Tabcorp Emerges as Likely Buyer of West Australia’s TAB Betting Agency

Media reports suggest that the nation’s largest gambling operator will add the betting agency to its portfolio

Australian gambling giant Tabcorp is billed as the likely new owner of the West Australia TAB totaliser betting agency, according to a new round of reports from financial news outlet the Australian Financial Review. TAB has remained the only state-owned agency across Australia since 2014 as national and international companies have been stepping up their game and claiming larger shares of the local gambling market.

A sale of TAB has long been advised by financial services company Investec. The firm acts as an advisor to the West Australia government on the potential sale of the state-owned betting agency as well as on the sale of WA land registry. The investment bank has warned the industry that regional operators will quickly be squeezed out of the field due to heavy competition from national and international companies. According to Investec, TAB is at huge risk of losing its relevance, but its privatization could prevent that from happening.

The betting agency reported a A$5-million loss on revenue of A$340 million for the 2016-17 financial year. It is yet to release its results for the 2017-18 financial year.

The government of West Australia is planning to introduce a piece of legislation that would clear the way for TAB’s sale early next year, it became clear earlier this week. It has also emerged the government plans to use 65% of the proceeds from the sale to pay down state debt. The remaining 35% will be contributed to an industry infrastructure fund.

Tabcorp Considered the Likely Winning Bidder

It is believed that Tabcorp has the largest chance to win a bidding process for the sale of the TAB betting agency. The company currently manages totaliser betting in all other Australian states. It has long held the monopoly over retail sports betting in New South Wales and Victoria and following last year’s merger with rival local gambling operator Tatts Group it has extended its reach to the remaining states.

It is believed that Paddy Power’s local brand Sportsbet, Ladbrokes, and the recently rebranded BetEasy (formerly CrownBet) have too been interested in potentially purchasing TAB.

Reports about the betting agency’s sale emerge as its value has been estimated to have halved from A$1 billion to A$500 million in recent years. The Australian Financial Review wrote that the final price of the entity will depend on several important details, including the duration of the operating agreement, tax rates, and the addition of electronic and other gambling options to TAB’s existing offering.

The price will certainly go up given the fact that the West Australia government is set to implement a 15% point of consumption tax on gambling revenue in the coming months.

According to reports, Tabcorp has informed the state government about its interest in the betting agency. The gambling giant has also said in a discussion paper on TAB’s future that a longer operating contract would be the best for the agency itself and for maximizing returns to the government, the racing industry, and the community.

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