Tabcorp, the prominent gambling group, is set to pay the Victorian government more than AU$1 billion over the next two decades as part of its new licensing agreement, beginning in August 2024 when its current exclusive license expires.
The license grants Tabcorp the authority to engage in betting activities in Victoria, including the exclusive ability to accept in-person bets outside of racetracks.
Had these new license terms been applicable in 2023, the group’s EBITDA would have been $140 million higher on a pro-forma basis.
The key change in Tabcorp’s license is the discontinuation of its joint venture arrangement with the Victorian racing industry, along with the termination of its current industry funding obligations.
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Instead, Tabcorp will be required to pay wagering taxes and racing and sports product fees on the same terms as other operators.
In June 2024, Tabcorp will make an initial payment of AU$600 million to the Victorian government, followed by 19 annual payments of AU$30 million starting in August 2025.
The initial payment will be funded using existing debt facilities.
Adam Rytenskild, Tabcorp’s CEO, expressed the significance of these changes as the company aims to compete with rivals licensed in Northern Territory.
He emphasized that this new license structure will enable Tabcorp to revitalize its Victorian wagering business and continues the positive momentum of the company’s transformation, making it faster, simpler, and more agile.
The licensing process for Victoria’s wagering license began with an expression of interest submission in June 2022, followed by formal applications in April 2023.
These applications underwent rigorous assessments, considering various criteria such as corporate and individual probity, harm minimization, and economic benefits to the state.
The new license places a strong emphasis on harm minimization measures to promote responsible gambling.
Melissa Horne, the Minister for Casino, Gaming, and Liquor Regulation, highlighted the government’s commitment to reducing the impact of gambling-related harm and ensuring that the new wagering and betting license prioritizes harm minimization and consumer protection, ultimately supporting sustainable growth in the Victorian wagering and betting market.
Despite a 6.1% decline in revenue and a 5.4% decrease in betting and media revenue in the most recent quarter, Tabcorp remains committed to its business goals.
The company faces challenges such as a record AU$1.0 million fine in Victoria related to its Wagering and Betting System outage during the 2020 Spring Racing carnival, but it aims to continue its transformation and offer customers an enhanced wagering experience.