Thank you John and thank you everyone for your kind welcome.
Good evening folks, although, having just arrived from the United States, for me, it is really good morning. It is weird, I just called L.A. to say good morning to my children and here we are sitting down to supper. So to avoid confusing my jet-lagged brain, I'll act like a local and just say G’day. This is not my first time "down under" and I am thoroughly delighted to be here on your Golden Coast once again hanging out with like-minded people who are celebrating the Spring Racing Carnival.
I was down in Sydney for the Olympics and learned a new thing to say in Australia. "Aussie Aussie Aussie Oi! Oi! Oi!". If you are from Europe, it’s "Greece Greece Greece Oil! Oil! Oil!".
Lets hear it for the Chinese people "China China China Soy! Soy! Soy!". To my fellow Jews, "Israel, Israel, Israel, Oi Vey! Oi Vey! Oi Vey!" And finally to anyone from New South Wales "Little town North of Sydney, Little town North of Sydney, Little town North of Sydney. Woy! Woy! Woy! A little harmless Aussie humour there.
It is elegant, it is known as the sport of kings and it is a booming industry. But just what is it about horse racing and especially your world famous Melbourne Cup that gets people so excited? I guess it is those three things, the elegance, the mystique and the chance to make bucket-loads of money.
But these very things that attract us to the sport are the same things that frustrate us so much. Because although racing is essentially and outdoor sport, the perception that there is elegance, is often shattered by the weather. Elegance doesn’t last long if it is raining, windy or extremely hot, especially when beautiful hats are being worn by most of the women …and some of the men.
The mystique of horse racing? Well, there is something to be said for coaxing the best out of a beautiful animal like a horse. Not everyone can do it and the methods vary. Some of those methods are not pretty, but the point is that they produce results.
Is racing booming? You can bet your socks it is. In fact, one of the reasons I am "down under", I just love that phrase "down under"…G’day! Anyway, one of the reasons I am down under this week is because the business is booming, but I will have more to say about this a little later.
Yes, the racing industry is booming. Course attendances are up. There has never been more horses registered to race. Turnover at the bookmakers and the betting agencies is increasing. Prize money is at a record high.
All the indicators point to an industry that is heading up. This is good news because the racing industry has seen some tough times in the last few years. As you would all know, horse racing suffered all over the world during the early 1990s. As one of the leading industry commentators in the United States, I have long held that the reason was that old bogey of Political Correctness.
This phenomenon of political correctness has had huge impact on society. I was on the plane coming here and I was sitting next to an Australian who told me that New Zealanders, Kiwis, as he called them, have different words to Australians. Aussies say "Thongs", Kiwis say "Jandals". Aussies say "Esky", Kiwis say "Chilly Bin". Aussies say "Blind Date", Kiwis say "Livestock"
I can see you agree, that this is extremely humorous, but it is far from politically correct. And this has led to a lot of turmoil in the world
For example. Several runnings of the Grand National Steeplechase in the England have been disrupted by animal liberationists wanting to protect the horses. All this publicity saw a big swing towards sympathy for the horses. Now I could understand this if the horses were being mistreated, but my horses live under better conditions than my kids. They have a personal trainer, get exercised every day with a swim at the end, have regular check-ups from a vet and are pampered with the best food money can buy…kosher of course.
My kids? They fight a lot, in fact they fight so much My wife and I have called for a team of United Nation peace keepers, led by Kofi Anan, and maybe with his brother, decaffeinated Anan.
Now in the Grand National, when a tired horse comes crashing to the ground, it does make news and it is not a pretty sight. But if the activists think that people with millions of dollars invested in a horse are happy to see it get hurt, they are pretty stupid. But I see their point and for that reason, I don’t enter any of my horses into steeplechases any more.
But there are two sides to the racing industry and this is really brought home at the Melbourne Cup. Firstly there is the racing side, with the big build up of races like the Caulfield Cup, the Oaks and the Derby. This part of the Spring Carnival is where the people on the inside get themselves and their horses in the best shape for the difficult campaign over the forthcoming weeks.
Most punters think that it is just a matter of a bit of exercise for the horse then throw it in a float and run it in the Melbourne Cup. But it goes a lot further than that. For a start the horse needs a new set of shoes and if you want a happy horse, they had better match the saddle. And since the fashion parade is off the track, not on it, none of this platform shoes nonsense either, no matter how insistent the horse is.
And that leads me to the other side of the industry, on the other side of the rails. The people who watch, whether they are watching trackside, on TV or radio, or even on the Internet. While the money for the owners, trainers and jockeys is certainly very good, it doesn’t compare with the vast sums outlaid by the rest of the world on all the ancillary aspects of racing.
