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Tabcorp awarded new 20-year exclusive licence in Victoria

| By Richard Mulligan
Tabcorp has been awarded exclusive rights to offer wagering and betting in the Australian state of Victoria for the next 20 years.
Horseracing Levy BGC HBLB

The gambling group, which has held its current licence since 2012, will pay the Victorian government more than AU$1bn (£521.0m/€604.0m/US$642.0m) over the next two decades. Tabcorp’s licence period commences in August 2024, immediately after its current exclusive licence expires.

The licence authorises Tabcorp to conduct betting activities in Victoria, including the only authorisation to take bets in-person, outside of racetracks. Had the new licence terms applied for 2023, group EBITDA would have been $140m higher on pro-forma basis.

How Tabcorp’s licence has changed

Tabcorp will no longer be required to collaborate on the joint venture arrangement with the Victorian racing industry, while the current industry funding obligations are also terminated. The group will instead pay wagering taxes and racing and sports product fees on the same basis as other operators.

Tabcorp will pay a licence fee to the Victoria government of AU$600m in June 2024 and 19 annual payments of AU$30m starting August 2025. Tabcorp said it intends to fully fund the June 2024 payment from existing debt facilities.

Adam Rytenskild, Tabcorp’s chief executive, said the changes were essential as Tabcorp seeks to compete with Northern Territory-licensed rivals.

“Today is momentous in the journey of our company post demerger. This is a positive outcome for our shareholders, the Victorian government and industry stakeholders,” he said.

“I am particularly pleased with the terms we have secured under this new licence which directly addresses the structural reform required in the modern wagering environment. It’s a licence that will allow us to ignite our total Victorian wagering business.

“This announcement continues the strong momentum of our transformation. We are a faster, simpler and more nimble company. We’re delivering on what we promise and offering our customers a better experience with faster speed to market and an attractive product offer.”

Victoria’s licensing process

In June 2022, organisations were invited to submit an expression of interest for the wagering licence. Select respondents were formally invited to apply in April 2023.

The ministry for casino, gaming and liquor regulation said applications for the new licence were subject to rigorous assessment against several criteria, including corporate and individual probity, harm minimisation and economic benefits to the state. The new licence supports robust harm minimisation protection measures to help promote responsible gambling.

Melissa Horne, minister for casino, gaming and liquor regulation, said: “The Allan Labour government is dedicated to reducing the impacts of gambling-related harm and the new wagering and betting licence sets strong mechanisms for harm minimisation and consumer protection.

“We support sustainable growth in the Victorian wagering and betting market that has harm minimisation at its core.”

Ups and downs for Tabcorp in Q1

Tabcorp reported a 6.1% year-on-year decline in revenue in the most recent quarter despite an increase in digital wagering turnover. For the three months to 30 September, meanwhile, betting and media revenue fell 5.4%. Tabcorp said fixed-odds yields stood at 14.8% compared to 15.0% last year and a preceding three-year average of 15.6%.

Tabcorp faced a far from settled period in Q1, having been hit with a number of penalties in Australia.

First, Tabcorp was fined a record AU$1.0m in Victoria. This related to Tabcorp’s conduct when its Wagering and Betting System (WBS) went down during the 2020 Spring Racing carnival.

The Victorian Gambling and Casino Control Commission (VGCCC) hit out at Tabcorp over its actions. It said the operator did not voluntarily provide adequate information about the outage and criticised its conduct during the investigation. Tabcorp was also criticised for its “repeated failure” to comply with directions.

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