Tabcorp hits out at offshore players taking a punt
Speaking after Tabcorp posted a 63 per cent fall in its annual profit on Friday, chief executive David Attenborough said he would like to see the government ban offshore betting firms from taking bets in Australia.
"An offshore operator should not be allowed to take an Australian resident bet," he told BusinessDay.
"Some countries around the world have dealt with this by just making it illegal for an [offshore] gambling company or operator to take bets from their citizens.
"France has instituted that, so now we don't take any French bets."
Tabcorp's annual profits have slumped on the back of changes to Victoria's poker machine licensing. The changes, which came into effect last August, mean the $2.6 billion spent annually on pokies in Victorian clubs is now split between the state government and the venues.
"The 2013 financial year was the first year of the new wagering and gaming licence structure in Victoria, which we knew would have an impact on Tabcorp's earnings and operations," Mr Attenborough said. "Tabcorp has had a successful year, while managing significant change."
Tabcorp competes with several big international betting players in Australia, such as Bet365, Paddy Power and William Hill. Most of the bigger firms have registered gaming sites in Australia, but others are registered overseas or have both local and offshore accounts.
William Hill, for example, is registered in Australia through Sportingbet and now Tom Waterhouse, but its Gibralta-registered websites are still accessible to Australians.
William Hill chief executive Ralph Topping hit out at Tabcorp on Friday, calling it a "comfortable monopoly". "We are keen to take on comfortable monopolies," he said. "I don't think they have a place in the modern world. Monopolies often mean weak management, weak performance."
However, Mr Topping also backed calls for tighter regulation of offshore gambling. "You have a situation where Australians are betting overseas with underground operations on the internet. That is not good for the consumer."
Tabcorp reported a net profit of $126.6 million for the year to June 30. Its revenue was also down 30 per cent for the period, to $2.1 billion.
While it would not give a guidance for the current financial year, it said poor consumer confidence and weak trading conditions had affected its fourth quarter.
The company also revealed it was making a $18.6 million write-down against the carrying value of its Victorian Keno licence, due to softer trading conditions. Tabcorp shares fell 3 per cent on the results to end the week at $3.27.
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Tabcorp posted a 63% fall in annual profit largely driven by structural changes to Victoria's wagering and poker machine licensing. For investors, the result—net profit of $126.6 million for the year to June 30 and revenue down 30% to $2.1 billion—signals near-term earnings pressure from regulatory change and softer trading conditions, so shareholders should note the company is managing a significant transition.
Tabcorp's chief executive David Attenborough said he would like the government to ban offshore betting firms from taking bets from Australian residents. He pointed to examples such as France, which has made it illegal for offshore gambling companies to accept bets from its citizens.
Tabcorp faces competition from large international online bookmakers—named in the article are Bet365, Paddy Power and William Hill. Some of these firms operate sites registered in Australia, while others are registered overseas or maintain both local and offshore accounts, increasing competitive pressure on Tabcorp's domestic markets.
William Hill chief executive Ralph Topping criticised Tabcorp as a 'comfortable monopoly' and said monopolies can lead to weak performance. At the same time he backed calls for tighter regulation of offshore gambling, saying Australians betting with underground or offshore internet operators isn't good for consumers.
Changes that came into effect last August mean the roughly $2.6 billion spent annually on pokies in Victorian clubs is now split between the state government and the venues. Tabcorp said the 2013 financial year was the first year of the new licence structure and that it was expected to impact the company's earnings and operations.
Tabcorp took an $18.6 million write-down against the carrying value of its Victorian Keno licence due to softer trading conditions. For investors, the write-down is a sign of weakening performance in that product area and a reminder that asset values can be adjusted when trading deteriorates.
Tabcorp shares fell about 3% on the results, closing the week at $3.27. The company did not provide guidance for the current financial year, citing poor consumer confidence and weak trading conditions that affected its fourth quarter.
Investors should watch for any government or regulatory moves on offshore betting restrictions (which Tabcorp is advocating), updates on how the new Victorian wagering and gaming licence structure continues to affect earnings, further trading updates from Tabcorp on consumer confidence, and any additional asset impairments like the Keno write-down that could impact profits.
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