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A daily podcast delving into the biggest stories of the day throughout the sports betting and igaming sector.
Charlie Horner (00:01.548)
Tabcorp has reached an agreement to acquire Betmakers technology in a deal carrying an enterprise value of £267 million Australian dollars, circa £140 million. It's an acquisition long speculated on by Australian media, and Tabcorp views betmakers as a fundamental asset to accelerate the transformation of its horse racing wagering technology and expects the deal to support the wider development of its betting business.
The first major acquisition of the Gillen McLaughlin era. The deal signals Tab Corp's intent to put Tab back on the forefront of Australian's betting sector. But can that objective be achieved by a company whose wagering business is consistently underwhelmed during the first half of this decade? Welcome back to iGaming Daily, supported by Optimove, the creator of positionless marketing and the number one player engagement solution for sports betting and iGaming operators.
I'm Charlie Horner and today to dissect all of the the details of the deal is our editor at large, Ted Menmuer. Ted, how are you doing?
ted (01:07.874)
Very well Charlie, good to be here on the MandoPod. And yeah, I think we've been graced by an &A at start of the week, which is always, always nice.
Charlie Horner (01:17.77)
It is, yeah. It's n it's always nice to to break down the biggest and A deal at the at the start of a week. Well, let's let's dive into it then. so Tabcorp is is acquiring bet makers in a deal that has it's been an on the card for a little while. how about you take us through the the transaction and you know the terms and and w tell us exactly what Tabcorp is buying.
ted (01:19.854)
Makes our job a lot easier.
ted (01:43.822)
Okay, so let's kind of simplify this and separate it to what gets presented on the prospectus. And essentially TapCorp is buying betmakers at an enterprise value of 267 million dollars and paying 0.24 cents per share. So that gives an enterprise value of circa 160 million euros for our European audiences.
Essentially the deal secures TabCorp with a new wagering and horse racing focused platform. It also provides data and a risk management solution for horse racing. And of significance, TabCorp kind of needs this deal and it will gain a kind of a new platform, new
Tote Pool platform in paramutual pricing to revitalize the Sky Racing product and to bolster the offering a tab for the Australian fixtures of the Gold Cup, the Melbourne Festival and the Racing Victoria fixtures.
In I think in the simplest of terms, Cloud Corp is buying a technology that sits underneath its kind of existing platform, but it will kind of modernize its kind of solutions for racing and its overall kind of waging operations. However, I don't kind of view it as this kind of panacea to all the company's issues and to the company's kind of technology output. They certainly do need more.
Charlie Horner (03:11.051)
Mm. Yeah, we know how important racing is to Tabcorp and and you know I mentioned at the start of the show that it that you know there have been struggles in in the first half of this decade. Gillam Glocklin, you know, addressed investors upon the deal's announcement. how did he sell it to the market and investors and and what and why does Tab Corp management believe that Betmakers can be transformational for the wider group, even though maybe Ted you're you're a little bit more sceptical?
ted (03:41.836)
Okay, so as a first &A by Dylan McLaughlin, I kind of view this as actually quite a conservative buy, 140 million pounds, right? And I don't think that there's so much to kind of upsell on much risk to upsell to the investors. It's pretty simple. Tab Corp is securing kind of new competencies in a better kind of technology platform.
It's also kind of solutions that will lower costs and it will bring kind of a revitalisation of its wagering product for Australian horse racing. In terms of in deal terms, it expects kind of 30 million in annualised savings to come to be or to be secured by year two. And overall, it also kind of backs betmakers teams to kind of support or to strengthen kind of the product development of the tab, which has been lacking.
Finally, and this is another kind of strategic view of Tabcorp is that management really wants to kind of build out the B2B technology unit. It's kind of a commercial objective in which Tabcorp wants to kind of diversify its strategy and start kind of outselling services and it kind of views kind of the Asian market as one that kind of carries interest for them.
It's again, I'll just go back and just say that overall it's a conservative buy I think that we will probably see kind of more aggressive stuff coming down the line
Charlie Horner (05:17.099)
Sure. And th these reasons that that management's outlined, you know, s streamlining technology and making technology modernisations, cutting costs and creating synergies and generating B to B revenues, all seems a a little bit, you know you know, what what else would you want from a from an MA deal? This is this is kind of you know, quite generic reasoning, you you might say.
ted (05:41.516)
Mm-hmm.
