Thu, Feb 20, 10:21am by Ethan Anderson
Tabcorp has warned the cost of integrating its TAB wagering business with the UBET brand, acquired when it merged with Tatts, has blown out by more than 40 per cent.
The Brisbane Times reports the cost blowout, which was revealed alongside a decline in wagering revenue and dealt a blow to shareholders last Wednesday.
Tabcorp chief executive David Attenborough said integrating UBET, which operators in Queensland, South Australia, Tasmania and the Northern Territory, with TAB was on track to be finished before July.
The move would deliver benefits of up to $145 million next year as customers in UBET states would then be able to access products and services that are winning customers for TAB, he said.
The company became aware of the “increased complexity” in merging the two brands’ systems, including those responsible for regulatory compliance and anti-money laundering checks, which required additional resources, he said.
These would cost another $40 million, bringing the total cost of the project to $135 million.
“We’re going to be using more people focused on integration than initially anticipated to get the job done,” Mr Attenborough said.
The news came as the $9 billion gambling group revealed a 12 per cent jump in keno and lotteries turnover on Wednesday, which includes the Oz Lotto and Powerball draws, pushing earnings from that division 17 per cent higher to $245.8 million.
But digital wagering turnover was down almost 5 per cent and turnover at its retail betting shops fell 9 per cent, resulting in a 16 per cent earnings slump at its wagering and media division to $138.5 million.
Mr Attenborough said Tabcorp’s share of the digital wagering market had actually grown, but its share of industry revenue declined as rival digital bookmakers increased their yields in response to the introduction of state-based point of consumption taxes.
“We’ve seen overall soft sales in the wagering market and some of that could be the changing market dynamics and some of that could be the macro-economic factors,” Mr Attenborough said.
— Dokter Bola (@dokterbola_ID) February 19, 2020
Wagering giant Tabcorp has said that its punters are embracing its efforts to get more customers betting online.
The Sydney Morning Herald reported in January that a third of Tabcorp’s active customers in Victoria and New South Wales placed an online bet in a venue since October.
The shift to digital betting, led by others in the industry such as Sportsbet and Ladbrokes, over the past 15 years presented a challenge to Tabcorp’s retail network of 4,000 betting agencies and entertainment venues.
The $9 billion group’s managing director of wagering Adam Rytenskild said many punters went to its pubs and clubs to watch live sport and racing, but placed bets on their phones, not the TAB betting terminals.
This meant the venue would not get its cut of the gambling turnover.
“That’s not good for the publicans, that’s not good for the clubs and it’s not good for TAB,” he said.
“There were some extreme situations of marching customers out of the venue if they weren’t betting cash with them.”
TAB’s online wagering turnover grew by 7.4 per cent last year, while its retail turnover fell 7.7 per cent.
Its wagering revenue is roughly split 50/50 between the two channels now.
Overall, wagering revenue fell 3.6 per cent last year, with Tabcorp’s bottom line propped up by the lotteries business it acquired through a 2017 merger with Tatts.
Tabcorp started rolling out systems in late 2016 that used geolocation technology to identify when a customer placed a bet on the TAB’s smartphone app within a venue, so the revenue could be shared.
Mr Rytenskild said that did not stop up to 60 per cent of the online bets in venues being placed with rival bookmakers.
Tabcorp is now trying to combat that by rolling out “venue mode” on its app, which gives customers special offers or deals only accessible in TAB venues.
The feature was designed to encourage punters to both choose TAB over its competitors and also drive patronage at TAB venues.
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