In a trading update, Tabcorp reported a decrease in revenue for both its wagering and media, as well as gaming services segments during the Q1 period from July to September. Wagering and media revenue dropped by 5.4%, mainly influenced by lower fixed odds yields due to unfavorable racing and sports results. Fixed odds yields were at 14.8%, slightly lower compared to 15.0% last year and a three-year average of 15.6%. Digital wagering revenue also declined by 3.9% year-on-year during Q1. However, digital wagering turnover saw a slight increase of 1.0% despite softer market conditions, while overall wagering turnover slipped by 0.9%. Gaming services revenue decreased by 12.9% compared to the previous year, primarily due to the sale of the eBet business in February 2023. Tabcorp is also finalizing the planned sale of its Max Performance Solutions business, with the deal expected to be completed by the end of the first half of the financial year.
Looking ahead, Tabcorp aims to achieve 30% digital revenue market share by its 2025 financial year, as part of its TAB25 strategy. Despite the challenging trading environment, the company’s managing director and CEO, Adam Rytenskild, expressed satisfaction with the growth in digital wagering turnover, indicating positive customer response to their new digital customer offering. Rytenskild emphasized the importance of executing their TAB25 strategy and making decisions that contribute to the long-term success of the business. Tabcorp continues its transformation journey, implementing significant changes within the company and the industry. As they navigate through level playing field and license reforms, Tabcorp aims to enhance its customer reputation while reducing its cost base.
During Q1, Tabcorp faced penalties and fines in Australia. In Victoria, the company was fined a record AU$1.0m by the Victorian Gambling and Casino Control Commission (VGCCC) for its conduct when its Wagering and Betting System (WBS) experienced an outage during the 2020 Spring Racing Carnival. The VGCCC criticized Tabcorp for not providing sufficient information voluntarily and highlighted its repeated failure to comply with directions during the investigation. Additionally, Tabcorp was fined $15,000 in New South Wales (NSW) for breaching advertising and promotion rules. The company had advertised a promotion on its website that included an inducement to participate in gambling, accessible to anyone visiting the website, regardless of having an account with Tabcorp.
In August, Tabcorp announced the departure of its chief financial officer, Daniel Renshaw, due to personal reasons. Damien Johnston has been serving as the interim CFO while the search for a permanent replacement is ongoing. Tabcorp has not made any further announcements regarding the appointment of a full-time CFO. On a positive note, Tabcorp resolved a tax dispute with the Australian Taxation Office (ATO) and was refunded $83.0m. The dispute was related to the income tax treatment of payments for licenses and authorities. Tabcorp paid the disputed amount of tax liabilities and interest in full, and the refunded amount represents 20% of the disputed tax liabilities and interest. As part of the settlement, Tabcorp will pay approximately $37.0m to The Lottery Corporation Limited (TLC) in accordance with the separation deed between the businesses. This settlement will result in a benefit of approximately $45.0m after tax for Tabcorp, which will be reflected in the financial statements for the year ending June 30, 2024, and treated as a significant item.