Charlie Horner (05:45.696)
But we know that horse racing is so key for Tab Corp. So do you see a world in which the this deal sort of transforms Tabcorp's racing operations and its technology and its franchises, or or do you think that you know, or what else would would an aggressive move look like that that you think might be on the cards?
ted (06:06.647)
So yes, you're right. racing is at the center of logic for this deal and it does strengthen, betmakers does strengthen the tax proposition in terms of horse racing, pari-mutuals and pool betting.
And that is, you know, that should compliment kind of the Tabs makeover, also Sky Racing. And the most importantly, Tab Corp's kind of 10 year or generation agreement to kind of run the Victoria Waitress License, so Tab Victoria. And that is kind of the only, the unit, like when you kind of flip it back, it's the only unit of growth that has seen growth for Tabs Sports betting in the past two years. So that's kind of been
a key focus of how he can kind of upgrade upgrades that component. Now a lot of that is just simply down to the exclusivity of the Victoria contract in Australian betting.
Charlie Horner (07:02.805)
Sure, and let's let's continue to to move away from just the horse racing side of things because we know Betmakers is you know, that's the primary aspect of this deal. But do you think that the other aspects, including the wagering platforms, data pricing, B2B services, do you think that can have a material impact on Tab Corp's wagering division? or do you think that there there's gonna have to be some further moves in the pipeline to to get that moving?
ted (07:29.549)
Again, I think I got to kind of sit back on this and look at of Tabco's last two years and it really has performed underperforming sports betting. And even when this kind of new leadership team stepped up to the plate, it marked out that they needed significant revisions and significant upgrades in sports betting to get it back on track against increased competition. And actually competition that is executed in Australia, a lot better than the Tab in the past.
since this decade began. It's lost ground to your likes of, you know, sports bet Australia by Flutter, Entain, Ladbrokes, Nades, and Bet365. In the online element, it has a lot of catching up. And this is why I just returned to it like, yes, betmakers can improve it, but it needs significant gains to get there.
Charlie Horner (08:22.793)
Maybe you could just outline a little bit, Ted, some of those woes or some of those struggles that Tab Corp has faced in the last couple of years as as they've sort of faced that increased competition. Is it is it online market share that they're they're struggling with? Is it is it revenue? What what what seems to be the source of the problem?
ted (08:41.067)
So I think it all kind of points back to, know, Tab Corp has had a very kind of unique decade here and where the business wanted to be.
And with its merger with Tats lotteries that completely failed and was kind of just panned after two years and the companies were kind of respanned off. Now, one of the things is that that kind of process stopped any development of the company and especially the Tab Corp unit for about three years. So it was just stagnant there. And then when it came back, it came back to a much more different Australian sports betting market and one that even had kind of moved on from racing itself and it kind of broadened out to kind of new sports.
new pricing models that were kind of dominated by these kind of foreign competitors. Last year, they hired kind of Deleon McLaughlin, who is very much a high profile CEO, he oversees kind of the transformation or end the modernization of TabCorp holdings. It's been two years of...
really kind of a downcast beat by investors. And this is very much a company that's kind of rethinking kind of its status in Australia and how it can just go back to its kind of heritage stance of being the top player in the market, but it has a lot of technical challenges to proceed with.
Charlie Horner (10:15.317)
Sure, and that I guess that means that this deal in in terms of buying Betmakers is a is a logical first step for McLaughlin as its fur as his first and A buy, since since taking over as CEO. what what do you think this deal actually tells us about his his strategy for turning round the fortunes of the company?
ted (10:34.845)
Again, it's very much kind of sports betting focused, get the tab back to displaying its whole prominence. Also improve kind of sky racing and its kind of engagement with horse racing audiences in Australia and horse racing events out there. And it's like I mentioned, I think, you know, it is conservative in a sense, but it's definitely a deal that gives them
new technology competencies or kind of bolsters that side of the business for them and it's one that was much needed. We will see if that's kind of delivered. I don't necessarily think this year, but certainly there'll be a lot of investor eyes in 2027 in what have they gained out of Petmakers and have they actually really turned it around in the the wagering offering.
Charlie Horner (11:26.251)
Sure. All right, well Ted, let's take a quick break and we'll come back and we'll continue this the discussion and maybe place this in the wider context of what's happening in Australia at the moment.
