Dean Shannon and Matthew Tripp set to battle for $3bn Tabcorp wagering division

Two of Australia’s best-credential digital bookmakers look likely to go after the most storied name in Australian wagering. But why is Tabcorp set for a $3bn split?

Australians are big punters and this week it emerged that Tabcorp is in play. (Photo by Mark Evans/Getty Images)

They’re the two colourful bookmaking entrepreneurs who love a deal, and look set to do battle for one of the more storied brands in Australian business.

Australians are big punters and this week it emerged that Tabcorp is in play, with the TAB the target of suitors in a possible break-up that would see Tabcorp’s $3bn wagering arm carved off and sold to international gambling or private equity bidders.

In one corner is Dean Shannon, the 54-year-old quietly spoken and publicity shy boss of the local arm of Entain, the London-listed global wagering giant that owns the Brisbane-based Ladbrokes and Neds brands in Australia.

Entain and Shannon were the first to have their hands officially revealed when reports by The Australian led to Tabcorp revealing that it had received a “non-binding indicative offer to acquire [it’s] wagering and media business” from Entain.

Shannon could compete with Matthew Tripp, the highly-regarded 46-year-old former boss of Sportsbet and later CrownBet and BetEasy who after a lifetime in the wagering industry is currently without a job after his BetEasy was acquired by the local Sportsbet via a merger of their global parents last year.

The Australian revealed late last year that Tripp has been approached by private equity firms to run Tabcorp’s wagering arm should an official bid eventuate. Blackstone has been one party said to be looking, Apollo Global Management another.

Both Shannon and Tripp were remaining quiet this week, but their involvement in any potential deal has dominated chatter across the racing industry and driven up Tabcorp’s share price with expectations of them both showing their hand as early as next week when bids are formalised or launched.

If a bidding war eventuates, it will pit two of the most innovative, successful and risk-taking figures in the online betting industry over the past two decades against each other.

Shannon’s colourful corporate career includes building bookmaker.com.au and selling it to Ladbrokes in 2013 for $22.5m and later leaving to form Neds, which at one stage tried to launch a lotteries website and even contemplated developing its own cryptocurrency. Neds would then be sold to GVC Holdings (now Entain) for $68m upfront in 2018.

Matthew Tripp. Picture: Mike Keating.

Under Shannon, Entain’s Australian business has performed strongly since and delivered good profits. He has the full backing of Entain’s global board to go after Tabcorp and will focus on the group’s global reach and superior technology, its ability to put popular and innovative betting products into the market as well as its track record of integrating 20 acquisitions into the group over the past decade.

Shannon will also push for Entain’s relationship with key racing bodies and personalities to grow stronger. He is a keen racing fan and wants to ensure returns to the industry grow and don’t keep slowly ebbing away as has been the case under Tabcorp’s joint venture parimutuel model with the states.

Melbourne Racing Club chairman Peter Le Grand oversees an organisation that counts Ladbrokes as a sponsor for races at its historic Caulfield racecourse and is also the naming rights sponsor of its track at Sandown.

While he says he wouldn’t know the ins and outs of any financial deal Entain would be able to strike with the racing industry, Le Grand has praise for its local Australian arm and Shannon himself.

“Based on our experience in dealing with them I wouldn’t have a problem. Both Ladbrokes and Dean himself have been terrific to deal with and they’ve been very supportive of use whenever we have gone to them for anything.”

But Tripp also has strong racing and sporting links, having forged close relationships with Victorian authorities and also NSW. He even runs into Racing NSW boss Peter V’landys in their respective rugby league roles as Melbourne Storm and NRL chairmen.

“Matt is a money maker,” one official told The Weekend Australian.

The son of famous bookmaker Alan, Tripp bought a fledgling Darwin-based online bookmaker called Sportsbet for $250,000 in 2005 and turned it into a market leader.

He would sell out over two deals for $338m, buy the troubled BetEzy for $10m, sell a majority to Crown Resorts, engineer a sale to Canada’s The Star Group in a $150m transaction in 2019 and a $406m deal for William Hill’s Australian assets and finally make a $250m exit from rebadged BetEasy last year after TSG was sold to Flutter Entertainment in a global $US6bn merger that saw BetEasy folded into Sportsbet in Australia.

Sportsbet is now the most dominant digital player in the Australian market making almost $200m profit in the first half of 2020, though as one well placed source said: “Matt would be the only one out there that would really scare Sportsbet. He won’t die wondering about this and will want to have a crack. You can bet on that.”

The stage is set for a long and drawn out battle for Tabcorp’s wagering division, with no guarantee of victory and plenty of twists and turns along the way.

Yet Tabcorp would not be in this position if it hadn’t done a better job of riding the digital betting revolution in recent years. It has been defensive about its dominant position in the market, constantly trying to stymie its more digitally-savvy competitors by lobbying for regulatory change to protect it rather than building a phone betting winner with a retail betting shop presence.

The roots of the modern Tabcorp trace back to then Victorian Premier Jeff Kennett’s decision to privatise the TAB in 1994.

The roots of the modern Tabcorp trace back to then Victorian Premier Jeff Kennett’s decision to privatise the TAB in 1994.

Kennett says he could not have foreseen a day when Tabcorp would face competition from globally owned brands that offered customers wagering and racing and sports vision easily accessible on their phones and cutting the need to go into a betting shop to have a punt.

But he says it was ultimately understandable that he set in motion a chain of events that unshackled the TAB from government hands but also later brought in competition that has cut into Tabcorp’s market share.

“We are no longer an island in the sense that what we do here from a commercial point of view is constrained by borders, Mr Kennett said.

“So what do you do? Do you say “competition is not a good thing and should we have protectionism?’ Protectionism in the end might work for a little while until it collapses in a screaming heap.”

Tabcorp’s $11bn merger with Tatts in 2017 was also meant to futureproof the company. It would have retail outlets in Queensland, South Australia, the ACT, Victoria and NSW, as well as a strong lotteries division. Now the lotteries business is seen by shareholders as the jewel in the crown and the wagering arm a disappointing proposition they would be happy to jettison.

According to Tabcorp shareholder Anton Tagliaferro, the investment director of Investors Mutual, which controls about 3 per cent of Tabcorp’s shares, the company’s leadership has been lacking with many of the benefits of the merger failing to materialise.

Although the lotteries business has been a big winner — accounting for 56 per cent of the group’s revenue last year — it has been held back by the poor performing wagering division, which has been losing market share to upstart digital rivals.

“It’s a bit like Telstra. The world has changed in terms of the competitive outlook but has the company adapted to the new world and a lot of shareholders believe the company hasn’t done that yet,” Mr Tagliaferro told The Weekend Australian.

“Clearly the lotteries side of the business has done well since the merger with Tatts. But I think it’s fair to say that the wagering division has been disappointing … there has been delays in the integration of the systems and the synergies have been a lot slower to come through,

“There are significant costs to come out of the wagering business. Management has said they have been busy with the integration but there is actually a double whammy for potential improvement with the wagering. Nobody has streamlined the costs.”