT) began reporting impressive growth in its wagering business.

Over the next four years its parimutuel turnover would nearly triple to an impressive $937 million in 2011.

Despite nearly $1 billion in turnover, TOTE Tasmania could manage just $1.5 million in profit last year.

The gambler AKA Zeljko Ranogajec. John Wilson and Mrs Wilson of course

The following story is from last week’s Financial Review and takes a close look at the betting activities of Australia’s biggest punter.

It was hardly a difficult question, nor one that invited clarification.

But when one of Australia’s most secretive men was asked to state his name at the Federal Magistrates Court in Sydney there was a moment of confusion.

“My name is John Wilson … and I am an investor,” he told the court.

That was not, as it emerged, the only name he answers to.

After prompting from counsel, the witness confirmed he was also known as Zeljko Ranogajec.

It’s a name few would recognise, even though Ranogajec would count as one of the world’s biggest gamblers. His vast wealth and incredible power has been achieved in an arena beloved by Australians – horse racing – but he has never given an interview, has rarely been photographed and many of his long-time employees have not even met him.

To racing insiders, however, the man known simply as “Z” is an almost mythical figure – loathed and admired in equal parts.

Born in Hobart, this 50-year-old son of Croatian immigrants controls an empire that wagers an astonishing $1 billion on racing each year. Yet the closest thing to a public profile for Ranogajec comes via his old friend and fellow gambler, Tasmanian art collector David Walsh, who built the ambitious Museum of Old and New Art outside Hobart.

The pair have prospered since their university days, but recently Ranogajec’s gambling empire has come under threat.

The Australian Taxation Office is known to be once again looking into Ranogajec’s affairs and he told associates last year that it is demanding about $900 million for 10 years of back taxes, penalties and interest.

Ranogajec, who is thought to have relocated to London, is not available for comment.

And just as the ATO is giving him a good-looking over, so too are everyday punters and racing professionals, who are beginning to grasp the sheer scale of the incentives given to his betting syndicate by TABs across Australia.

These incentives, not available to ordinary punters, almost brought down Tote Tasmania last year and threaten to undermine how the racing industry is funded.

The story of how Ranogajec built a system that has ended up in controversy and litigation starts in the United States, where his business became so large it attracted the attention of regulators and attorneys working for former New York governor Eliott Spitzer.

They had grave concerns about how syndicates such as his work.

Despite this industry-wide notoriety, up until now little has been known about how Ranogajec operates. But previously unseen court files, obtained by the Weekend Financial Review, provide a window into this normally opaque world and to what Walsh has described as a “money mine”.

Ironically, the assiduously private Ranogajec outed himself when he brought a commercial dispute to court in 2008.

His legal action, designed to claw back $2.5 million from his former bookmaker Karl O’Farrell, meant the court ended up hearing the gritty details of how his gambling operation worked. It offered a close-up of the deals that delivered his fortune. And it was all on the public record.

What could have possessed Ranogajec to expose himself will never be known but it is inexplicable given what he previously told O’Farrell.

“We like to keep our dealings secretive. Nothing in writing,” Ranogajec told O’Farrell, according to his written evidence filed in the Federal Magistrates Court in Sydney.

In the course of the case, which was not reported at the time, the court heard how Ranogajec had convinced totes around the world to provide him with giant rebates or subsidies in return for his betting dollar. These deals enabled Ranogajec to win even when he picked the wrong horse.

That was a revelation to federal magistrate Rolf Driver, who heard the case.

“Surprisingly, the syndicate apparently makes most of its money by placing losing bets,” he said.

Ranogajec expanded on this during his evidence to the court. He was talking about racing in the US but it’s a model he has used successfully the world over.

“You bet to lose, so that you actually turn over more money and the win comes from the rebates,” he told the court.

“So we may not necessarily have won. I don’t know off the top of my head whether we won [excluding rebates] or not.”

Whatever the outcome, it was certainly lucrative.

From an outlay of just $200,000, Ranogajec confirmed to the court that his syndicate had earned $44?million from betting on US races over a 3½-year period. In addition, he claimed to be owed a further $8.5 million in rebates from O’Farrell’s bookmaking company Capital Play, which was licensed to take bets on US races.

