Tabcorp Secures New 20-Year License in Victoria
After a lengthy bidding process from multiple companies, Tabcorp has emerged with a new Victorian wagering and betting license. Tabcorp will receive a new 20-year license to commence in August 2024.
The license will come at a hefty cost to the company. In addition to agreeing to a new tax structure, the company will pay over $1.17 Billion in licensing fees over the next 20 years.
Tabcorp Receives New 20-Year License
Last week, TopAustralianGambling learned that Tabcorp will receive a new 20-year license from the Victorian government, successfully fending off challenges from other corporate bookmakers. In the terms of the agreement, Tabcorp will be on a more level playing field as its agreement with the Victorian racing industry will be dissolved.
Instead, Tabcorp will now pay both wagering taxes and sports and racing product fees similar to what other wagering companies pay in the area. This new license will come at a substantial cost to the company.
Initially, Tabcorp will pay a $600 million license fee on 28 June 2024. Next, the company will make 19 annual instalment payments of $30 million starting 16 August 2025. In total, the company will pay $1.17 billion in licensing fees.
Tabcorp CEO Adam Rytenskild spoke on the deal, stating, “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. 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.
Tabcorp Wins Exclusive License Despite High Bid from Sportsbet
Past reports had stated that there was a bit of a bidding war on the Victorian license, with Sportsbet being the main competitor. According to past reports, Sportsbet initially made a high bid and wanted to split the license, allowing both Tabcorp and Sportsbet to operate in Victoria.
Ultimately, Victoria agreed to renew the exclusive license, a move that some analysts call a “positive outcome.” With the company looking at potential annual earnings pre-EBIT of $132 million, things are looking up for the company.
As stated by an analyst for Jefferies, the result is “a positive outcome for Tabcorp all around,” as the exclusive license removes a lot of uncertainty in the market. Some felt that a multi-company solution could have proven “operationally messy.”
Company Saw Massive Intraday Shares Jump on News
When the news was initially announced last Monday, Tabcorp shares saw a massive push upward. Trading as TAH.AX, the company saw a 24.8% jump in shares at one point up to .91. The company’s shares have since cooled off to around the .85 range. Before the announcement, the company’s shares had slid to around .68, well off its high of $1.17 in May. The May high has also served as the decade-high for the company.
With the company having secured its license for the next 20 years, it can focus on providing quality betting services to players. The sports betting market is constantly evolving, and operators must stay ahead of the curve to retain players.
Tabcorp offers live and online sports betting services in Australia. For sports betting, only licensed and regulated sportsbooks are permitted according to Australian gambling laws. While some are not fond of Tabcorp and its policies, the company has proven to regulators to have the necessary tools to protect players and provide a safe and secure gambling environment. The big question is whether the massive investment in the new license will continue to pay dividends over the next 20 years.
