Punters betting less as Tabcorp ‘hero metric’ digital profit falls

Tabcorp says it’s the only big wagering company in the country to have increased its earnings. But digital wagering profits – a big focus for its future – are falling.

Tabcorp CEO Adam Rytenskild is confident about the company’s outlook in a softening market

Wagering giant Tabcorp claims it can still hit its “hero metric” goal of 30 per cent digital betting revenue market share by 2025 despite punters placing smaller bets as interest rates rise and inflation bites.

Tabcorp said it was the only big betting company to increase its earnings but suffered a double-digit slide in digital betting that was partially offset by punters making more bets in pubs and clubs.

The group’s full year revenue was up 2 per cent to about $2.43bn and EBITDA rose 8 per cent to $391m, which chief executive Adam Rytenskild described as “Tabcorp’s best ever result since competition arrived”.

Yet while it now has record active digital TAB customers of 805,000, Tabcorp’s digital market share fell slightly to 24.5 per cent from 25.9 per cent a year earlier.

Mr Rytenskild insisted Tabcorp was still on target to achieve the 30 per cent digital market share goal he announced a year ago, as part of a re-set of the company to have more of an online presence post its demerger from The Lottery Corporation.

“The wagering market is definitely soft. The wagering digital market is having a post-Covid readjustment … and what we’re seeing from consumers is translating into less spend by more punters” Mr Rytenskild told The Australian.

“We are going through an economic cycle at the moment but we are pretty durable. That [30 per cent] target is not going to be in a straight line, but as we build product and build our brand, we will get there.”

While it targets more digital punters, Tabcorp’s cash wagering revenue increased 25 per cent to $654m. Mr Rytenskild said consumers “might be shunning expensive restaurants but they seem happy to go to the pub, and they’re betting there.”

Foreign owned Sportsbet has digital market share in Australia of about 48 per cent according to its London-listed parent Flutter Entertainment, while Entain Group’s Neds and Ladbrokes combine for more than 20 per cent.

Both companies previously reported softer earnings in Australia, with Sportsbet’s profits declining by about 30 per cent in Australia in the past two years. Entain’s revenue and bottom line has also been hit by higher point of consumption taxes.

Tabcorp is also competing with Sportsbet for the Victorian wagering licence, with a decision due by about October. Mr Rytenskild would not be drawn on the outcome, other than to say that the competition proves that the licence is valuable to have as a way of promoting a brand given a looming federal government crackdown on betting advertising.

Mr Rytenskild has been a voluble supporter of less advertising, which has been a successful way for rivals like Sportsbet to build brand awareness and market share.

But he said that he did not support the surprise inclusion of a recommendation to ban betting inducements offered to customers contained in a House of Representatives committee’s report on online gambling and its impact on problem gambling.

“We did not advocate for a ban on inducements and we have given that feedback to the government,” Mr Rytenskild said.

Gambling industry sources have told The Australian up to about 30 per cent of betting turnover for some companies is inducements, including bonus bets for customers and money-back offers on certain bets.

Tabcorp is also currently brokering a deal for free-to-air broadcast rights for the Melbourne Cup in conjunction with the Victoria Racing Club.

Nine Entertainment is understood to be the VRC’s preferred network but a deal is yet to be finalised, with Seven West Media also having lodged a bid. Incumbent broadcaster Network 10’s deal with the VRC ends with this year’s Melbourne Cup in November.

“We have been working with the VRC for a couple of months now and have been looking at different options. We have two really good proposals from Seven and Ten, but we haven’t made a call yet,” Mr Rytenskild said.

Tabcorp’s group net profit of $67m and normalised net profit of $84.3m were both above analyst estimates, helping drive its share price up 6c or 5.7 per cent in trading on Thursday morning.

The company announced a fully franked final dividend of 1c per share, bringing full 2023 financial year dividends to 2.3c per share.