Tabcorp extends Powerball reselling partnership with Jumbo until 2030

Tabcorp has renewed its Powerball and Oz Lotto reselling agreement with Jumbo Interactive, gaining a $15m extension fee.

Tabcorp CEO David Attenborough. Picture: Stuart McEvoy.

Gaming giant Tabcorp has extended its reseller agreement with Brisbane-based Jumbo Interactive for another seven years, netting it an immediate $15m and up to 4.65 per cent of lottery ticket sales.

Jumbo - which was one of the ASX’s runaways last year, hovering around $7.70 before rising to a high of almost $28 - is reliant on reselling lottery tickets, including Tabcorp’s Oz Lotto and Powerball.

On Monday, Tabcorp signed a binding term sheet to extend its agreement with Jumbo to 2030 - or a further seven years - following its current expiry.

Under its new agreement with Tabcorp, Jumbo will pay a fixed extension fee of $15m when the deal begins. It will pay additional service fees rising from 1.5 per cent of ticket sales in FY21 to 4.65 beyond FY23.

Moreover, Tabcorp chief executive David Attenborough said where the value of subscriptions is more than $400m for each applicable financial year, Jumbo will pay a service fee of

4.65 per cent on the value in excess of $400m.

“We are pleased to extend out to 2030 our longstanding commercial distribution relationship with Jumbo,” Mr Attenborough said.

“Jumbo is a valued reseller and distribution partner of Tabcorp lotteries products and these agreements support a longer term relationship on more sustainable commercial terms.”

Mr Attenborough said if long form agreements are not entered into within 60 day from June 28, the date the binding term sheet was executed, then the term of the reseller agreements reduces from 10 years to a term expiring on May 1 2023, with a partial refund of $13.5m of the upfront extension fee and a partially reduced service fee.

The binding terms include customary termination rights for distribution agreements of this type permitting Tabcorp to terminate each of the reseller arrangements on 30 days’ notice if Jumbo fails to perform its obligations, enters into similar arrangement with third parties, or there is a change of control of Jumbo.

Tabcorp’s lotto business — which it acquired during its $11bn merger with Tatts in 2017 — is the company’s main revenue driver and it has been under pressure to spin off the division.

Its lotteries and Keno business delivered a 12.4 per cent increase to $1.584bn in the six months to December 31, with a record $150m Powerball jackpot last September helping lift earnings.