Tonight, I want to focus on one race, the big one tomorrow. Think about how much is wagered on this one race. It is said that Australia stops for the Melbourne Cup and the reason is because almost every person has a wager or is in a sweep and therefore has a vested interest.
Last year the total prize pool was fifty six million Australian dollars. Around seventy nine million US dollars. Today it sounds even more impressive when the same fifty six million Australian Dollars is worth one hundred and eight million US dollars. This is the official amount spent, but one can only guess how much is invested in offices and at private parties around the country, but it must take the total to over a billion dollars, all on one horse race.
Lets look at the boost to the economy from a mere horse race. Well, here we are tonight for a start. This evening would not be happening were it not for that one race. No doubt there are thousands and thousands of similar events taking place all over the Gold Coast tonight as people get ready for the big day tomorrow.
Add to that the fashions, the parties tomorrow, the food, the drink, and of course, you have to factor in the lost productivity on a day like Cup Day and you can see that the whole thing has become more than just a bunch of hacks running around a field.
And with big money comes the temptation to take advantage of the weak, the gullible, the rich. What a classic example just recently with the sting on the Queensland TAB where a Canadian betting syndicate tried to win almost $200,000 by exploiting a loophole in the system.
I was delighted to see these guys pull it off for one reason alone. I had warned the head of the TAB, Sir Charles Anderson, about the loophole about 10 months ago and he was confident about his system, to the point of being cocky.
His first assumption, which was clearly wrong, was that no one would ever discover the scheme…or should I say scam…depends on how you look at it. Secondly, he had been convinced by his advisors that their computer system was intelligent enough to spot any attempt a mile away…or in Aussie speak, they would spot it 1.6 kilometres away.
Does everyone know how this sting worked? OK, briefly, as a marketing tool, the TAB was guaranteeing that you would always get at least your original investment back if your horse ran a place. This sounds very attractive to the mug punter.
Now, if you think about the odds of most of the horses in a race they are pretty long. So this syndicate started by betting a huge amount of money on two horses they were confident would run a place. You can imagine what this did to the odds for the rest of the field, they were artificially inflated, while those tow horses saw their odds crumble.
Now that they had manipulated the odds, they backed every other horse in the field for $5000 a place. It surely was a large outlay, but if a forty to one horse came home they were into the big money. And better for them, if the horses they put the original bets on ran a place, they would be guaranteed of getting at least their bet back, despite what had happened to the odds on those horses. The whole idea was very clever.
I have some software that monitors racing fixtures around the world over the Internet. I had it especially written so it knows the general rules of gambling and it will set off an alarm if it detects anything unusual. Well, you can imagine how the alarm bells rang when a country race meeting where the average pool is around twelve to fifteen thousand dollars suddenly had one race where there was a betting pool of over one million dollars.
At first I thought there had to be something wrong, but then I saw it was on the Queensland TAB and I knew straight away what was happening. I was on the phone to TAB headquarters in Brisbane but by the time I got through to someone who could do anything, the race was run and the Canadians had cleaned up with around one hundred and eighty thousand dollars profit.
Knowing that these guys would not be able to resist having another try, I warned the system administrator to keep an eye on the figures and sure enough, a Tasmanian greyhound meeting was the next target, also through the Queensland TAB. But even forewarned, these Bozos in Brisbane dilly dallied around and didn’t refuse the bet until after the race had started.
Now is that any way to run a multi billion dollar industry? I should say not. Quite rightly, the Canadians are threatening legal action if they aren’t paid up as the bets were not refused by the start of the race. And if I had to bet, I would not put my money on the TAB winning this case.
The point of this is that if this industry is to be profitable it needs to be innovative and pro-active. The stuffed shirts need to realise that there is a very sophisticated market out there that knows the system and knows how to use it to advantage.
But how is it possible to be innovative in an age old industry that is so set in its ways. Well, I am about to tell you and give you the opportunity to be part of one of the most exciting trade ventures in Australia, if not the world.
As you may know, I am the Senior Vice President of Barternet International, by volume, the second largest trade exchange in the United States, which also makes us the second largest in the world. As part of welcoming Trade Limited into the Barternet family, we are looking to broaden our interests and have been having negotiations with John at Trade Limited about some sort of cooperative venture in Australia…G’day.
As you will have noticed, there is a huge shift away from cash in our society. It started with credit cards around 35 years ago, moved into smart cards and electronic funds transfer over the last 5 years and as part of this trend, in the United States at the moment, due to our booming economy, there is a big swing towards trade and this is good news for all of you. In fact, the volume of units traded during the last financial year increased by two hundred and seventeen per cent, while the comparable national cash to spending ratio, that is, what part of total spending involved cash, dropped by seven point one three percent.
