BetMakers was ‘lowest risk’ and ‘cheapest’ option for Tabcorp’s tech overhaul

Speaking to analysts following the announcement of Tabcorp’s acquisition of BetMakers on Tuesday, the Australian operator’s C-suite said it was the “cheapest and most efficient” option for its plans to restructure Tabcorp’s technology stack.

Tabcorp has purchased 100% of BetMakers shares at AU$0.24 (US$0.17) per share, valuing BetMakers at approximately $283 million, with an enterprise value near $267 million.

Money saving

Tabcorp projected annual cost synergies of up to $30 million by the end of the second year post-acquisition.

The savings are mainly technology-related, stemming from integration of BetMakers’ advanced product suite, rationalisation of data centres, consolidation of contracts and streamlining corporate and support functions. 

On the analyst call Tabcorp’s CEO Gillon McLachlan said the decision to go with BetMakers over in-house tech came down to cost synergies. 

The acquisition was positioned as a faster, more cost-efficient alternative to organically overhauling Tabcorp’s legacy technology systems.

CTO Robert Fraser highlighted BetMakers’ cloud-native and asset-light technology platform as valuable assets, which already operate profitably and offer a reduced execution risk, compared to internal transformation efforts.

Fraser said Tabcorp, in comparison, had built up a lot of legacy technology, including a mix of on-premises and cloud infrastructure for data centres, and various third-party ancillary services.

“The cost synergies will be delivered with BetMakers much faster and cheaper than we would be able to do ourselves. And that’s borne out of some detailed analysis of the alternative options as well,” Fraser added.

CFO Mark Howell said: “It was sort of the cheapest and most efficient way home and, in our view, was also the lowest risk option we had ahead of us to modernise the tech stack.”

Combining BetMakers’ racing data into Sky Racing coverage

As part of the deal, Tabcorp plans to leverage BetMakers’ technology and distribution channels to create an integrated, end-to-end offering which combines racing media, data, wagering technology and tote services, targeting international markets. 

BetMakers’ racing data offering will be integrated into Tabcorp’s Sky Racing media coverage to provide improved data analysis, McLachlan said.

“Ultimately, what we’re talking about is having a full suite of vision, data, technology and wagering services, having them end-to-end and distributed to every significant territory in the world. [BetMakers] has complementary assets and the timing and exact opportunity in each market will differ.”

“A lot of the capability that we like in BetMakers is around the customer intelligence data capabilities and content and experience capabilities, including some of the media capability they’ve got,” said Fraser. 

Tech team plans

The executives said they would prioritise retaining key BetMakers executives through the integration, although the team leading the new tech arm internally at Tabcorp would be largely new. Fraser will lead the technology team.

“We’ve got a team that’s clear. Their targets are established, and we’ve got a structure in place that we think will see us through,” McLachlan said.

“And a lot of the team that will drive the integration here were deeply involved in that demerger process. So they have intimate knowledge of all the systems and what it will take,” Fraser added.

McLachlan said the business would welcome the new talent from the BetMakers team, particularly those working on the early adoption of AI.

“They’re proven in digital transformation and we’ll harness that capability. Their focus on being lean and efficient and fast aligns with the culture that we are building at Tabcorp,” he said.