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A serious man - 28th May 2012...
Tom Waterhouse just lost $400,000. It's 2.25pm on a Saturday in Melbourne and Waterhouse is working, with 20 of his staff, in his weekend "office", a gloomy bunker at Moonee Valley Racecourse. The course itself is a ghost town - there are no races here today - but the bunker, a low-ceilinged and exceedingly unglamorous space, is animated by the kind of urgency you see in a termite colony that has just been kicked. There are lots of computers, screens, mobiles, TVs tuned to six race meetings, and young guys with fashionable facial hair - Waterhouse's "wagering officers" - who yell out stuff like "The eight in Sydney to win $5000" or "$4000 each way on Top Fluc One!"
At the centre, meanwhile, is Waterhouse, standing at a high table, sucking on a vitamin C tablet. He is dressed in a dark-blue suit and mint-green tie. His eyes are blue, his skin pale, his teeth ruler straight and pearly white. On the table before him are four computer screens and 10 mobile phones, the numbers of which are known only to VIP clients, 100 "high net worth individuals" whose minimum bet is $1000. He won't tell me their names or, in fact, anything about them, except that all but one are men.
The first thing you notice about Waterhouse is that he is the exact opposite of what you expect. He doesn't drink alcohol or coffee, nor does he smoke or swear. Instead, he says "Oh, gosh". He is distractingly, almost distressingly polite: "When I first met him he was so nice I thought he was taking the piss," his marketing manager, Warren Hebard, tells me. Above all, he does not get ruffled. Getting ruffled would indicate either a lack of control, which he has in spades, or a surfeit of emotion, which he hasn't. And yet, like his mega-risk-taking grandfather, Bill, Waterhouse is known for taking on the biggest punters, for winning and losing bathtubs full of money in the course of an afternoon. In 2008, he lost $1.175 million in 10 minutes, only to make it all back by sundown. Not long after, he lost a further $2 million (for good, this time). When, this afternoon, it becomes apparent that he has just done $400,000 on one race, he issues only the slightest wince, pops another vitamin C and returns to his screens.
Waterhouse, who turns 30 this June, is the managing director of www.tomwaterhouse.com, one of Australia's largest corporate bookmakers. The company, which has offices in Sydney, Melbourne and Darwin, offers odds on not only thoroughbreds, harness racing and greyhounds but also on rugby league and rugby union, cricket, tennis, Australian rules and, as Hebard puts it, "every other sport you can think of, from Swedish handball to two flies crawling up a wall".
Waterhouse makes the most of his family name, which has been intimately associated with bookmaking and horse racing for 112 years. (His father, Robbie, still works as a bookie; his mother, Gai, is a celebrated trainer.) But his real business is in creating as many markets as possible for punters to wager on: Waterhouse now offers odds on everything from who will win Dancing with the Stars and the Miles Franklin Literary Award to the final sale price of painter Edvard Munch's masterpiece, The Scream. "As long as it meets my licensing conditions and it passes the smell test, meaning it's not too weird, I will bet on anything," he says.
Perhaps more than any other bookie, Waterhouse embodies the changes that have recently transformed Australian gaming. Ever since the easing, in 2008, of regulations governing cross-border betting and gambling advertisements, overseas and domestic bookmakers have been battling each other for a piece of the local market, where punters wager more than $20 billion a year. Corporate bookmakers such as the foreign-owned SportingBet and SportsBet barrelled in, going toe to toe with on-course operators, including Waterhouse, who had been working "on the rails" since 2003, building his VIP business under the tutelage of father Robbie and grandfather Bill. By 2008, Tom was Australia's biggest on-track bookie; at the Melbourne Cup that year, he held more than $20 million over four days, more than all the other bookies combined.
But there is only one Melbourne Cup a year. Thanks to the advent of pay TV and online gambling, normal race-day attendances plummeted throughout the 2000s. "I haven't been to the races in three years," Waterhouse says. "It's dead. At the same time, I realised people still want to have a punt, they just wanted to do it from their couch or on their iPhone."
And so, in 2010, Waterhouse launched his online business, which he promoted in a multi-million-dollar campaign of free-to-air, print and online advertisements, including paying $70,000 to have his face plastered on a Melbourne tram. The company now has 80,000 clients, boosted by the purchase last year of the databases of two corporate bookmakers who had recently gone bust. Waterhouse employs 60 staff, and is recruiting overseas for 40 more. Robbie Waterhouse calls the strategy "growing broke", explaining, "The business is expanding at such a rate that it requires every dollar Tom has."
According to Warren Hebard, the marketing spend is now $20 million a year, a mere fraction of company turnover, which he puts in the "hundreds and hundreds of millions".