So cash is down, electronic transactions are up and using trade is going through the roof. As you can imagine, this leaves the trade industry in an excellent position with great leverage and huge ambitions.
What I am about to tell you has all been very hush-hush, of course and the official announcement will hit the papers tomorrow by way of a media release to coincide with the Melbourne Cup. However, I am going to let you in on the secret that Barternet international with Trade Limited as a partner, has today, signed heads of agreement to purchase your Gold Coast Turf Club with the aim of turning into a trade dollars operation. We are not talking sponsorship here. We are actually buying the club outright. I think this deserves a round of applause.
The fine details are commercial in confidence, however I can tell you that while we paid a large sum of money – cash, I might add, with some options thrown in - our projections for the Gold Coast indicate that we have obtained the property at a very reasonable price. Though it wasn’t without some tough negotiating.
Why would Queensland Trade Exchange want to invest in something like a race course? The Gold Coast is our trial site before we move into the Asian market, where negotiations are already well under way in several major cities. Although Barternet has invested in real estate and various other ventures, this is the first of an exciting expansion involving the purchase and operation of racetracks where everything is done on trade. The horses will be bought and sold on trade, the prizes the entry, the food, will all be conducted exclusively in trade dollars. To make it viable, the gambling is also going to be done with trade dollars and it is going to be line international over the Internet. The market its ready for it, there is sufficient capital and we have many eager pioneering participants.
Until now it would not have been possible due to the lack of direct global access to customer accounts. However, one of the hi-tech start-ups that we own has developed new technology that allows instant on course connection via the Trade Limited database to accounts around the world, enabling rapid transactions to be made and verified directly from individual accounts.
While the technology is not entirely brand new, the implementation is and it is also a double first in that it is a first for a race course and a first for trade dollars. Ladies and Gentlemen, welcome to the new world order where we will be making cash a thing of the past.
Obviously a vision this grand does not just happen overnight. The rollout of this scheme is over the next 12 months with a planned soft launch at the Magic Millions next year. At that meeting we will have a dual hybrid system in operation as an emergency redundancy plan. Because it is the first time, ever that such a system has been implemented there will, of course, be a few changes.
Over the coming year you will all be issued with new Trade Limited member cards, but not just any cards, these are the latest secure smart cards compatible with the ISOA standard as was recently ratified in Geneva at the Encryptit 2000 Conference.
Since this is a global operation, we need to bring Australia into line with the rest of the world, especially in regards to your trade dollar value. For that reason, there will be an adjustment made to all your accounts to take the weak Australian dollar into consideration. You will be receiving more information about it this week by mail.
But just having smart cards with the tightest possible security is not enough these days. If you are installing any sort of card based transaction system, you can’t expect people to have to swipe the cards through a reader any more. No, these are going to be contact-less cards. Using a transponder that excites a chip within the card, it can be read from up to 100 feet away, I think that’s 30 metres in your talk.
Think about your Gateway Bridge, you can drive through without stopping and your account is billed automatically. No doubt many of you will have building access cards where you only have to wipe it past the reader to have your card verified.
Now imagine that all over the Turf Club, or whatever venue, and it could be a whole city, there is a myriad of antennas, just listening for cards and transactions. Our planning estimates that we can cover the whole of the Turf Club with 11 antennas and each bookmaker or food outlet will be equipped with an inexpensive hand held card reader.
Our research shows that Australian trade users are ready for it. We have done a lot of research into the matter and I must tell you a story about one of the research people. He was indulging in a little, lets call it, "horizontal folk dancing" with one of his subjects…am I going too fast for anyone? Suddenly and unexpectedly her husband pulled into the driveway. Since it would have been a little hard to convince him that they were doing a survey while they were both naked he decided to attempt a rapid exit. Cut off, he grabbed all his clothes and dived into the cupboard. Just as he thought he had gotten away with it, you can guess what happened. His mobile phone started ringing. Now this guy was good, the sort of creative person that we like to use, because when the husband flung the cupboard door open, he handed him the phone and said "Its for you". It didn't work
As well as that we are offering from next week the chance to buy, for trade dollars, shares in a syndicate owning this beautiful horse. The horses is called "Mugs Game" by "Sucked In" out of "Just Kidding" and we are selling 100 shares for 1000 trade dollars each with a limit of 5 shares per trade account.
But we are making a special preliminary offer of a 15% discount if you sign up tonight. How many people are interested? John I don’t think its going to work. This idea is doomed to fail. This is pretty typical of the bloody awful day I have had. For a start I have had to fake this American accent and pretend to be a fictional character named Saul Yahmak.