McLachlan brokered extension of Sportsbet deal before he left the AFL

Gillon McLachlan oversaw an extension of the AFL’s multimillion-dollar advertising sponsorship deal with wagering giant Sportsbet until 2028 before he departed the league.

There was no public announcement but two industry sources, who wanted to remain anonymous because of sensitivities around the issue, confirmed the extension of the deal, which had been due to expire in 2025.

The extension prevents other wagering businesses, including McLachlan’s new employer, Tabcorp, from advertising or promoting their odds on AFL platforms for a further three years. McLachlan, the AFL and Sportsbet were contacted for comment.

What does Gillon McLachlan’s appointment as Tabcorp CEO mean for the AFL and gambling?Credit: Getty Images

The reasons for the sensitivity are the looming regulatory reforms for gambling advertising, and community concern about the relationship between sport and betting.

McLachlan, who left the AFL last September, was announced as the new CEO of the publicly listed Tabcorp on Monday, a job worth $1.5 million a year plus bonuses.

Two people with knowledge of the AFL’s strategy, who asked for anonymity to speak freely, said there was little room or willingness for the league to change its approach.

They said the relationship between the AFL and Sportsbet was strong and mutually beneficial.

The partnership started in 2014 when the league ended its deal with Tabcorp, moving to Crownbet which, after a series of mergers, became Sportsbet – now Tabcorp’s main competitor.

A source familiar with McLachlan’s thinking, who also wanted to remain anonymous to speak freely, said the former AFL boss had no intention of muscling in on the league’s current arrangements.

Horse breeder, sports-lover and money-maker: Some believe McLachlan is better suited than most to his new role.Credit: Eamon Gallagher

His initial priorities would be to implement the TAB25 strategy, as the company seeks to bolster its online betting business, and the cultural change many deem necessary at Tabcorp after the exit of former CEO Adam Rytenskild, who stepped down after allegations he’d made inappropriate comments at an executive meeting. 

However, Monash University gambling expert Charlie Livingstone said McLachlan’s appointment highlighted well-established links between professional sports and gambling.

“If you have been the chief executive of the AFL, you are already working in the gambling business,” Livingstone said.

McLachlan, representing the AFL, told a parliamentary inquiry into online gambling last year that wagering deals earned the league “a material amount of money that makes a contribution to affordability, to access and to community”.

The Albanese government is considering recommendations from that inquiry, including a ban on gambling advertising and inducements.

Under current arrangements, the AFL earns money from its Sportsbet partnership as well as the product fees it receives from a range of gambling companies including Tabcorp and Sportsbet, who use the game as a vehicle to run betting markets. An investigation by The Age in 2022 estimated that those arrangements were worth between $40 million and $50 million a year to the AFL, with the sponsorship providing about $6 million to $8 million and product fees between $30 million and $40 million.

AFL executives also understand that gambling advertising helps underpin the league’s broadcast deals, with media companies prepared to pay huge amounts for rights knowing they can attract gambling companies as advertisers. However, it is difficult to calculate the value wagering contributes to those deals.

McLachlan knows the equation better than anyone. It was McLachlan, then a 30-something commercial manager of the AFL with a family history in horse racing, who first struck a partnership between Tabcorp and the league in 2006.

That six-year deal — reported at the time to be worth about $650,000 a season — meant, for the first time, the AFL received a product fee for money wagered on football. McLachlan said the deal represented “a new and significant revenue stream for the competition”.

McLachlan ran the AFL until last year. He was appointed Tabcorp’s chief executive on Monday.Credit: Eamon Gallagher

That deal formed the foundation for today’s connection between betting and the AFL, which extends to advertising at their venues.

That advertising was reduced in 2019 when the AFL self-regulated to limit the amount of advertising in venues to six 30-second ads per game. Some venues such as GMHBA and the SCG have stopped gambling advertising.

Two AFL clubs, the Giants and Brisbane Lions, have Tabcorp sponsorships, signed before McLachlan joined Tabcorp.

However, most Victorian clubs abandoned betting sponsorships around 2016, instead partnering with the Victorian Responsible Gambling Foundation to replace that revenue.

Gambling industry experts claimed at the time that this less-cluttered market meant more exposure for the AFL’s major wagering partner. Given the league distributes money to clubs as part of their equalisation funding model, clubs still receive gambling dollars indirectly from the AFL’s revenue pool.

Racing NSW chief executive Peter V’landys is confident McLachlan will lead Tabcorp successfully. Credit: Rhett Wyman. Images digitally altered.

The AFL argued under McLachlan that it had little choice but to partner with gambling companies so they were aware of betting trends that identified threats to the game’s integrity.

The league also emphasises that as a not-for-profit company, the revenue from betting is used to invest in game development.

Industry sources said McLachlan’s real challenge would be to adjust to the regulatory requirements that come with leading an ASX company.

Chasing a target of 30 per cent digital revenue, which is outlined in Tabcorp’s strategic plan, will also mean shifting the culture and its brand perception among young people.

The agreement Tabcorp struck with the Victoria Racing Club and Nine, the owner of this masthead, is the sort of deal McLachlan would need to hit that mark, according to one industry observer, who wanted to remain anonymous to speak freely.

The observer said the deal suggested Tabcorp would play to its strength which remained in wagering on racing, which would bring McLachlan face to face with his old adversary, Racing NSW boss Peter V’Landys.

“He did a brilliant job at AFL. If he replicates [that, then the] TAB will boom,” V’Landys said on Monday.

However, Monash University’s Livingstone said McLachlan’s appointment would make the connection between sport and gambling “inescapable”.

“It means the likelihood is there is going to be even more persuasion brought to bear on governments to let things keep going as they are,” Livingstone said.

With Danny Russell

News, results and expert analysis from the weekend of sport sent every Monday. Sign up for our Sport newsletter.