Recently I had dinner with Waterhouse at Nobu, a Japanese restaurant in Melbourne's Crown complex, where he lives in a $1900-a-night villa apartment on the 31st floor. Waterhouse has a perfectly acceptable home in Sydney - an apartment in Balmoral on Middle Harbour, just around the corner from his parents, that he bought in 2009 for $3.5 million. But Victoria's more favourable gambling laws mean he spends half his life south of the border, necessitating a yoyo-like schedule of at least three business-class flights to Melbourne and back a week. Such an arrangement is fine for now - he and wife Hoda Vakili, whom he married last year, don't have any children, a situation Waterhouse plans to remedy.
"I want to have six kids," he says. "As soon as possible."
"Seriously?" I ask.
"Seriously," he says.
Thanks to his 2006 appearance on Dancing with the Stars (he was knocked out in the third round), and his frequent partying with the likes of Charlotte Dawson and Tim Holmes à Court, Waterhouse has become known as something of a red-carpet junkie. He certainly knows how to spend his money: there are the skiing trips to Aspen, the holidays in Italy and, of course, the yearly pilgrimage to London, where he attends Royal Ascot and picks up a new suit from his father's tailor in Savile Row. His marriage last year was similarly five-star: bucks' and hens' nights in London, ceremony in the Sicilian seaside town of Taormina, followed by, as one newspaper put it, "lunch in Switzerland" and the honeymoon in Monte Carlo.
Not surprisingly, plenty of people don't like Waterhouse. The consensus is that he is too rich, too young and too lucky. Others don't like the fact he's a bookie. "Self promoter, making $ off the misery of others," one tabloid newspaper reader commented after an article on him last year. When news emerged that Vakili had undergone emergency surgery in January after injuring herself in Aspen, readers responded with an outpouring of indifference: "Should wipe the smug smile off their faces for a few weeks at least," one wrote.
I'm as jealous as the next guy, but "smug" isn't the right word for Waterhouse, who, in person at least, is self-effacing to the point of invisibility. He is softly spoken and reflexively formal. "Mum thinks I dress very boringly," he says. "Always in a dark suit and white shirt." When he was nominated for the Cleo Bachelor of the Year Awards in 2005, he was one of only two people out of 50 who opted to keep their shirts on for the photo. (The other was Guy Sebastian.) For now, he says, his life is defined by work: he goes to bed at midnight and rises at 7am, and takes only one day off a week. "Until I was married I worked seven days a week," he says. "Even when I'm on holidays I'm on my computer six or seven hours a day."
He is partial to fast cars: he has owned a Porsche 911 and currently drives a silver Mercedes SLS Gullwing (retail price: $496,000). But to picture him driving it fast, let alone crashing it, is to picture the Pope smoking crack. His optimum mode of relaxation is going to the movies with Vakili, which he does at least once a week. "We'll get the choc tops, a Slurpee," he says. "It's really great."
He also likes tennis, though playing him requires a certain kind of patience. "This is the problem with Tom at tennis: he is so formulaic and robotic," friend Jason Dundas says. "He never goes for a winner, because he knows the formula is that whoever can hold the rally longest wins. And so he plays the game to never hit a foul, and just hits these lollipops; he never goes for that Rafael Nadal cross-court winner because he knows that the chance it will go out is higher than it will go in, and he calculates that all in his head and wins the game every time. It's so annoying."
It's impossible to separate Waterhouse from his family, which has, since the First Fleet, shown a Flashman-like knack for controversy. When Governor Arthur Phillip was speared by Aborigines at Manly in 1790, it was Lieutenant Henry Waterhouse who was there to pull out the spear; Henry also brought the first thoroughbred racehorse to the colony, along with the first merino sheep. Later the family operated a Sydney ferry service, ran pubs and a sly-grog operation, even dabbled in opium smuggling.
The first bookmaker in the family was Charles Waterhouse, who got his licence in 1898, but it was his son, Bill, who would take it to another level. Through a combination of brains, balls and ruthlessness, Bill, who had initially practised as a barrister, became arguably the world's biggest gambler, a "leviathan bookie" who in the 1960s took on high-stakes punters like "Filipino Fireball" Felipe Ysmael and "Hong Kong Tiger" Frank Duval in million-dollar betting duels.
With his suit, hat, tote bag and cigarettes - 100 a day at one stage - Bill, who turned 90 this year, epitomised the old-style bookie. In his autobiography What Are the Odds?, he writes about arming himself with a .38 Smith & Wesson in the 1970s, and about his various entanglements with gangster George Freeman, "marijuana salesman" Robert Trimbole and the late Kerry Packer, who apparently died owing him $1 million. ("You can go and get f...ed and whistle for it," Packer reportedly told him. "You'll get nothing from me.")
