Entain in talks over New Zealand TAB

TAB operates 675 outlets throughout New Zealand as well as on-course tote terminals, internet, phonebet and touch tone wagering channels. Picture: David Caird

London-listed sports betting and gambling company Entain has been talking with the New Zealand government about an acquisition of the commercial rights of the TAB across the Tasman, sources say.

The TAB is operated by the New Zealand Racing Board, which also controls Trackside TV which broadcasts across the country, and is tipped to be placed on the market sooner rather than later as the government looks to recoup losses from the pandemic.

Depending on how a deal surrounding the cashflow is reached, some estimate that the asset could be worth at least $1.5bn.

It would not come as a surprise if Tabcorp is also involved in talks, say sources, given that the government would want to drum up competitive tension.

Some Tabcorp shareholders see merit in Tabcorp combining its lottery pool with that in New Zealand. If discussions are unfolding with the New Zealand government about the TAB, they hope Tabcorp will also engage on that front.

TAB operates 675 outlets throughout New Zealand as well as on-course tote terminals, internet, phonebet and touch tone wagering channels.

It offers a wide range of totalisator and fixed-odds betting products where just over 80 per cent of the totalisator betting dollar is returned to the customer and the rest goes to racing and sporting codes, after tax and NZ Racing Board costs.

The talk of a sale comes as the sale process for the Western Australian TAB continues to unfold, with Tabcorp, Entain and interests related to Matthew Tripp all said to be in the running.

Tabcorp is considered the frontrunner for that process, with the question centring on whether a totaliser would be part of the deal and whether that would be pooled with Victoria or just for Western Australia, and if it was WA alone, whether the value would be enough to be attractive.

Tabcorp is Australia’s largest wagering group and already operates TABs throughout the country except WA, so it makes the most sense for the Australian listed lotteries and wagering group.

Major synergies exist for a group owning more than one TAB because betting is dependent on the same systems and IT platforms.

Marketing also becomes an easier exercise.

Exactly what would be in it for Matthew Tripp to compete on WA TAB is not completely clear, but one thought is that he could pick up a database for fixed odds customers.

The WA TAB, on the market through Ad Astra Corporate Advisory, is expected to sell for more than $1bn.

The WA government will provide the racing industry with an upfront payment from the proceeds.

The unit is understood to be generating about $100m in annual earnings before interest and tax.

Entain last year offered $3.5bn for Tabcorp’s wagering and media unit but was rebuffed by the Australian gambling group, which is now demerging its wagering arm.

Sources say globally, Entain has been under pressure to carry out acquisitions.

When it vied for Tabcorp wagering, it was advised by Macquarie Capital and Morgan Stanley.

In recent years, the New Zealand government looked at a sale of the New Zealand TAB.

Australian racing expert John Messara conducted a review of the industry several years ago and a new racing bill was passed in 2019 to introduce a number of reforms.

Any sale decision would need to be put to the Jacinda Ardern cabinet and the New Zealand racing industry is likely to require a lengthy consultation phase.

Tabcorp is seen as the most natural buyer of the business despite Entain’s interest, but Entain could return for a bid to buy Tabcorb wagering following its demerger, slated for this year.

It would be expected that the Victoria-based group would turn to its long-term adviser UBS.

The Messara review recommended operating rights of the NZ TAB would be bought by an overseas player that would help expand the gambling pools in New Zealand.