The AFL makes up to $40 million in product fees from bookmakers every year, a figure that is eclipsed by other sports such as NRL, which receives more than $50 million from wagering agreements annually. The NRL locked in a three-year deal with bookmakers over the summer.
The product fees are based on a percentage of a bookmaker’s turnover or total revenue, whichever of the two figures is higher.
People briefed on the discussions between the wagering companies and the AFL, who asked for anonymity due to the sensitive nature of the negotiations, said sports administrators had proposed increasing the amount it received from 0.9 per cent of turnover to 1.5 per cent. Under the proposal, the proceeds would rise to 2.5 per cent for finals and multi-bets, which allow gamblers to place multiple, more exotic bets in one transaction.
Those remain lower than the NRL, on average, where bookmakers must pay 1.2 per cent of their turnover for regular season bets and as much as 3.5 per cent for multi-bets or for finals and events such as the State of Origin.
The AFL has also asked for an increase if the proceeds are calculated using total turnover – from 15 per cent to 17 per cent for regular matches and 18.5 per cent for finals and multi-bets. The deals also include information-sharing agreements used to identify suspicious betting behaviour.
Negotiations are expected to continue until the end of February but one wagering operator estimates the new deal, if successful, would result in a payment increase to the AFL of more than 25 per cent per annum.
The AFL declined to comment.
Product fees – also known as integrity fees – were first introduced by then AFL chief executive Andrew Demetriou more than a decade ago at a time when online bookmakers were rapidly growing and earning serious money from punters gambling on their favourite sports matches.
Mr Demetriou put the scheme in place with the help of two AFL executives – Gillon McLachlan, who now runs Tabcorp,
and Andrew Dillon, who succeeded Mr McLachlan as the sport’s chief executive in 2023.
The proposed increases come at a difficult time for the local wagering industry. Tabcorp is in the midst of a major overhaul under Mr McLachlan, and last year cut 10 per cent of its workforce. Earlier this month, it hired Hong Kong Jockey Club executive Michael Fitzsimons to run wagering operations as it attempts to compete with Sportsbet and Entain.
Sportsbet, owned by New York-listed Flutter Entertainment, and London-listed Entain, are facing their own difficulties, including legal action from gamblers who lost money betting on sporting contests and from the Australian Transaction Reports and Analysis Centre for breaches of anti-money-laundering and counter-terrorism laws.
Bookmakers are also waiting to see whether the federal government follows through on its plan to ban social media gambling advertising and
limited marketing on television to an hour before and after live sport, a decision that would make it difficult for smaller players to attract new customers.
Some bookmakers are worried about the AFL’s proposal, arguing the increases would strain margins and make it more difficult to make money. However, not all are concerned. “The AFL has had a long-term, stable model and we’re working through their proposed fee changes in good faith,” said one person involved in the negotiations who requested anonymity.