Supplier News

Australia – Tabcorp reports financial and strategic success for 2015

By Phil - 2 November 2015

The going is good for Australian betting group Tabcorp who reported a net profit for the 2015 financial year after tax of A$334.5m, up 157 per cent on the prior year.

Whilst this figure has been inflated by two significant one-off income tax benefits, net profit after tax, excluding these items from continuing operations was up 14.7 per cent to A$171.3m. Revenues for the group were A$2.16bn, up 5.7 per cent.

Tabcorp now operates Wagering, Keno and Trackside licences in the ACT, complementing existing operations. ACTTAB was rebranded in August, so that Tabcorp now operates under a single TAB brand across the ACT, New South Wales and Victoria.

The completion of media rights arrangements for NSW and Victorian thoroughbred racing means that TAB’s apps and tab.com.au are the only digital channels where customers can watch every single race across every racing code. This is a major competitive advantage and a real point of difference for the company.

Tabcorp Gaming Services business, TGS, has evolved from being a Victorian-only business to one which is building a presence in NSW with the signing of a number of new venues in that market.

The Keno business has been transformed, with a new brand identity and a more contemporary and appealing customer experience. Keno jackpots are now pooled between NSW and Victoria, with Queensland planned to follow in due course.

Tabcorp’s Managing Director and CEO, David Attenborough, said: “A strong Wagering and Media contribution underpinned the group result. We performed very well in what is a highly competitive market. Customers are responding positively to our wagering offer and our results demonstrate the value of our integrated retail, digital and media assets. Revenue growth was 6.9 per cent, while EBITDA was up 7.2 per cent. Total racing revenue growth was 5.1 per cent, while sports revenue was up 16.2 per cent. However, racing continues to drive the bulk of our wagering turnover, with fixed odds products underpinning racing’s growth. Media revenue continued to grow, driven by increased international vision and co-mingling arrangements, such as those in place with Hong Kong, Singapore and South Africa.We have also put in place new media rights arrangements for NSW and Victorian thoroughbred racing, providing certainty for the future.”

Tabcorp Chairman Paula Dwyer said: “I am pleased to report that the Dow Jones Sustainability Index once again rated Tabcorp the global gambling industry leader in its 2015 results. We have received this ranking 10 times in the last 11 years, demonstrating a long-standing commitment to doing the right thing.”

The Tabcorp Chairman also praised industry regulation following the Australian government’s review into illegal online wagering, announced last month.

“A well-regulated gambling industry is, therefore, in everyone’s interests,” she said. “Gambling laws and regulations must be upheld and must be appropriate for today’s environment. However, the growth in online betting, wagering advertising and the propensity of some wagering operators to push the boundaries has created challenges for regulators and the communities in which we operate. In addition, we have unlicensed offshore operators targeting Australian customers.

“We believe wagering operators should be licensed in Australia if they are to take bets from Australian residents. This would largely address the problem of unlicensed offshore operators, whose activities pose a threat to racing and sports integrity. Unlicensed offshore operators are also not held to account in relation to responsible gambling or other consumer protections. Their operation deprives our states and racing industries of income.”

She did highlight three areas though that Tabcorp felt the government needed to address.
“The first relates to live betting on sport. This product is only permitted in the retail wagering
environment or by way of a telephone call. Some wagering operators, however, are offering inplay betting online and through digital apps,” she said. “This activity has been referred by the federal regulator, ACMA, to the Australian Federal Police for investigation.

We understand the AFP will not proceed with an investigation, but this is based on its case prioritisation. ACMA has stated that it remains concerned about what it says is potentially prohibited internet gambling content.The Federal Government’s review provides an ideal opportunity to provide certainty and a level playing field for all operators. Nationally consistent and clear regulations around gambling advertising and inducements are also needed. Last year, there was $89 million spent on wagering advertising across Australia.

That was up 34 per cent on the prior year. Our concern is not only that advertising is regulated differently in every state and territory. We also share the community’s view that there is too much gambling advertising.

“Finally, we believe there needs to be a single rule across the country in relation to the offering of credit by bookmakers. Northern Territory-licensed corporate bookmakers can offer their clients lines of credit, but TABs cannot. We believe the easiest way to address this is to introduce a single rule preventing wagering operators from acting as lenders and providing credit to customers.”
“The current regulatory framework is a mix of state-based and national laws, which do not work well together, particularly in the online environment. The Interactive Gambling Act, which administers online gambling, is outdated and needs to be modernised. The government recognises this through the current review.”

Ms. Dwyer added: “Tabcorp concluded the 2015 financial year as a stronger and more sustainable company. We have a portfolio of quality, integrated gambling entertainment businesses that are well placed to deliver profitable growth and attractive shareholder returns well into the future. In 2016, we have a very clear focus to invest in the customer experience. This means giving customers the most compelling products and services, delivered through the channels of their choice. At the same time, we will target investments in high-growth areas that can set us apart from our competitors. These areas include the integration of our retail, digital and media assets, our brands, which are the strongest in the market, and innovation in products and services.”