Tabcorp shares jumped on Monday as Australia’s largest listed wagering business announced a two-decade extension of an exclusive Victorian license for retail wagering and betting in pubs, thus keeping out international rivals such as Sportsbet.
The company has agreed to pay AUD 600 million ($402 million), and AUD 30 million ($20 million) annually over 19 years, taking the total payment to AUD 1.2 billion ($803.8 million). However, the annual payments are not linked to inflation, giving the total payment a current value of about AUD 864 million ($578.7 million).
Victoria is a major market as it hosts several high-profile racing events, including the Melbourne Cup, and has been a target for Sportsbet and Entain, which operates the Ladbrokes brand. The companies had earlier made proposals to be given part of the state’s wagering license, reports Australian Financial Review. As per the publication, Tabcorp shares were 23 percent higher in early-afternoon trade at 90 cents, their highest level in months.
Other proposals considered included awarding non-exclusive licenses and splitting the state’s retail wagering outlets between major bookmakers. Specifically, the new deal removes joint venture arrangements with the Victorian racing industry that will result in lower fees and taxes paid by Tabcorp. In exchange, the point of consumption tax for all bookmakers will rise from 10 percent to 15 percent.
Tabcorp Chief Executive Adam Rytenskild pointed out that the company was halfway through a restructure which began with the demerger of The Lottery Corporation last year. “Before we demerged, we did not have any level playing fields, and now we have four,” he said, referring to Victoria, Queensland, Tasmania and the ACT. “Victoria is the best license in the country, and it is the prototype for the rest of the country.”
Tabcorp acquired the Victorian license following a new license and tax regime put in place in Queensland last year. Analysts expected that the new regime would save Tabcorp AUD 30 million annually. The company noted that if the terms of the new license in Victoria had been in place earlier, its earnings in the last financial year would have been AUD 140 million higher.
Tabcorp’s major competitors in Australia including Sportsbet, Entain, and other digital bookmakers, have far lower costs, as per reports. These companies hold prominence as betting shifts from retail premises and pubs to mobile apps. Entain has been flagged as a potential buyer of Tabcorp in the past. It is crucial for Tabcorp to reduce fees paid for exclusive licensing arrangements and get them replaced with higher taxes across the entire sector.
Rytenskild said Tabcorp had “stabilized market share, digital share, and we want to grow it”. “We are competing better than we ever have,” he added.
Earlier in October, Tabcorp warned of soft trading conditions and noted that the revenues had fallen 6.1 percent in three months. Wagering turnover was also down 0.9 percent in that period.
“It has stabilized somewhat, and Spring Carnival was actually quite good,” Rytenskild said. “The main focus is how we are competing in whatever the market is and ultimately looking to take share and grow the market. Cycles come and go, and the announcement [of the new Victorian license] is much bigger than just six months of a soft market.”
Tabcorp’s previous deal with Victoria took place in 2011 with an upfront fee of AUD 410 million. The company currently does not require a fee as part of a joint venture with the racing industry and has agreed to pay $15 million in transition funding over three years.
Original article: https://www.yogonet.com/international/noticias/2023/12/19/70124-australia-tabcorp-secures-20year-extension-for-exclusive-victorian-betting-license