That would have taken the syndicate’s earnings to about $52?million over that period.

This is surely successful punting, yet in the US, Ranogajec’s system was based on rebates, not picking winners.

To understand rebates and how it’s possible to win from losing, the mechanics of pari-mutuel betting needs to be explained. It is standard?practice for totes around the world to take out between 15?per cent and 20 per cent of all money wagered.

Due to this “take out” it is considered almost impossible for the average gambler to come out in front over any length of time.

But Ranogajec is not your average gambler.

Due to his sheer size he has persuaded the totes to pay him “rebates” or “loyalty payments”.

In the US, the syndicate received an average rebate of 13 per cent on all losing bets, according to court documents.

From there the maths is pretty simple, as Ranogajec told the court.

“If you bet $100 and lost $5, but you get a 10 per cent rebate, you still make 5 per cent,” he said.

That means the more money you can turn over, the more money that comes back to you in rebates. And so it becomes a matter of ensuring that any losses are less than the amount rebated.

The court documents show that just 15 per cent of what the syndicate earned from US racing over that 3½-year period was from selecting the right horses.

Their winnings on a correct punt were just $8 million – a figure dwarfed by the $44?million earned from losing bets with rebates attached.

It was a perfect system that only came unstuck when O’Farrell allegedly refused to pass on all the rebates the syndicate felt it was owed by Capital Play.

In response, Ranogajec called in a $2.5 million loan advanced to O’Farrell, who was eventually bankrupted by the court.

In his effort to get his money back from O’Farrell, it became clear that Ranogajec was very keen to impress on the court that his syndicate was “not a business”.

In his words, it was a “punters club” or just a “collection of individuals” who came together to bet.

This modest description does no justice to the scale of his enterprise. The syndicate employs about 300 people at its offices in Hobart and Sydney and it runs a global gambling operation that places bets on races in Japan, Hong Kong, England, Australia and the US.

The betting system relies on computer models driven by complex algorithms that place thousands of bets, worth millions of dollars, in the final minutes before the horses jump.

In Australia the syndicate is known to win in its own right, while in the US the operation relied on rebates.

But during his legal battle with O’Farrell, it became clear that the paying of rebates was something of a legal grey area in the US.

While not unlawful, they were prohibited by some state racing authorities.

Regulators had been concerned for some time about the probity of so-called rebate shops such as O’Farrell’s Capital Play and the type of clients they attracted.

In fact, Ranogajec and Capital Play were one and the same, as his syndicate was its only customer and financial backer.

“Rebate shops have for some time been associated with illegal activities such as race fixing, money laundering and tax evasion,” said a 2008 report commissioned on the industry by former New York governor Eliot Spitzer said.

The report mentioned Capital Play extensively but made no specific allegations against the company.

It also named Ranogajec and his wife, Shelley Wilson, as being associated with Capital Play and claimed regulators in the ACT, where Capital Play was based, paid the couple little attention.

“The screening of individual betters, in particular with respect to the nature of their businesses, backgrounds, and sources of funds, is limited,” the report said.

Eventually, the New York Racing Association cut off Capital Play’s access to betting pools at the Aqueduct, Belmont Park and Saratoga racetracks.

Keeneland Race Course in Kentucky soon took the same action. No specific reason was given but, despite persistent protests from Capital Play, its access was never restored.

O’Farrell said that the termination was “without merit” and was “driven by the New York Racing Association’s attempt to remediate its own serious integrity problems.”

That failed to sway the regulators and the report to Spitzer said there were “serious risks associated with rebate shops”.

“By betting consistently on races where the risk of loss is known to be relatively slight, money can easily be laundered,” the report said.

With no access to the major US racetracks, that was the end for Capital Play.

But just as regulators in the US were raising concerns about how the likes of Ranogajec operated, he was being welcomed warmly by TABs in Australia.

Ranogajec’s home state of Tasmania was the most aggressive enthusiast.

From 2007 onwards the government-owned TOTE Tasmania (TT) began reporting impressive growth in its wagering business.

Over the next four years its pari-mutuel turnover would nearly triple to an impressive $937 million in 2011.

But the spike in revenue turned out to be profitless growth.

Despite nearly $1 billion in turnover, TOTE Tasmania could manage just $1.5 million in profit last year.

