BUSINESS

Tabcorp profit cut in half by AML probe legal fees, Sun Bets launch

TAGs: austrac, Australia, sun bets, Tabcorp

tabcorp-sun-betsAustralian betting operator Tabcorp’s profit fell by nearly half in its most recent fiscal year due to legal troubles and the launch of its UK-facing online betting site.

In the 12 months ending June 30, Tabcorp eked out a 1.5% revenue gain to A$2.19b (US $1.67b), while earnings posted a similar rise to $515.8m. But millions worth of exceptional items dragged net profit after tax down 49.3% to $169.7m.

Those exceptional items included $13.6m in legal fees related to the Australian Transaction Reports and Analysis Center investigation of Tabcorp allegedly allowing punters to illegally wager on credit and set up betting accounts under false identiies.

There was also $14.4m in costs associated with the launch of the new Sun Bets online wagering joint venture with Rupert Murdoch’s News UK. The site went live this week, as did the new Playtech-powered Sun Casino.

Tabcorp’s core Wagering & Media division was flat, growing 0.9% to $1.87b. Digital was the wagering star, with turnover rising 12% to $3.82b, and the second half of the fiscal year stronger than the first. The Northern Territory-licensed Luxbet online brand was also up, rising 1.6% to $748m.

By comparison, retail wagering turnover fell 1.1% to $6.5b and phone betting fell 6.7% to $525m. Tabcorp’s Gaming Services revenue rose 7.6% to $107.2m, while the Keno division improved 4.8% to $208.5m.

Tabcorp said it expects Sun Bets will generate a variable contribution margin of around 20% in FY17, while its expenses will come to around $25m. CEO David Attenborough claimed Sun Bets only had to capture 1.5% of the UK online market to make it a profitable venture.

Attenborough noted that “half the people that bet in the UK interact with The Sun each week,” and said the media outlet would roll out the necessary media campaign to make the site “a challenger brand.” Attenborough expressed confidence that Sun Bets would prove “scalable and transferrable” into other markets following its UK debut.

The Sun Bets ‘multimillion pound’ marketing push gets underway on Saturday, timed to the start of the new English Premier League season. Ex-England player and commentator Ian Wright and racing journo Matt Chapman will front the campaign, which will span print, digital, radio and TV.

Back home, Tabcorp is prepping a new mobile app that will arrive before the all important spring racing carnival. Mobile accounts for 65% of Tabcorp’s digital wagers and the company plans to incentivize its partner pubs and clubs to sign up new digital punters.

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