Tabcorp granted 20-year exclusive Victorian wagering licence
‘Modernised licence terms valuable in an era of heightened regulatory scrutiny’
Tabcorp has secured a “game-changing” 20-year deal for the Victorian Wagering and Betting Licence, ensuring the wagering giant retains exclusivity over parimutuel and retail gambling in Australia’s second most populous state.
The company will pay an upfront $600 million licence premium, which is due in June next year, with a $30 million licence premium to be paid annually from 2025 to 2043. The yearly payments are not linked to inflation, so the overall current value of the deal is about $864 million, Tabcorp said.
The 50/50 joint venture component of the current licence agreement between the Victorian racing industry and Tabcorp has been scrapped, a move which the betting company says puts it on a level playing field with its online bookmaking rivals.
After protracted negotiations between the government and betting companies, Tabcorp announced to the market early yesterday that it had received the green light to continue as Victoria’s totaliser and bricks and mortar operator.
Tabcorp, which demerged its lotteries and wagering businesses about 18 months ago, has held the Victorian licence since 1994 and the new licence will take effect from August next year.
Tabcorp managing director and chief executive Adam Rytenskild described the securing of the new licence as “momentous in the journey of our company post demerger”, labelling the agreement as a positive outcome for all the stakeholders involved including the thoroughbred industry.
He added that the structure of the new agreement “provides Tabcorp with strong modernised licence terms that are valuable in an era of heightened regulatory scrutiny”.
“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,” Rytenskild said.
“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.
“We are pleased to have worked with the Victorian government on a retail and tote licence that appropriately takes into account the structural changes created by the proliferation of online bookmakers licensed in the Northern Territory.”
There had been speculation over the past 12 months as the process dragged on that the Victorian government might split the wagering licence involving multiple parties.
It had reportedly become a race in two for the state’s wagering licence, with Tabcorp and Sportsbet left in the running for the 20-year agreement.
Entain was also thought to be a contender for the licence but withdrew from the process in May.
The parent company of Australian corporate bookmaker brands Ladbrokes and Neds, Entain had made a revised $3.5 billion takeover bid for Tabcorp in 2021, an offer that was rejected by the Tabcorp board.
Under the new deal, which is similar to what was implemented by the Queensland government in 2022, there will be no revenue sharing with the Victorian racing industry, as there was in the previous long-term deal.
Tabcorp will pay Victorian and interstate race field fees and Point of Consumption Tax (PoCT) from August just as its competitors do.
“The structure of payments represents value for shareholders, and will enable us to invest more in our products, offerings and customer experience,” Rytenskild said.
“As the long-term industry partner, this New Licence ensures TAB remains part of the social fabric of local communities in Victoria.
“We are excited to partner with the Victorian government over the next two decades under a modern wagering licence to continue to create a safe, enjoyable and innovative entertainment offering and retail wagering ecosystem for Victorians, while ensuring long term sustainability for the state’s racing industry.”
In an attempt to counter the financial impact on the racing industry, exacerbated by declining wagering turnover from the Covid-inspired peak, Victoria’s PoCT rate will increase from ten to 15 per cent from July next year.
Fifty per cent of that PoCT revenue will be distributed to the state’s thoroughbred, standardbred and greyhound racing industries.
In acknowledging the new agreement, a spokesperson for Racing Victoria, the state’s principal racing authority, said: “We’re aware of the announcement by Tabcorp regarding the Victorian Wagering and Betting Licence.
“We’re awaiting official confirmation and associated details from the Victorian government and Tabcorp.
“We’ll make comment once we’ve received and digested all relevant information.”
Tabcorp has now secured long-term wagering licences in all states and territories, except for Western Australia, the only jurisdiction which is yet to privatise its totaliser and retail betting business, TabTouch.
Entain recently partnered with the New Zealand government and industry to take over the running of the country’s parimutuel and fixed odds betting operator, TAB NZ.
Tabcorp’s share price was up 23 per cent yesterday, closing at 91 cents, its highest price since mid-October.