Tabcorp chief executive’s exit after ‘inappropriate comment’ linked to a female regulator

The exit of Tabcorp chief Adam Rytenskild followed allegations of ‘inappropriate comments’ made about a female regulatory official.

Tabcorp’s now departed CEO Adam Rytenskild in the TAB marquee on Derby Day at Flemington. Picture: Luis Enrique Ascui

Disgraced Tabcorp boss Adam Rytenskild allegedly made a sexually charged comment about Victoria’s top gambling regulator in a conversation with company executives while the gaming giant was vying for a lucrative licence deal in the state.

Sources told The Weekend Australian that Mr Rytenskild, who was sacked on Thursday, made the crass statement late last year about Annette Kimmitt, the chief executive of the Victorian Gambling and Casino Control Commission in front of some company executives.

Tabcorp had been locked in a race with rival Sportsbet for the Victorian wagering licence, which it had held since 1994. Both Tabcorp and Ms Kimmitt declined to comment on Friday.

It is understood the comment was leaked to the regulator amid growing disquiet within Tabcorp’s management team over the performance of Mr Rytenskild.

A Tabcorp staffer made a formal complaint about Mr Rytenskild’s comment around 10 days ago with the gambling giant appointing lawyers to investigate the claim.

Tabcorp was announced as the winning bidder for the Victorian licence on December 18, with the 20-year deal worth $864m sending the company’s share price soaring by 25 per cent as investors celebrated the major wagering win over its fierce online rival, Sportsbet.

Behind the scenes, mounting pressure had been building on Mr Rytenskild on three fronts with the board concerned over its falling share price, the loss of market share to Sportsbet and unrest among the management team over his leadership style.

The Australian reported on Thursday that Mr Rytenskild allegedly called an executive a “useless c...” in mid 2023 which some insiders said had acted as a “first strike” against the CEO, who was only appointed to the top job in June 2022.

Its share price has also languished, down by a third since June 2023, wiping nearly $1bn off the company’s market capitalisation.

The Victorian Gambling and Casino Control Commission confirmed Friday that the resignation of Mr Rytenskild followed allegations of inappropriate comments he made about a female regulatory official. The commission declined to comment on the identity of the official or the nature of the comments. Commission chairwoman Fran Thorn said the regulator would continue to operate “as a fierce advocate in the public interest, ensuring integrity, safety and fairness in the gambling industry”.

“I am proud to be the chair of an organisation that champions strong, female leadership and a gender inclusive, respectful workplace culture,” Ms Thorn said in a statement.

Mr Rytenskild’s resignation Thursday from the ASX-listed company is expected to cost him up to $10m in lost shares and options. The Tabcorp board said it considered the language to be inconsistent with Mr Rytenskild’s continued leadership of the organisation.

Tabcorp’s shares fell 5 per cent to 72c on Friday.

The gambling giant’s chief executive said he didn’t recall making the alleged comment “and it’s not language I would usually use”. “But I have regrettably agreed to resign,” Mr Rytenskild said, after 20 years with the company.

Meanwhile, some market analysts believe Mr Rytenskild’s exit was more about a board push for new blood to improve the performance of the company that is losing ground to online competitors such as Sportsbet.

The lack of any suitable successor to assume the top job at the gaming operator has also been raised as an issue with Mr Akhurst drafted in as an emergency boss until a replacement is found.

Victorian Gambling and Casino Control Commission chairwoman Fran Thorn

Taylor Collison gaming analyst Andrew Orbach said Tabcorp’s tote asset had been in structural decline under Mr Rytenskild’s watch.

“Tabcorp needs to find a replacement that has never worked at the company with an existing understanding of the domestic wagering market and Tabcorp’s strengths and weaknesses,” Mr Orbach said in a note to clients. “The CEO needs to challenge Tabcorp on everything it currently does. The turnaround story is there. It just requires more of a corporate approach and less reliance on ‘level the playing field’ mentality.

“We know of at least one candidate that would be perfectly suitable and would alleviate the need for a time-consuming global search that might leave Tabcorp rudderless in the interim.”

Hunter Green Institutional Broking director Charlie Green said the chief executive did not resign and leave behind $10m “just for using some colourful Aussie vernacular”.

“Put another way, that’s a $2.5m penalty per letter in the apparently offensive letter,” he said.

“I do believe Adam was a dead man walking and they have mature succession plans under way.” It is understood several senior executives at rival Entain, the parent company of Ladbrokes Australia, are being considered.

Mr Rytenskild joined Tabcorp in 2000 and has been a member of the executive team since 2010, most recently as managing director of its wagering and media operation.

Tabcorp under Mr Rytenskild has faced increasing competition from big international bookmakers such as Ladbrokes and Sportsbet as customers abandon in-person wagering and place bets online.

Tabcorp, which has a substantial network of betting shops, pays double the wagering fees and taxes of bookies like Sportsbet and Ladbrokes that are only licensed in the Northern Territory and only pay a point-of-consumption tax on a state-by-state basis.

Queensland and Victoria have made tax changes to ensure everyone pays the same, while other states are currently considering the same “level playing field”.

Tabcorp in February reported an interim net loss after tax of $636.8m and took a non-cash impairment charge of $731.9m on its wagering business.

Revenue dropped 5 per cent to $1.2bn. But even with a level playing field, Tabcorp would struggle under its current management, according to some analysts.