Western Australia government calls for expressions of interest on TAB sale

Expressions of interest are being called for by the Western Australia government for its TAB. Picture: Vince Caligiuri/Getty Images.

The West Australian government launched the sales process for its $1 billion-plus TAB on Tuesday, calling for expressions of interest from prospective buyers.

It is understood that the West Australian government has altered the structure of the sale, which means that what is on offer to prospective buyers is now worth well over $1bn.

Earlier, the deal was expected to be worth about $300m to prospective bidders.

Last year, the government was embarking on a sale where the buyer of the TAB would be required to hand over a sizable portion of the TAB’s annual cashflow to the racing industry.

However, under the revised structure, the owner would be able to retain all of the cashflow.

The Western Australia government will now provide the racing industry with an up-front payment from the sale proceeds instead.

Expressions of interest are due on November 16.

The sale of the West Australian TAB is back on the agenda after being derailed late last year by Covid-19 and is being advised by Ad Astra Corporate Advisory.

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

As earlier reported by DataRoom, a number of high profile wagering groups are set to line up for the country’s only yet-to-be privatised TAB, including Tabcorp, betting tycoon Matthew Tripp, Flutter Entertainment and Entain.

Tabcorp is Australia’s largest wagering group and already operates TABs throughout the country except Western Australia, so it remains the favourite to pick up the WA TAB.

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

Marketing also becomes an easier exercise.

But wagering assets are in favour, with the level of betting on the increase amid the global pandemic.

Global wagering groups such as Entain already operate in Australia, as does Flutter Entertainment. Both are licenced through the Northern Territory.

The sales process will no doubt be closely watched by the Victoria government.

Its TAB licence is up for renewal in 2023 and expressions of interest have been called for.

In Victoria, the licence is currently held in a 50-50 joint venture between Tabcorp and the racing industry.

But the Victoria licence renewal enables the opportunity for a change to those terms.

Major wagering groups like Tabcorp have been eager for changes to the licences.

The NSW licence runs for 99 years which suggests the status quo is likely to remain.

Under the earlier structure of the WA TAB deal, what was paid back to the racing industry was based on retail and tote betting volumes, but they have been in decline with the growing prominence of betting through digital platforms.