Lottery strength lifts Tatts revenue

Robbie Cooke has joined Tabcorp’s boss in denouncing foreign bookies’ tax arrangements.

Tatts CEO Robbie Cooke. Picture: Jamie Hanson.

Tatts boss Robbie Cooke has joined his main rival to attack foreign bookmakers, arguing some are circumventing the tax and duty system for their own financial benefit.

Mr Cooke, who today delivered a 7.2 per cent fall in annual profit to $233.8 million, added his voice to the increasing debate around wagering reform, which is set for a shake-up this year on the back of anti-gambling Senator Nick Xenophon increasing his parliamentary power.

The Federal Government has already flagged it will push for new reforms this year and the Northern Territory, which licences most of the foreign corporate bookmakers operating in Australia, has flagged it is reviewing its regulatory framework.

David Attenborough, head of wagering giant Tabcorp, also used his annual results to attack the corporate bookmakers for their Australian tax arrangements and call for further reform.

Mr Cooke said today that the regulatory outlook had improved for the company’s wagering division, which recorded its first full reporting year under the new rebranded Ubet banner.

The boss of Tatts (TTS), which derives the bulk of its revenue from its lotteries division, hinted at his support for South Australia’s move to hit corporate bookmakers with a new 15 per cent tax.

He said the “gradual awakening” of state and territory governments to, what he said, was the taxation leakage occurring from certain betting companies operating out of virtually tax free jurisdictions was a positive.

“Tatts pays $1.4 billion in lotteries and wagering tax and duty to state and territory governments,” he said.

“The fiscal position of these jurisdictions is damaged by operators who are circumventing the tax and duty system for their own financial benefit, and in some cases deceiving customers as to the true nature of their product offering.”

Tatts booked a net profit of $233.8 million for the year through June, a 7.2 per cent fall year-on-year, impacted by the company’s long running and now concluded pokies compensation litigation, and the loss arising on the sale of its UK slots operation, Talarius.

Revenue for the group was up 3.8 per cent to $3.03bn.

“All-in-all, our business renewal program is delivering, it positions us well for future growth, and has at its core a focus on maximising value from our unique portfolio of gambling assets,” chief executive Robbie Cooke said. “It is really satisfying to see the digital initiatives we implemented over the last few years now driving strong sales outcomes,” he said.

Analysts believe Tabcorp could revive merger talks with rival Tatts. The market has consistently suggested that Tatts’ wagering arm would be better run by Tabcorp. Tatts derives about 70 per cent of revenue from its lotteries business.

Over the year, digital sales growth in lotteries lifted 32.2 per cent to now represent 13.5 per cent of lotteries sales.

“The group’s lotteries operation was the standout performer,” Mr Cooke said.

Tatts and Tabcorp, which combined would create a $9bn gaming and lotteries giant, failed to reach an agreement during merger talks late last year.

“Transactionally, our logic in initiating the nil-premium merger of equals discussions with Tabcorp in mid- 2015, was the product of our quest for shareholder value creation, given the significant efficiencies the combination was capable of releasing,” Mr Cooke said. “The additional attraction from the merger was the potential for the enlarged entity to embark on meaningful business expansion activities outside the Australian marketplace.”

Tatts will pay an 8c dividend, bringing the year’s total distribution to 17.5c — an increase of 1c on the prior year’s payout.