Tabcorp Secures Exclusive 20-Year Victoria Betting License
Tabcorp, the Australian gambling company, has emerged victorious in securing a new exclusive Victorian Wagering and Betting License, beating out Sportsbet for control of the state’s retail betting for the next two decades.
This transformative agreement, which covers retail betting in all of the state’s TABs, bars, and clubs, reflects a substantial win for Tabcorp, granting them an exclusive license until 2043. The company explained that this extended period will provide a stable and predictable operating environment, allowing it to invest in long-term growth and innovation.
To obtain this exclusive license, Tabcorp will have to make substantial financial contributions to the Victorian Government. The company is poised to pay an upfront fee of AU$600 million (US$402.96 million) in June 2024, followed by an annual payment of AU$30 million (US$20.14 million) for the next 19 years, totaling AU$864 million (US$580 million) over the life of the agreement.
In exchange for the exclusive license, Tabcorp eliminates its joint venture contributions to Racing Victoria and commits to injecting an additional AU$15 million (US$10.07 million) in funding for the first three years of the new license. The company is also pledging an AU$2-million (US$1.34 million) payment to support research on gambling harm and contribute to programs addressing problem gambling within the state, as well as an additional AU$2.5 million (US$1.68 million) to bolster existing animal welfare initiatives within the racing industry.
The new deal is projected to significantly expand Victorian TAB and Group margins, contributing to improved earnings quality, and is expected to enhance the overall profitability of Tabcorp’s operations. The company is confident that its earnings will significantly outpace the costs associated with the license.
Following this victory, Tabcorp’s stock experienced a considerable boost, indicating investor confidence in the company’s future prospects. From trading at AU$0.68 (US$0.46) on the Australian Securities Exchange, the stock surged to AU$0.90 (US$0.60) and continued to climb after the news broke.
Tabcorp’s successful bid for the new license also marks the conclusion of the company’s current joint venture with the Victorian Racing Industry, eliminating existing funding agreements between the two entities. This will allow Tabcorp to manage its finances and investments more independently and marks a significant shift in the company’s operating structure.