BUSINESS

Tabcorp profit falls one-third on AML fines, Sun Bets startup costs

TAGs: Australia, Longitude LLC, sun bets, Tabcorp

tabcorp-profit-falls-sun-betsAustralian gambling operator Tabcorp Holdings‘ profit fell by one-third in the first half of its fiscal year, weighed down by a money laundering fine and startup costs for its UK online betting site.

Tabcorp’s revenue in the six months ending Dec. 31, 2015 rose 1.8% to A$1.135b, while earnings rose a similar amount to $266m and profit rose 7.3% to $97.5m. But $15.6m in significant after-tax items caused profit to fall 33% year-on-year to $81.9m.

Those significant items included $7.2m to resolve civil proceedings launched last year by Aussie financial watchdog AUSTRAC, who accused Tabcorp of falling down on its anti-money laundering (AML) responsibilities.

A further $8.4m was spent preparing Sun Bets, Tabcorp’s UK-facing online betting JV with News UK. The site will launch sometime in Q4 of this year and Tabcorp is busy building a 50-person team in the UK. The company also signed a three-year deal with Digital Fuel Marketing to serve as Tabcorp’s exclusive digital marketing and creative services provider in the UK and Ireland.

Tabcorp’s core TAB racing business saw H1 revenue rise 2% to $895.3m. Tote revenue remained dominant with $638.5m, but this was down 3.7%, while fixed-odds betting rose one-fifth to $256.8m.

TAB Sports revenue fell 8.1% to $98.6m but the company was keen to point out that the previous year’s H1 featured the second half of the 2014 FIFA World Cup. Tabcorp’s Luxbet online betting site saw revenue fall 5.7% to $25m.

Overall retail betting turnover fell 1.4% to $3.4b while digital turnover rose 9.2% to $1.9b. Telephone wagering was down 7.2% to $266m while Luxbet’s turnover was up 4.4% to $402m.

As for Tabcorp’s other verticals, Keno revenue was up 5.7% to $109.7m, gaming services rose 4.3% to $53m, the Trackside virtual wagering business fell 2.9% to $50.8m and the media division slipped 0.5% to $85.8m.

In other Tabcorp news, the company announced a strategic partnership with New York-based Longitude LLC to help address falling tote racing bets. Longitude’s Enhanced Pari-Mutuel System, which offers a greater variety of bet types and more accurate odds display, is already in use at the Hong Kong Jockey Club. Longitude’s platform will be exclusive to Tabcorp in Australia and is expected to make its debut in the next few months pending regulatory approval.

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