"I don't pretend to be Simon Pure," Bill Waterhouse writes. "I have sometimes cut corners to get what I needed, but I am certainly no crook." Yet his name has been associated with virtually every scandal in horse racing bar the death of Phar Lap. Chief among these was, of course, the Fine Cotton affair of 1984, in which a handy sprinter named Bold Personality was painted with Clairol hair dye and substituted for a weaker horse called Fine Cotton. Bill and son Robbie, who had put money on the horse, were both charged by the Australian Jockey Club with "prior knowledge" - something they have always denied - and banned from racetracks for 14 years.
Tom insists he can't remember much about it: "I was two years old!" he tells me. Nor did it feature much in conversation. "It's a little bit like religion; I try not to bring it up."
It's tempting to see in the younger Waterhouse a reaction, conscious or otherwise, to the family's picaresque backstory. But it seems Tom has always been serious. Like his father before him, he attended the elite Sydney private school Shore. But where Robbie had gained a name for running a student betting ring, Tom became a senior prefect and house captain. "He is a seriously, like very, very, very ambitious guy," long-time friend David Chambers says. "He controls his emotions, he doesn't let them control him."
Chambers, who grew up around the corner from Waterhouse, says "Tom was always super competitive ... and a little bit bizarre. One day he came to school and said, 'You guys are all taking sick days: that's soft. I am never going to take a sick day.' He just thought it would be fun. And we were all like, 'Yeah, whatever.' But he never did, the whole time we were at school."
Horse racing dominated the Waterhouse home. "It was always discussed around the dinner table," Robbie says. "Every aspect of it." Tom got his first horse, a Shetland pony, for Christmas when he was five. Yet he had no interest in an on-course career. Instead, after school, he started a commerce degree, majoring in finance and marketing, at Sydney University. "I wanted to go into finance," he says. "It seemed like a good industry to be in."
Then one day in 2001, Robbie asked him if he'd come and "help out on the bag" at Rosehill. "Within about 20 minutes I was hooked," he says. Waterhouse was only six months into his course, but he immediately rearranged his timetable, moving his classes to Monday and Tuesday so that he could attend the races for the rest of the week. He got his licence for the dogs, then for thoroughbreds. Coming from racing royalty had its advantages. Gai, daughter of legendary trainer Tommy J. Smith, taught him horses; Robbie taught him analysis. ("Dad still gets up every day at 3am so he can do seven hours studying all the results and times.") And Bill showed him how to gamble. (Bet bigger if you're winning, smaller if you're losing, and always keep an eye on cash flow.)
Yet there were mishaps. In 2007, one of Waterhouse's biggest punters, the CEO of a big listed company in the US, placed a bet with him of $1.2 million. As he had never taken a bet that big, Waterhouse laid off the risk by "betting back" $800,000 with other bookies. When the CEO's horse lost, "I thought, 'Oh gosh, I've won $400,000! I'm going to buy a Ferrari!' But come Monday I had to pay $800,000 to those other bookies while my guy took the knock [refused to pay]."
Waterhouse pursued the debt through the courts, but has never got all of it back. (Courts are a recurring motif with bookies. In 2010, Waterhouse was in the Federal Magistrates Court chasing $2.6 million that he said Sydney businessman Andrew Sigalla owed him. And in January this year he placed a caveat over brothel-owner Eddie Hayson's Parramatta Road business, Stiletto, as security for $1 million in gambling debts.)
The movement of money away from the track and onto the internet has done much to sanitise racing. "In the days of the SPs, if you took the knock they'd come round and cut your toes off," veteran race writer Max Presnell says wistfully.
The perils of 21st-century gambling are more prosaic. Addiction. Bankruptcy. Family break-up. Waterhouse was raised in a religious household. "We went to church every Saturday night," he says. "I still pray occasionally, just to reflect on family and loved ones." But the moral dimension of his business doesn't trouble him. "I always say to people who bet with me, 'Anything in excess is bad for you: shopping, eating, gambling.' "
When in doubt, he invokes what he calls The Toilet Test: "If you feel uneasy about the bet, if you need to duck off to the toilet all the time, then you're betting too much. It's like anything else - if you feel uncomfortable doing it, chances are it's not a great thing to be doing."
The boardroom of Waterhouse's North Sydney office is an impressive space: there's a giant antique table, a cabinet full of trophies and a life-sized portrait of Bill Waterhouse, form guide folded under his arm, standing beneath the Harbour Bridge. Tom is explaining how he prices his odds when I spot, high up in the cabinet, Bill's original white leather tote bag.
"Do you want to see it?" Tom asks excitedly.
"Yes," I reply, imagining it to be full of interesting stuff: betting stubs, track programs, old pencils worn to the nub. But when Tom opens it up, it's empty. "Oh," I say, disappointed.
"It's basically just like a big purse," Tom says. "That's the way it worked." (Fairfax Media)
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