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Taxman targets the king of punters Zeljko Ranogajec
BY:BRENDAN CORMICK AND CAMERON STEWART From: The Australian December 24, 2011 12:00AM
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Zeljko Ranogajec enjoying a walk around Balmoral in Sydney. Picture: Craig Greenhill Source: The Australian
AUSTRALIA'S biggest gambler, a reclusive maths wiz who bets more than $1 billion each year, is being examined by the Australian Taxation Office.
Tasmanian-born Zeljko Ranogajec accounts for between 6 and 8 per cent of Tabcorp's $10bn Australian betting turnover and is said by experts to be the world's biggest punter.
Now, the mysterious son of Croatian immigrants faces an ATO audit, according to his business partner and fellow gambler David Walsh.
Ranogajec recently helped fund Walsh's dream of building Hobart's newest tourist drawcard, the $70 million Museum of Old and New Art and Walsh says he feels deeply indebted to his former university colleague.
"He is being audited (by the tax office) at the moment but I am sure it will turn out amicably," Walsh tells The Weekend Australian.
"Does he owe them money? I suspect he reckons he doesn't and they reckon he does."
Walsh says he and Ranogajec have discussed the audit, which he says is due to be completed by next September.
"The assumption that he owes them money depends on the assumption that gambling is taxable and that has never happened in Australia," Walsh says.
"At this stage no gambler in Australian history has ever been taxable."
The Weekend Australian understands that the ATO has asked Ranogajec for financial records going back seven years. Ranogajec, who is in Europe with his wife and daughter, did not respond to questions from The Weekend Australian and the ATO declined to comment, citing privacy provisions.
A man never spotted at racetracks or casinos, Ranogajec defies the image of the traditional flamboyant punter from the rich history of Australian thoroughbred racing. They wore expensive suits, had flash cars and dined at the best restaurants. They had names like "Hollywood" George Edser, the "Prince of Punters" Perc Galea, the "Filipino Fireball" Felipe Ysmael and Eddie "The Fireman" Birchley.
Ego drove them and, for some, was their downfall.
Not so Ranogajec. He has been dubbed the "Loch Ness Monster", simply because he is so rarely seen. Rivalled on the world stage only by a couple of Hong Kong's betting syndicates, he is the exact opposite of his punting rivals.
He is reclusive, loathes media attention and demands discretion from his employees and information and service providers.
He and his wife, Shelley Wilson, own properties across Australia including a $20m, 2000sq m waterfront property on two blocks at Sydney's Balmoral Beach.
Ranogajec is also believed to use the pseudonym John Wilson.
He has never granted an interview and has been nominated by racing websites as probably the world's biggest punter. A senior wagering source estimated the man known among the gambling elite simply by his Christian name, invests as much as $3bn across numerous international markets where pari mutuel (tote) systems operate, including the US, France, Britain and Hong Kong.
Besides horse racing, he bets on sport, lotteries and the stockmarket. Ranogajec has spent millions of dollars trying to find a legal way to "beat" lotto and has studied the stockmarket, looking for behavioural patterns and ways to manipulate share prices to his advantage under certain conditions.
In Australia, he bets on every thoroughbred race. There is no racing on Good Friday or Christmas Day, though you can bet a major race meeting in Japan tomorrow will not have escaped his attention.
Hundreds of bets are queued up in the TAB system and are placed in the final seconds as horses fill the barrier stalls, so that opportunistic betters cannot follow the money as the odds tumble. Win and place bets may fit into his repertoire, but the big money is in the exotics - trifectas (1st, 2nd, 3rd), quartets (the first four placegetters) and quaddies (the winners of four nominated races). These types of bets offer big pools and opportunities for big payouts.
At the major carnivals, when there is a lot of "mug money" wagered by uninformed and once-a-year punters, the rewards for Ranogajec are at their highest. A source at One Tote Tasmania said a file detailing his betting activities one Melbourne Cup Day was "an inch thick".
Betting on horses is not a perfect science. When champion mare Makybe Diva was preparing to win an unprecedented third Melbourne Cup in 2005, Ranogajec bet against her, laying her over an extended period leading up to the morning of the race. Trainer Lee Freedman threatened not to start Makybe Diva if the track was presented like a bitumen road. The Victoria Racing Club's ground staff watered the track enough to ensure it would remain forgiving in the warm conditions.
Makybe Diva duly ran and won. Ranogajec endured a loss that amounted to double figures with six zeroes on the end.
