Tabcorp is proposing the biggest shake-up of its retail wagering business in decades and wants to stop paying thousands of pubs for hosting its betting products in a move that puts the company and its new chief executive Gillon McLachlan on a collision course with the powerful hotels lobby.

The move is McLachlan’s most significant change since he joined the company last year and almost immediately dumped a previous strategy to turn around the wagering group’s fortunes. Instead of paying the fees, McLachlan is promising to refurbish facilities in the hotels and spend millions of dollars on promotions that he says will bring in more patrons.