Australian gaming operator Tabcorp profits fell more than one-quarter in its fiscal H1 in part due to startup costs of its new UK-facing online betting joint venture.
Figures released Thursday showed Tabcorp revenue rising 2.1% to A$1.16b in the six months ending December 31. Earnings rose 1.7% to $270.4m and pre-tax profit gained 5.3% to $102.7m, but $43.8m of significant items drove actual profits after tax down 28.1% to $58.9m.
Those significant items included $17.9m related to the launch of Sun Bets, the UK-facing online betting joint venture with Rupert Murdoch’s News UK. The site, which went live last August, has signed up 85k customers who generated turnover of $96.8m. But Sun Bets’ revenue totaled just $1.5m, reflecting “mid-single digit” margins that were offset by major bonus and promo offers. Tabcorp expects Sun Bets will lose an additional $15m in H2 2017.
Sun Bets wasn’t included in Tabcorp’s core Wagering & Media division, which reported H1 revenue rising 1.4% to $987m. The gains were attributed in part to a record Spring Racing Carnival, which saw turnover rise 4.7% over the 57-day period (spurred by a 17.6% rise in digital betting).
Total TAB turnover was up 2.3%, as digital wagering rose 13.8% to $2.2b while retail wagering fell 2.5% to $3.3b. Fixed-odds betting revenue was up 21.2% to $311m while Tote betting fell 7% to $594m.
TAB Sports revenue improved 10% to $108.4m while Trackside virtual wagering fell 13% to $44.2m. Tabcorp plans to give Trackside a badly needed boost via the rollout of new graphics and other game enhancements in H2.
Tabcorp says its digital results reflect the company’s integration of digital into its retail operations, including the omni-channel Check & Collect feature, which allows punters to scan winning tickets with the TAB mobile app and deposit winnings into their TAB accounts.
Tabcorp’s non-wagering divisions were also in the black in H1, with Gaming Services revenue up 13.8% to $60.2m, while Keno gained 2.2% to $112m.
Tabcorp’s other major significant items included $20m related to the federal court civil lawsuit launched by Australia’s financial watchdog over Taborp’s anti-money laundering lapses.
A further $9.1m was spent on Tabcorp lawyers working out the details of the company’s proposed merger with Australian lottery and betting operator Tatts Group. Tabcorp says it continues to work with shareholders and competition watchdogs to ensure completion of the transaction by “mid-2017.”