He has been known to diversify his gambling to include even scratch-and-win tickets. One anecdote relates to a company, keen to market a new theme with their scratchy tickets, getting in touch with Ranogajec. It was explained that a portion of the tickets had been sold, though tens of thousands remained and nobody had come forward with the major prize winning ticket and therefore it must be in the remainder.
Ranogajec bought them and paid someone to scratch the opaque covering off all the tickets. At the end of the exercise, it became evident that the winning ticket had been sold to a customer at a shop, who had discarded it, not realising it was a winner.
One bookmaking identity said Ranogajec could walk through Melbourne's Bourke Street Mall and nobody would recognise him or look at him twice.
He is known to bookmakers but is too big and too frequently successful for them to entertain his business.
He is responsible for more than $650m, or 8 per cent, of the annual turnover from Victorian and NSW-rooted company Tabcorp. That figure does not include Tote Tasmania, which is soon to be absorbed into Tatts' betting pools, with which he also conducts business and which control TAB betting in Queensland, South Australia and the Northern Territory.
Wagering outlets have courted Ranogajec with rebates of between 6 and 10 per cent on his turnover. He is betting exchange Betfair's biggest antipodean client, thought to be responsible for a third of the company's Australian operations.
Racing stewards have had, on rare occasions, the need to query his betting activities, but have never had suspicion of corrupt activity. In fact, they say he appears to have no connection with jockeys or trainers. The only thing that got him into strife punting was his cardcounting ability, which, although not illegal, saw him barred from gambling on blackjack tables at every casino in Australia.
One steward said his panel queried wagers on a horse to lose on Betfair, but Ranogajec produced proof that he had backed the same horse to win with TAB. The dividends were such that no matter whether the horse won or lost, Ranogajec had more than covered his outlay.
The 49-year-old has amassed his personal wealth from gambling, accelerated by a $7.5m Keno jackpot. He was a formidable blackjack player and began to accumulate his fortune at Wrest Point Casino. He joined forces with Walsh and two others at the University of Tasmania to develop the gambling empire. One of them died when accidentally run over by a car. Walsh is the only member of the group that remains involved with Ranogajec.
The key to Ranogajec's success is often said to be a slender profit margin. Another industry figure, who did not wish to be named, says: "If anybody tells you that you can't win on the punt, he (Ranogajec) is proof that you can."
Working on an annual turnover said to be $1bn, he grosses $10m for every 1 per cent of profit. One high-profile individual engaged an actuary to replicate Ranogajec's model, but to no avail and he eventually gave up.
Speaking to The Weekend Australian, one close observer of Ranogajec's business yesterday debunked that theory, saying that, with attractive rebates, it was possible to break even on a series of bets and profit close to 10 per cent with the rebate alone. When he gets a race "right" the profit can be as high as 15 per cent.
Walsh says he has been mates with Ranogajec for more than 30 years.
"I met him at Wrest Point which was then Australia's only casino," he says. "We weren't particularly serious about gambling. The casino was quite near the university and it was a fun thing to do. It was very much a recreational pastime."
Walsh says they enjoyed gambling as a hobby and, using the logic of probability, they began to prove that they could win.
"The confluence of enjoying gambling and being able to win meant we did more of it," he says. "It's what I still do today and it takes up the majority of my time.
"The difference between winning and losing is knife-edged. It can be a tiny percentage, so it is an interesting thing to try to figure out that percentage.
"There is nothing particularly profound about this. We've been successful but the rules are simple and there are a million books that tell you how to do it. You just need to know what the odds are."
Walsh says that Ranogajec has never had a run-in with the law over his gambling.
"And there is absolutely no reason why he should have," he says. "The way we gamble is completely at a stand off from the event."
Walsh says the industry is "better off" for the money that people such as Ranogajec pump into it.
The Weekend Australian visited Ranogajec's double-fronted property in Mosman. A neighbour said they had never seen him there. A tenant in another Mosman property belonging to the Ranogajecs had not heard of him. Ranogajec's wife is the landlord.
A lavish home on Coronation Avenue, Mosman - possibly the Ranogajecs' primary residence - was bought for $5.96m in a dispersal of assets of Brad Cooper, a central figure in the HIH scandal.
Level 3, 495 Harris Street in Sydney's Ultimo - the building that houses Tabcorp's NSW regional office - is the registered address of some of Ranogajec's businesses, including Minefield Investments, Paziti Holdings and Razson Pty Ltd.
According to one insider who spoke to The Weekend Australian, Ranogajec has left Australia to live in England. He says the move allows the mega-punter to better control his global operation from a central location.
Walsh confirms Ranogajec is in Europe with his family "looking for betting opportunities".
'He won't be back for awhile," he says.
Additional reporting: Anthony Klan
