TAB powerhouses Tabcorp Holdings Limited and Tatts Group Limited set to combine

AUSTRALIA’S TAB powerhouses Tatts and Tabcorp are set to combine in a deal that is likely to bring an instant $50 million in additional funding to the national racing industry.

Tabcorp’s Chairman, Paula Dwyer.

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AUSTRALIA’S TAB powerhouses Tatts and Tabcorp are set to combine in an $11 billion deal that is anticipated to bring long-term benefits to the Queensland racing industry.

Tabcorp Holdings Limited and Tatts Group Limited announced yesterday the companies had reached an agreement to combine.

The move still requires approval from the Australian Competition and Consumer Commission, which knocked back a merger proposal in 2006, but it is anticipated that with a different wagering landscape in 2016 and more competition than ever from international operators, the deal will be given the green light.

The move could lead to a national tote pool as the two wagering giants seek to adopt strategies to address the national decline in parimutuel betting.

The Queensland racing industry is two years into a 30-year deal with Tatts Group’s wagering arm UBET, which has not enjoyed the same growth as Tabcorp’s wagering business in recent years.

From a Queensland industry perspective the deal should provide significant upside. For one, it has the potential to reduce “leakage” of Queensland gambling dollars to interstate.

Tatts Chairman Harry Boon. Picture: Darren England

Currently, money bet by Queenslanders through the NSW or Victorian TABs (Tabcorp) is either lost to the state or returned at a reduced dividend to what UBET (Tatts) pays to Racing Queensland.

Furthermore, Tabcorp owns the industry broadcaster SKY, which has been accused of providing minimal coverage of Queensland racing in favour of NSW, while UBET has been prohibited from providing SKY vision on its digital platforms.

This scenario would likely change if the merger goes ahead.

Racing Queensland CEO Dr Eliot Forbes said both Tabcorp and Tatts Group were important partners to the industry.

“We understand that the proposed arrangement still has a number of regulatory approvals to satisfy,” he said.

“We look forward to understanding the detail in coming weeks and months, but in the meantime are committed to working with both parties with a view to achieving positive outcomes for the Queensland racing industry.

“For example, we note that national pooling for parimutuel wagering is a potential outcome which we believe would be a positive development overall.”

Tatts chairman Harry Boon said “the benefits of this combination are very clear for the racing industry and customers”.

“In due course, (customers) with racing industry support should be able to access deeper and more liquid wagering pools,” Boon said.

Tabcorp chairman Paula Dwyer said combining the two businesses will provide “a national footprint and could create a pathway to larger wagering pools”.

Originally published as TAB powerhouses Tabcorp Holdings Limited and Tatts Group Limited set to combine