Bookmaker Tabcorp set for record jump on winning Victorian wagering license

Tabcorp Holdings

18/12/2023 02:43

By Rishav Chatterjee
       Dec 18 (Reuters) - Shares in Australia's Tabcorp
 TAH.AX  were on track for their best day ever on Monday after
the bookmaker said it had won sole rights to a new licence for
betting and wagering in the state of Victoria for the next 20
years.
    The racing and wagering giant said it would pay an
indicative value of A$864 million ($578.53 million) for the
licence, which it has held since 1994.
    Shares of the firm jumped as much as 24.8% to A$0.918 as of
0213 GMT and were set for a record intraday surge, emerging as
the top gainer on the ASX 200  .AXJO  benchmark.
    Tabcorp will pay a licence fee of A$600 million to
Victoria's government in June and 19 annual payments of A$30
million commencing Aug. 16, 2025.  
    Local media had earlier reported about a bidding war between
bookmakers, which also included betting giant Sportsbet.
    "Significantly, the terms of this agreement will place
Tabcorp on a level playing field with our competitors for the
first time in Victoria," Managing Director and CEO Adam
Rytenskild said. 
    Media had speculated that Sportsbet had originally placed a
higher bid to split the licence with Tabcorp in a move for both
the companies to operate betting shops in Victoria. 
    Analysts at Jefferies term the exclusive licence win as a
"positive outcome" for Tabcorp, as the company sees an annual
earnings before interest and tax (EBIT) uplift of A$132 million.
    "A positive outcome for Tabcorp all round," Jefferies noted,
adding it should alleviate investor uncertainty on the licence
outcome after media reports suggested that Sportsbet had outbid
the company as well as discussion on shared licence outcomes
which could have been "operationally messy."
    Tabcorp's had reached its existing agreement with the
Victorian government in 2011 and paid A$410 million as an
upfront fee to exclusively operate retail outlets in pubs and
clubs.
    
    

($1 = 1.4934 Australian dollars)

 (Reporting by Rishav Chatterjee in Bengaluru)
 ((Rishav.Chatterjee@thomsonreuters.com;))