Tabcorp is looking to its biggest changes in decades, imploring pubs and clubs to join it as it seeks to overhaul retail wagering in the wake of a shifting market.
The gaming giant has long been Australia’s dominant player in bookmaking, through its high-priced licences that give the company the exclusive right to offer retail betting. In 2023 Tabcorp took an extension to its Victorian permit, exchanging a higher fee for the exclusive licence for higher taxes across the board.
But Tabcorp’s time of minimal competition began to unravel with betting apps on smart phones, and it has struggled to maintain its market share against the drive by UK’s Entain, which owns Ladbrokes, and the NYSE-listed Flutter Entertainment, operator of Sportsbet.
In a pivot from its previous plans, Tabcorp is now looking to lift the appeal of its in-venue operations, such as PubTAB.
The new plan requires re-writing well established deals with venues, and the company met with industry representatives at the start of the week to put some detail around its proposal.
New chief executive Gillon McLachlan spoke of major structural challenges at the company while offering that “it’s not just us that needs a change”.
A major component of the plan is to fund renovations in pubs and clubs around the country, at no cost to the venue, installing attractions such as TV walls and allotted betting areas equipped with dedicated tablet devices.
Accompanying the new facilities would be assorted promotions that are only available to people within venues, which is suggested will bring in more patrons. Examples include bonus bets during Thursday’s happy hour, and a new initiative to be known as Tabtime, on Saturday afternoons.
Reporting indicates these “generosities” will cost the company over $20 million, already earmarked for the coming financial year.
McLachlan says Tabcorp will be putting “unprecedented levels of promotions and new initiatives” into the retail network, aiming to “revitalise our retail offering”.
Of course, the spend has to be funded, and is offset by the proposal to stop paying venues daily fees for hosting Tabcorp terminals, and to stop paying commission for new customer sign-ups and for punters depositing money through the venue. McLachlan admits their goal for the coming year is to reframe the terminals to operators as being an asset rather than a cost.
Tabcorp has terminals in around 3,700 pubs, and has instigated a minimum turnover threshold with low-earning venues because it says many already cost more than they earn.
Although commissions on turnover will continue at most venues, in the region of 1,300 will fall below the eligibility threshold. There will be some exemptions due to their remote location.
McLachlan concedes they know confidence in the company “will deteriorate” if it doesn’t deliver the kind of turn-around it is championing through the sweeping changes, having posted a loss of more than $1.4 billion for FY24.
“We know the risk in that, we know the opportunity in that, and we own that,” he told publicans.
The shake-up risks putting the company at loggerheads with the pubs and clubs industries.
AHA CEO Stephen Ferguson noted there could be upside from the capex and promotions, but that the Association was concerned for rural and regional hotels. Many will have their commissions “go to zero overnight” but will be expected to continue to pay thousands of dollars for a PubTAB terminal.
Ferguson describes it as “baffling” that a pub might sell the Tabcorp product yet not receive any payment for doing so.
AHA (Vic) relayed to members that the new conditions could have “a material impact” on smaller operators with Tabcorp betting operations.
Conversely, high turnover venues will likely see additional promotions and activities.
The move to recoup around $20 million from pubs and clubs, beginning July, is expected to be followed by an even higher, undisclosed amount in FY27.
Having been briefed on the proposal, Bruce Mathieson Jr acknowledges that retail betting has become all about the apps and that Tabcorp is attempting to reconfigure its arrangement with venues to better utilise its own app. In early May it announced intention to ramp up live betting on its app for patrons in venues.
But while Mathieson poses that Tabcorp has little option other than to make sweeping changes to combat the encroachment of online bookmakers, he bodes “there is going to be significant hurt as a result”.
The plan takes cues from the vast American market, despite inherent differences in the availability of betting platforms in the two countries. Earlier this year new chief customer officer Jarrod Villani flew a contingent of publicans to New York to show and explain the vision.
Tabcorp’s formal proposal has not yet been made openly available, and the company has declined to comment on the events of the week and the spearheading of the biggest change driven by McLachlan since his appointment in 2024. He swiftly vetoed the former turnaround strategy in favour of what he says is a “simpler” commercial model.
McLachlan insists Tabcorp wants to invest in and grow its retail platform, working with venue partners toward the “long-term sustainability of the retail network”.
He speaks of creating alignment and a better outcome for venues, but entreats operators that “we need your help, to listen to us on this change journey”.
After hitting an historic low of $0.38 per security in September, the ASX-listed Tabcorp (TAH) had clawed back, gaining 80 per cent to reach $0.685 at the end of last week.
News of the proposal prompted a modest rise before TAH closed today at $0.70.
