‘Visionary’ Entain chief Dean Shannon weighs state wagering licence punt
The smart money suggests Entain, under the direction of Australian chief Dean Shannon, will take a run against Tabcorp for wagering licences in WA and Victoria.
When most 17-year olds were looking forward to turning 18 and having their first legal drink in a pub, all Dean Shannon wanted to do was go to the TAB and make his first legal bet.
“I’ve loved horse racing and betting all my life,” Shannon says. “I’ve always been one of those customers who looks forward to the Saturday afternoon races, week in week out. I’ve always loved it for as long as I can remember.”
Nowadays, he is more likely to be the guy that owns the TAB rather than bets in it.
Shannon is a self-made wagering wizard and definitely one of the richest. He’s done it by starting two successful online gaming businesses and selling them to Entain – which he now runs in Australia.
His company last year made an unsuccessful $3.5bn bid for gaming giant Tabcorp and the smart money says he is now very likely to bid against his former target for the $4bn-plus state wagering licences in Western Australia and Victoria.
“Why wouldn’t he just bid directly for the licences in Victoria and West Australia rather than bother trying to buy Tabcorp again?” says one prominent bookmaker.
Shannon won’t comment on the processes with the state governments, citing confidentiality issues.
London-listed Entain will certainly need to use its big pockets if it wants to play.
The WA business has a mooted price tag of $1bn-plus and the Victorian one is likely to be worth significantly more, at between $3bn and $4bn if the contract is exclusive.
Entain’s local turnover of about $10bn this past year may help convince the London-based board, on which Shannon sits.
The WA bidding process has already begun and in Victoria, expressions of interest are due on August 18.
Losing the Victorian licence would be disastrous for the incumbent, Tabcorp, which already faces an uphill battle to win back investor support after continuing to lose market share to smarter and nimbler online rivals.
Tabcorp had made a pitch to the Victorian government to extend its contract rather than have it put out to tender.
“We always keep a close eye on what our competitors are doing and what the opportunities are that are around,” says Shannon.
If any potential state licence bids fail to succeed, would Entain come back for Tabcorp?
Shannon can’t say, but he believes his firm would do a better job at running the company that currently holds the retail wagering licences across all states and territories except Western Australia.
By comparison to Entain, Tabcorp’s wagering turnover was $16.4bn last year.
“We still see Tabcorp as a good opportunity for market share. Despite their bravado, we’ve kind of heard it all before. We believe we can deliver a much better experience to customers in Australia than they can, and I see it as a good opportunity for us, so whether we have another crack at Tabcorp or not, we will keep our options open.”
Shannon’s views about doing a better job of running Tabcorp are shared by some investors.
“Entain are doing a good job globally and they certainly have a better story to tell than Tabcorp,” says Sandon Capital chief investment officer Gabriel Radzyminski. “Part of the problem for Tabcorp, and Tatts before it, was that they are legacy businesses. They are former monopolists and it’s impacted their DNA.”
Radzyminski believes Tabcorp management, which has retained previous wagering boss Adam Rytenskild as chief executive after the demerger of the lotteries business, has already proven itself not up to the task of competing with the corporate bookmakers.
“The same people are involved and they have failed to deliver,” says Radzyminski. “While a one-off bad result can be explained, very consistent poor performance is an accurate predictor of the future. And that’s Tabcorp. Corporate bookmakers have cut their lunch and eaten it.”
It’s a sentiment echoed by fellow Tabcorp shareholder Hugh Dive, chief investment officer at Atlas Funds. “It’s been a torturous thing,” says Dive. “I would have preferred that the takeover happened.” While some question the ability of the Tabcorp chief executive, there are no such doubts about Shannon.
A search online of his name reveals little about the man, apart from the $55m he made selling his Bookmakers company to Ladbrokes and the $85m he made doing the same thing with Neds a few years later. All three are now owned by Entain.
He ran a number of other businesses including online adult entertainment, a listed online media business and online casinos in Europe before finding his way back to his first passion of wagering.
“Dean Shannon is and has always been a visionary,” says Racing NSW chief executive Peter V’landys.
“He also has the uncanny ability to understand the punter, the customer, in every way. Believe it or not, this is rare in many CEOs.”
The backing of V’landys may come in handy. If Entain was to come back and bid for Tabcorp, it would require racing and ministerial support from both NSW and Victoria.
Even his rivals seem unequivocal in their admiration.
Alan Eskander, founder of Sportschamps, who pocketed $25m selling Betstar to Shannon when he was running Ladbrokes, describes his career to date as “brilliant”. “He is a really smart operator with a real flare and he can start from scratch and build a super good business quickly,” says Eskander.
Shannon himself says his skills come back to his passion for the industry and the great people who work for him.
“I’ve always put the customer at the centre of the business and that’s been the most important thing to us. Even when we were a smaller business we were always punching above our weight and trying to innovate, lead and build a really good team around us.”
Punching against the Queensland government is what Shannon and his online bookmaker rivals are currently doing. The state shocked their industry by deciding to raise the point of consumption tax from 15 to 20 per cent for online bookmakers.
The increased tax still needs legislative approval, and the online bookmakers won’t let it pass without a fight.
When people think of online bookmakers, they tend to think loud and brash. Think Tom Waterhouse. Shannon on the other hand, would rarely be recognised walking down the street.
If some of his plans come off, that might soon change.
