Operators are unhappy about the revised Tabcorp contracts that will hit up pubs and clubs to pay regulatory fines and reduce or eliminate commissions, as AUSTRAC again investigates the company’s compliance.
Tabcorp owns and controls in-venue betting terminals and the TAB wagering brand, as well as Sky Racing network and systems monitor Max. Its historic dominance has fought overseas-owned competition in recent years by bookmakers such as Entain, which owns Ladbrokes, and New York-listed Flutter Entertainment, which operates Sportsbet.
Venues are critical to Tabcorp’s ongoing profitability, as its primary market advantage is its exclusive physical betting terminals inside licensed gaming venues.
A year ago the betting giant announced a pivotal shake-up of the retail wagering business whereby it would stop paying thousands of venues with TAB terminals to have them onsite, instead offering to refurbish facilities and spend $50 million on venue-exclusive offers aiming to give punters better odds when they’re betting in person using the physical system. Theoretically, this helps operators attract more patrons.
In the final weeks of 2025 Tabcorp issues new five-year contracts to its network of around 3,700 venues across the country, urging they adopt the new agreement promptly. It’s understood around 95 per cent of pubs and clubs signed the contract, which take effect 1 July.
New TAB Live machines will reportedly cost from $6k to $21k each but will be owned outright by the company, including for tax depreciation. Venues will receive a lower commission on bets and yet the terminals will offer fewer services to customers than previously.
In addition, the new contract stipulates that should Tabcorp be hit with a penalty by a regulator “as a direct result of a breach of this Agreement or any Law by Licensed Venue” the pub or club must, within 30 days, “reimburse TAB for the amount of the fine … commensurate with [the] Licensed Venue’s contribution to the circumstances that resulted in the fine”.
In early May news broke that AUSTRAC had concerns about Tabcorp’s processes for detecting, halting and managing money laundering (AML) and counter terrorism financing (CTF) risks.
Similar AUSTRAC investigations in the past have led to major institutions being fined hundreds of millions of dollars, such as Crown penalised $450 million, the Commonwealth Bank $700 million and in 2020 Westpac forced to pay $1.3 billion.
The financial crimes watchdog audit could see Tabcorp slugged a comparable fine, speculated to possibly be as much as $300 million.
The AUSTRAC audit, focused on Tabcorp’s compliance, began by investigating the company’s activity for Q4 of 2025, but there is nothing to stop this expanding into pubs and clubs. AUSTRAC CEO Brendan Thomas has previously stated they are concerned gaming venues in hospitality are not appropriately mitigating their risk.
But at this stage the subject of the investigation is the company, not venues, and a Tabcorp spokesperson was quoted as assuring operators the sub-clause in the new contract did not obligate venues for penalties arising from the current investigation.
Beyond any culpability for breaches, even some larger operators are voicing concern over the decreased profitability and costs.
Comiskey Group owns and operates high-profile Queensland pubs including Eatons Hill Hotel and Sandstone Point Hotel, and lament each of their venues will earn around $200k less annually under the new contract.
Running the ruler over the associated costs, which factored in risk, staffing and money handling, Rob Comiskey says it would be more profitable for him to install pool tables or darts instead, boding the change is “something we are definitely looking at, seriously”.
Now approaching two years in the role, Tabcorp CEO Gillon McLachlan has been praised for the work to turn around the company’s diminishing returns, however, the new investigation and plummeting share price have proven a reality check.
“I am committed to leading a compliant and safe company that understands its risk obligations,” McLachlan said in an ASX announcement following the commencement of the investigation.
“Uplifting our risk capability has been an ongoing part of the Company’s transformation and we will work constructively with AUSTRAC through this process.”
Mid-2025 AUSTRAC took legal action against one of Australia’s biggest club operators, Mounties, based in failure to properly monitor high-risk customers and the lack of suitable systems or controls for its AML and CTF program. Mounties has conceded it allowed 13 customers to launder up to $226 million.
AUSTRAC also penalised international bookmaker Entain over AML offences, forcing the British bookie to allocate $100 million in provision.
And Tabcorp has itself previously been investigated by AUSTRAC, fined $45 million in 2017 over breaches of the AML and CTF act between mid-2010 and late 2015.
Since the AUSTRAC investigation was revealed Tabcorp’s share price has fallen sharply, closing today down 47c since the announcement, representing market cap loss of $1.08 billion.
