By Farah Hancock of RNZ

A leaked report completed for TAB New Zealand by racing insiders says the horse racing industry is “unsustainable” without further tax breaks.

It also recommends allowing TAB NZ to run online casinos, shifting the cost of the industry’s integrity board to the Government and making structural changes, including consolidating property ownership and management.

Winston Peters is currently the Minister for Racing and the report will eventually be considered by him. He is also the leader of New Zealand First.

The TAB advisory committee responsible for writing the report was chaired by Sir Peter Vela. Other members of the committee include Sir Brendan Lindsay, Mark Chittick, Greg Tomlinson, Ken Breckon, Chris Waller and Steve Thompson.

Both Vela and Lindsay are donors to NZ First. In 2023, they each donated $65,000 to the party. So far in 2026, Vela has donated $150,000 to NZ First and Lindsay and his wife Lady Jocelyn Lindsay $100,000. NZ First also received another $50,000 from businesses associated with racing industry player Nelson Schick, who was not on the committee.

During an election year, donations over $20,000 must be declared within 20 days of receipt. In total, $300,000 of NZ First’s $475,000 received to date has been associated with the racing industry. NZ First has, so far, declared the second-highest amount of donations of any political party in 2026.

‘Loops of decay’ in racing industry

The racing industry report warned there was a structural deficit of more than $50 million per year and cash reserves would be exhausted at the end of the 2027/28 racing season if there was no further support.

The two main issues contributing to “loops of decay” in the industry were fewer foals and races being frequently cancelled because of poor race track conditions.

There are 500 fewer breeders than there were in 2015 and foal numbers have reduced 22% in the past 10 years.

Adding to woes were administrative costs of $91m a year, which the report recommended slashing by consolidating the boards of horse and harness racing into one entity.

The report said horse racing’s participants and audience were “ageing” with weak youth engagement, which impacts the number of bets made.

Empty seats at Ellerslie Racecourse's Anzac Day races. Photo / RNZ, Farah Hancock

Vela’s U-turn on report request

A leaked letter accompanying the report written by Vela, the chair, said the report was requested by Peters. The committee had a 90-minute meeting with the minister in February, just weeks before the report was completed.

Peters’ office said in a statement that he had not commissioned the report and that it was an initiative of TAB NZ’s committee.

When contacted by RNZ, Vela said he must have got that fact wrong in his letter.

Without the changes outlined in the report being made, Vela said the racing industry would be in a very difficult place in the future.

He did not believe his donation would impact the likelihood of the report’s recommendations being adopted.

Vela said he donated to political parties “because that’s the way democracy works in our country”.

NZ First party secretary Holly Howard said donations to the party are dealt with by party officials, not ministers or MPs.

“The party is not privy to the work done in ministerial offices. The party has no awareness of the report you’re referring to,” Howard said.

RNZ was told the report is currently with the Department of Internal Affairs for analysis before officials report back to the minister.

A history of concessions

The report describes its recommendations as tax “changes”. But Victoria University of Wellington tax specialist Lisa Marriott said some of the recommendations were “absolutely” tax breaks.

These included faster depreciation for brood mares and yearlings and 100% deductibility for New Zealand-bred yearling purchases, which Marriott described as “straight-out concessions”.

“As an industry, they’ve had so much by way of privileged treatment and concessions, decade after decade.”

Unlike other gambling such as Lotto or pokie machines, which return all or some of the profits to the community, racing was allowed to return profits to itself.

“I just wonder how much more resource governments are prepared to put into the sector, which does harm,” Marriott said.

Taxpayers have come to the rescue of the industry previously, with a $50m bailout package in 2020, including $26m to pay its outstanding supplier bills. Prior to that, it received tax reductions in 2018 related to the purchase of “high-quality” horses.

A deal with offshore betting giant Entain threw the industry a lifeline in 2023. The agreement contracted out TAB NZ’s monopoly status to Entain in return for five years of guaranteed minimum payouts. These come to an end in 2028 and it’s expected the money made from the 50/50 split of gross betting revenue would be far lower.

Other tax-related recommendations in the report included a standard valuation of $2500 for homebred foals, default pass-through GST treatment for breeding co-ownerships and to allow groups of up to 15 to own a horse while being exempt from the Financial Markets Control Act, an increase from the current five owners currently exempted.

The report said these changes, with its other recommendations, would “unlock industry growth” and ensure the industry continues to remain a high-value export sector.

Spending by the horse racing industry contributed $1.38 billion to the economy in 2022/23, but the industry is estimated to create $1.87b when considering other factors, such as the number of people it directly and indirectly employs.

On track to become ‘a cottage industry’

Industry veteran Brian de Lore said the days of “rugby, racing and beer” were over for New Zealand. He thinks racing will be a cottage industry in 10 years’ time.

De Lore has written for and edited Racetrack magazine, managed and owned bloodstock businesses and more recently written a book on New Zealand’s horse breeding families.

He questioned the industry’s sustainability.

“It’s running out of horses and its costs are too high. There’s a general feeling amongst the public that racing’s becoming a little bit redundant and we’re not getting the crowds that we used to.”

Some of the suggestions in the report would go some way to helping the industry, but he called the tax recommendations “ridiculous”.

“The cost of breeding horses is so high today that just offering a tax incentive to try and turn around the foal crop diminishing ... well, it’s just not going to happen.”

The report’s five recommendations:

• Unify racing governance under a single accountable body with clear responsibility for strategy, funding, calendar and marketing.
• Create a Strategic Property Vehicle to unlock and deploy racing industry capital across a rationalised venue network.
• Modernise tax and regulatory settings for breeding investment to address the foal-crop shock and rebuild supply.
• Transfer Racing Integrity Board funding to central Government appropriation to remove conflicts of interest and protect social licence.
• Modernise TAB NZ’s legislative settings for revenue diversification so it can compete fairly, recapture offshore leakage and sustain funding beyond the Entain guarantee.