The Flutter Entertainment-backed Australian gambling company Sportsbet is believed to have been close to negotiating an exclusive deal to run Western Australia’s TAB in recent months.
However, the licence needed to go to tender, say sources, triggering an upcoming process to be run through investment bank Barrenjoey.
It is understood that Barrenjoey’s role is working for the Western Australia racing industry, rather than the government, with the negotiations with Sportsbet understood to have been with the former.
Yet the state government would need to approve any deal.
It comes at a time that Sportsbet, along with Tabcorp, remains in contention to win the 20-year wagering licence for the TAB in Victoria which expires next year, as revealed by The Australian.
The $750m-plus contest is set to be decided in October.
Melbourne-based Sportsbet is an online gambling company owned by Flutter Entertainment that primarily targets the Australian market.
Flutter, listed in Britain, has a £25bn market value after its share price on the London Stock Exchange rallied.
Its interim results released last week show that it had £4.6bn of net debt, as its earnings before interest, tax, depreciation and amortisation increased 76 per cent to £765m and its revenue increased 42 per cent, year on year.
Flutter said that Sportsbet’s average monthly players increased 7 per cent, with strong retention of an enlarged player base from the pandemic, but EBITDA fell 27 per cent due to tax increases, as mergers and acquisitions remain on Flutter’s agenda.
DataRoom understands that while Barrenjoey has been hired for a potential transaction involving WA TAB, it‘s still early days.
It is helping the racing industry to negotiate a strategic partnership.
Barrenjoey advised the New Zealand government-backed TAB earlier this year on its 25-year strategic partnership with Entain.
As part of that transaction, Entain has agreed to guarantee more than $NZ1bn of funding to TAB NZ in the first five years of the deal to support the revitalisation of the racing industry and a significant upfront payment.
There is also a $15m payment to New Zealand national sporting organisations and funding to Sport NZ to be invested in women’s sport, as well as a payment to help prevent unlicensed offshore betting companies from wagering in New Zealand.
A further $NZ10m is being paid by Entain for sponsorship of New Zealand racing carnivals and other community initiatives.
It comes after the Western Australia government shelved a sale process for the WA TAB last year when offers did not meet its $1bn-plus price expectations.
Entain could draw synergies from striking a similar deal in Western Australia to New Zealand, but faces pressure from a major shareholder in the United Kingdom to curb global expansion.
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