Tabcorp draws ‘line in the sand’ as FY23 opens with 19% revenue rise

The board of Tabcorp has grand ambitions for the company going into 2023, according to the group’s leading board members at its latest AGM.

In a statement to investors, Bruce Akhurst (Chairman) and Adam Rytenskild (Managing Director and CEO) asserted that the Australian media firm was ‘raising the game’ following 2022. 

This included an update on FY23 trading – covering June 2022 to June 2023 – with Rytenskild outlining that Q1 revenue was up 18.7% on the year prior, although the group anticipates higher cost growth due to investments in its new app and preparations for the World Cup and Spring Racing Carnival.

For Wagering and Media, revenue rose by 14.2%, with a 24.7% digital market share, up from 23.9% in the fourth quarter of 2022, and marking a recovery after the figure fell below 24% during the prior financial year. Additionally, Gaming Services’ revenue rose by 91.7%.

“We have a clear strategy that is focused on growing our company and creating value for our shareholders,” Rytenskild remarked. “I said at our investor day back in June that we were previously fighting with two hands tied behind our back. 

“One internally, because of the conflicted challenges of working with Lotteries and Keno and one at a regulatory level because of the additional wagering fees and taxes.”

He continued: “Internally, we are now much better positioned to grow digital revenue market share because we are a business, which has wagering and media as its priority. That’s the hero metric for everyone in the company and we are passionate about achieving that.”

Looking back at FY22 as a ‘line in the sand’, the executives referred primarily to the transformation of the organisation following the demerger of its Lotteries and Keno business from the Wagering and Media unit. 

Akhurst in particular stated that the demerger has enabled Tabcorp to renew its board and executive team, moving forward with an ‘urgent transformation’ of its business, which leadership remains confident will ‘generate long term value’ for shareholders.

“In conclusion, FY22 was our line in the sand for Tabcorp,” Akhurst concluded. “We completed the demerger and are now a more focused company with a core focus – growing our digital revenue market share while putting our customers first.

“We have a renewed board and executive team and renewed energy to urgently transform the company. As you can see, we’ve emerged from the Demerger with strong momentum.”

The executives also examined the group’s FY22 trading update, released in August, acknowledging that revenue for the ‘continue operations’, i.e. the Wagering and Media unit, had fallen by 4.3% to AUS $2.37bn.

As the executives noted in their statement, Tabcorp is the largest betting operator in Australia, whilst also maintaining a strong media presence as a distributor of horse racing content.

The group’s TAB and TAB Tote betting brands are both highly popular – however, the company is facing increased competition in both the wagering and media space. 

Entain in particular appears to be seeking to contest Tabcorp’s dominance in Australia, where its Entain Australia property manages the Ladbrokes and Neds operators. 

The group recently signed an agreement with the Australian Hotels Association New South Wales (AHA NSW) which allows hotels in New South Wales to promote Entain’s brands.

This is significant as Tabcorp currently maintains a monopoly in the state in operating the PubTAB terminals in hotels and pubs – although the venues will not install Entain terminals, promotional material could encourage customers to bet using the Ladbrokes or Neds apps instead.

Additionally, Entain Australia is apparently seeking to strengthen its standing in Australian sports media through the creation of a new division, something which could potentially bring the company into closer competition with Tabcorp’s Sky Racing outlet.