Charlie Horner (11:39.018)
Welcome back to iGaming Daily. Ted, I'm eager just to take a bit of a step back and analyze Tab Corp's acquisition of Betmakers within the wider context of what's happening in Australia. Do you think that this deal is significant for the market as a whole? Do you think that buying betmakers genuinely shakes up the market and puts Tab back into contention amongst those leaders as as we've sort of said before the break, there's a lot of competition now.
from from international operators, do you think this is just a drop in the ocean or is is it a you know a major move?
ted (12:16.469)
Okay, from first reactions, think the deal certainly strengthens TabCorp, but it does not immediately change the competitive order of Australian gambling or Australian betting, especially in terms of its online pack. What it does reinforce is Tab's unique strengths in retail and race and retail and racing. And especially now, if you can get a kind of better kind of tote and media product out there to audiences. Again, the integration is going to be key.
And the other thing here is that I think kind of like the tab especially from kind of the feedback we get is that it has to kind of rethink its proposition to market. So it'd be interesting to see what back makers can bring to that and how it can like.
maybe kind of diversify or create a better kind of overall omni-channel product for the company that needs it and has kind of failed to meet that remit in the past, you know, since the decade began, yeah.
Charlie Horner (13:16.895)
Yeah, well, I think one's one strength that it does does have in on its side is that twenty year Victorian wagering license. do you think that that that omnichannel is is a is a key to finding that meaningful and sustainable growth beyond, you know, just establishing licenses, retail network and and other racing assets? Do you think it is s sort of securing those more high profile media assets and things like that?
ted (13:43.854)
Look, I mean, if I think if you ask Tab, they'd wish they could just replicate the Victorian license across all states, but that's not the case. And if you look at the numbers here, it's okay. Tabcorp could say in 2025, we got sports betting back on track, back to plus one billion.
$1 billion in weighting. That's correct. But the majority of growth just came in through the exclusivity of the Victorian tab. And again, it's shown kind of little, little pace of growth in online and against the competition.
It's I think in this year and in 2027 you're looking at a tab that can't play the same trick again. It has to show to markets that it has a point diversification and that other metrics and KPIs are improving on its online platform. It hasn't been able to do that in the past two years. I don't think investors will tolerate it for another for another year if that continues.
Charlie Horner (14:51.723)
At the same time, operators in Australia are facing challenges on a on the regulatory level, and I'll just shout out episode two eight hundred and twenty one of iGaming Daily, we we Addison's partner Jamie Nettleton on, to discuss advertising reforms, Ted, and we the you know, with this is something we see in not just in Australia but all over the world. Do you think that tougher regulatory environments play into Tab's favour?
ted (15:05.655)
Mm-hmm.
Charlie Horner (15:19.645)
against some of those international operators, or do you think that, you know, because they will also have those same advertising restrictions, they're gonna face more challenges compared to those those challenges as well? what what do you what do you make of that?
ted (15:36.43)
Well, you know, in Australia, I mean, the tab is such a powerful brand and I don't think that it kind of needs the I don't think it needs.
advertising and marketing elements as much as other competitors. I think that marketing and especially since kind of the I think last year they undertook kind of a rebrand of of Tab Corp and the Tab new marketing campaigns. Gilly McLaughlin certainly and he's a marketing man himself is certainly kind of a believer of you know the power of advertising and also kind of bringing out a new kind of proposition to market a new kind of marketing engagement.
for wider audiences. And I believe that he of views, especially racing and how popular it is in Australia as being kind of a firm connection with TabCorp, its heritage values, and just its prominence with the marketplace and what it's achieved.
I think overall that the debate in starting advertising regarding whether it's whether Labour apply a prohibition or further restrictions is going to continue throughout the year. It's yet to conclude on where it lands, but it's definitely a market that is going to get tight in terms of advertising and both in terms of compliance. It's just going to get harder out there.
