Tabcorp eyes US sports betting legalisation

Business News

Tabcorp chief executive David Attenborough says the gambling giant is monitoring the legalisation of sports betting in the United States and could eventually push into the market after completing the integration of its mega merger with Tatts Group.

In May, the US Supreme Court overturned a ruling that banned sports betting in most states; New Jersey and Rhode Island have already legislated to allow operators to take bets in those states. The illegal US sports betting market is said to be worth as much as $US200 billion ($270 billion) a year.

Mr Attenborough told an AmCham lunch in Melbourne on Wednesday that Tabcorp was monitoring the opening up of the market closely.

“Are we going to be rushing in there? No. Will we be going into America eventually? We might well, but with a lot of planning and a lot of consideration. “But right now, we are focused on Australia and getting this integration done.”

Mr Attenborough said there were differing views on how quickly the US market would open up, and said it remained to be seen how regulatory and taxation levels settled across various states.

“It’s going to be a patchwork quilt. There are going to be a number of states that go slow, they think New York is probably going to be biggest market in the short term.”

Mr Attenborough said Tabcorp has not been scared away from international expansion by the failure of its British betting joint venture with News Corp, called Sun Bets.

Tabcorp confirmed last month it will seek to exit the operation, which has incurred heavy losses.

“We’ve been quite clear with the market, it’s not performing as we need it to. Our main focus has to be on the integration and has to be on getting that done over the next18 months to two years,” Mr Attenborough said.

“But that in no way affects the future opportunities internationally, at the right time.”

He said Tabcorp had successful offshore businesses on the Isle of Man, where it runs the largest international parimutuel hub in the world, and in the US, where it had a Las Vegas-based video and data distribution business.

“International businesses aren’t wrong. The Sun Bets business is not making the money that it needs to and therefore you either keep going and you pile on more on more or you take a decision and you step back.”

Deutsche Bank analyst Mark Wilson welcomed the prospect of an early exit from Sun Bets, saying “there appears to be little prospect that it will be able to generate revenue in excess of the annual minimum payment obligations to News UK”. It puts the cost of the exit at about $70 million.

Mr Attenborough said the integration with Tatts remained on schedule, with the key job of getting the right managers in the right positions across the merged group almost done.

“The biggest surprise has been how culturally ready the Tatts people have been for the merger,” he said.

After an agonisingly long merger process that took the best part of 12 months to win regulatory approval, Mr Attenborough said he was in finally in the place he had “dreamed about”.

“When I was sitting back there last year and we were the [Australian Competition] Tribunal process I dreamed of being in a position where we were executing and we were in control of our future, rather than waiting for approvals.

“It’s been a really good six-month period.”

Despite the woes of Sun Bets, Tabcorp has enjoyed a recent win with the introduction of point of consumption taxes in Australia for online bookmakers. The taxes, set at rates of between 8 per cent and 15 per cent across the states, are aimed at Australia’s foreign-owned corporate bookmakers, who have traditionally enjoyed low tax rates under their Northern Territory licences. The POC taxes are charged on net wagering revenue from bets placed by each state’s own citizens.

Mr Attenborough said the big win with the POC taxes was they would reduce the amount corporate bookmakers have to plough into advertising; he argues there has been too much marketing that has annoyed consumers.

“It should move the corporate bookmakers from paying nothing to paying north of $150 million a year,” Mr Attenborough said.

“That’s important, because right now they are using that money from paying no tax and they are piling it into advertising that is irritating the general pubic.”

The British-born Mr Attenborough said the World Cup in Russia had given Tabcorp’s wagering business a boost – and admitted he was getting excited about the prospects for the English team, led by star striker Harry Kane.