This gap between turnover and profit was due to aggressive rebating to the likes of Ranogajec. His syndicate did not actually bankrupt TT, but it made it unprofitable.

That lack of profitability may have explained the sudden sale of TT in December for $103 million, despite public assurances from the?Tasmanian government just three months earlier that it had no?intention of selling the business.

Tatts Group, which operates the tote in Queensland, South Australia and the Northern Territory, was the buyer and its chief executive, Dick McIlwain, was scathing of TT’s strategy.

“They gave all the profits away,” he says.

“They [TT] rebated the backside out of the business until there was nothing left.”

A recent Macquarie Equities report estimated that TT was paying an average rebate of 10.5 per cent to punters such as Ranogajec.

That’s aggressive in the extreme, given TT takes out only 14.8 per cent from win and place bets and 20 per cent on so-called exotics such as trifectas.

But while TT was floundering, syndicates such as Ranogajec’s were doing very nicely. Calculations provided to the Weekend Financial Review by someone with intimate knowledge of the TT business estimated the tote paid out $45?million in rebates last financial year.

“Most of that would have been to?Zeljko [Ranogajec],” said the source.

But his syndicate appears to have been living off more than rebates.

A line item in the latest TT annual report showed that Tasmanian punters, or perhaps one in particular, was highly successful.

TT reported that $69.1 million had been booked in “settlements from other TABs”. Once again, it’s thought Ranogajec’s syndicate would have reaped a good proportion of this.

“These guys made money consistently, they were not just living off the rebates,” says the source with knowledge of Ranogajec’s betting patterns.

Insiders say TT began by offering rebates of about 2.5 per cent in 2007, but the more money bet by the syndicates, the more they demanded in rebates.

“It became a race to the bottom,” according to McIlwain.

By June 30 last year it was clear that TT had all but destroyed its own business, by offering increasingly larger rebates to the likes of Ranogajec.

The nature of racing is also such that not everyone can win – it’s a zero sum gain.

In fact, the more Ranogajec won, the less was left for other punters.

This is McIlwain’s main gripe.

“They are giving money back in rebates to punters so they can screw over the betting pools,” he says.

“The ordinary punter is subsidising these guys.”

The result has been a devastating one for the weekend gambler.

The sheer weight of money from Ranogajec, facilitated by rebates, has flattened out the odds and means that any wins enjoyed by punters are far smaller than in years past.

It should be remembered that Ranogajec bets in all states, it’s just that TT was the biggest provider of rebates.

“The recreational gambler is losing their money faster,” McIlwain says.

“And if you take their money away from them too quickly, then they lose interest.”

Taken to its logical end, it could mean smaller betting pools and less money to fund the racing industry.

That is yet to happen and McIlwain is determined to end the massive rebates offered by TT when he takes control of the business in March.

But TT is not alone in providing the rebates.

“Tasmania started this odyssey and it has spread like a disease,” says McIlwain.

“Western Australia is now very heavily into it, although they would probably deny it.”

The Tabcorp-owned NSW and Victorian TABs also provide rebates, which are thought to be between 5?per cent and 6 per cent.

McIlwain says that “dimwit governments” have facilitated the “ripping off” of ordinary punters by passing legislation allowing the paying of rebates.

“Tasmania was OK until others started doing it [paying rebates] – then it became a fight to the bottom,” he says.

And the Tasmanian example shows that the only winners are the likes of Ranogajec and his syndicate.

It’s no wonder that David Walsh described the betting system as a money mine.

David Walsh, Tasmanian Reclusive Punter and Multi-Millionaire and Museum Owner

That appears no exaggeration, given that it funded Walsh’s $180?million Museum of Old and New Art (MONA) outside Hobart.

In the introduction to his book Monanisms, released when the gallery opened last January, Walsh gave a typically oblique description of his working life:

“I invent a gambling system. Make a money mine. Turns out it ain’t so great getting rich using someone else’s idea. Particularly before he had it. What to do? Better build a museum; make myself famous. That will get the chicks,” he wrote.

MONA has certainly made Walsh famous but it has also put the spotlight on Ranogajec, who would prefer to have no public profile at all.

That’s surely why he didn’t want to disclose his real name, even when asked in court.

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