Charlie Horner (17:08.555)
Yeah, I'm sure that leadership won't welcome any restrictions or reforms that come in on the advertising side of things. But yeah, you're right, Ted. I think a heritage brand like Tab could ultimately benefit from from some of these changes. So we'll we'll wait and see if that does play out. now, elsewhere, Australia's become an increasingly difficult market for for organic growth in in sort of the last three years or maybe since the start of the decade. Do you really think that MA
is is the way out and is is one of the few realistic ways for incumbents to to sort of scale up. And maybe as a result as a result of that, can we see you know the likes of Entain, Flutter, three six five also dip into the and A markets to to find growth in Australia?
ted (17:55.488)
It's an interesting question. And I think what we've seen in Australia, it's like, yes, it's a mature, it's a very expensive market. And in many senses, it just points to that, that the only way now, especially if you're one of these top brands, you know, bit flutter with Sportsbet Australia or M-Tain's portfolio.
you kind of look at that and say, consolidation is coming. The only way to grow is via &A. But in some senses that it hasn't been kind of as aggressive.
towards acquisition as markets such as the US or Europe. And I think part of that is because of this kind of regulatory limbo of where is this government gonna kind of push? Where will the reorganization of gambling and kind of these federal controls, where will that subject end? And what is kind of the new platform for Australian gambling? So that's yet to be decided. But I do kind of view
coming in the Australian market just because at one stage I mean you know the costs are running so high now you you are kind of I think I believe that a lot of the kind of the bigger fish are looking at kind of those mid-tier brands and say we might as well just acquire them.
Charlie Horner (19:19.071)
Yeah, I often think of Australia and I think the industry often thinks of Australia as one of the most mature markets in the world. and as a result, it's maybe not one of the more interesting markets to to to talk about or to report on. But actually if you sort of pull back a little bit, that there are a lot of moving parts in Australia. We talk about this consolidation now, there's regulation, there's new technologies and there's there's more competition in that market.
Do you actually think that Australia is becoming one of the the industry's most interesting markets to follow in twenty twenty six and and beyond? And maybe what do you think audiences should be keeping an eye on in Australia in the in the months and years to come?
ted (20:01.943)
Look, everything you said is absolutely correct. You know, we don't, kind of view Australia as this kind of mature market where everything's kind of settled. But there are kind of wider questions, especially in kind of the profile of Australia. And I always don't understand why gaming doesn't recognise as great Australia as kind of this gateway to Asia where, yes, okay.
the regulatory kind of play out, I reckon, will also be viewed by other countries and other neighboring countries. We've seen this, especially with New Zealand, who are going to take up their licenses. So Australia does carry a lot of influence, right? And it does have a high wagering activity that I think other Asian countries are aware of and follow. So even in that alone, I think that it's a very interesting market. Also, of the dynamics of play,
It's got a very kind of unique sports scene that I don't think you find in any other country. And I kind of view that it's one of the, it's an Anglo market that carries a huge level of kind of localized sophistication. That's very hard to kind of just.
you know, picture, you know, sitting in London or sitting in Manchester, you've got to be there to kind of understand kind of the passion of Australian sports and that's kind of certainly seen in the numbers in wagering, especially for horse racing and the AFL.
Charlie Horner (21:33.353)
Yeah, it's it's sort of underlines the importance of local localisation, I guess. and I think it is particularly interesting with New Zealand going live next year. Do you think that that might just give Australia a bit of a springboard as well and as you say, provide a little bit more of a platform into into those Asian markets as well for international operators looking to expand?
ted (21:53.517)
I think all in all, mean, there's a lot to play for in Australia. again, we see this coming in this kind of age too, like, know, questions are being asked about that market. You see Flutter, two years of kind of stagnation, Tab, the revitalization of their sports betting product, and Tain kind of pushing for kind of market share. So you've got three kind of very kind of distinct new narratives there. Now,
What I kind of think is that New Zealand will add further to that. It's a market that I think or I kind of view that will be going probably dominated by maximum one or two brands or one or two operators, whoever can establish themselves fastest. And again, it's going to kind be kind of refreshes kind of an order in that continent.
We will have to see how that kind of plays out. And also, finally, with New Zealand, it's interesting to see the level of commitment and the level of investment that the PLC has put into that market.
Charlie Horner (23:01.216)
Yeah, absolutely. Well all eyes on Oceania in twenty twenty seven and beyond I would imagine. And as part of that, we will monitor how Tab Corp manages to integrate Betmakers into its into its ecosystem. But for now, Ted, thanks ever so much for joining me today. Thanks to Optimu for supporting the show as always, and to our listeners, thanks for tuning in to today's episode of iGaming Daily, and come back tomorrow to keep up to date with all the latest global gambling news.