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Tabcorp has officially won sole rights to the Victorian wagering licence for the next 20 years in a deal that ends its long bidding war with Sportsbet.
Tabcorp has held the licence since 1994 and confirmed to the ASX on Monday that the Victorian government has committed to a new deal which will replace its existing arrangement, which was due to expire next August.
Tabcorp chief executive Adam Rytenskild has secured a deal which will result in Tabcorp holding the Victorian wagering licence for the next 20 years. Credit: Eddie Jim
Under the arrangement, Tabcorp will pay an upfront payment of $600 million in June and $30 million in annual fixed payments from 2025 to 2043, which would take the payment to $1.1 billion. Tabcorp said the payments are not linked to inflation, so the value is actually $864 million.
The $864 million deal is higher than JPMorgan’s prior valuation of between $750 million and $800 million.
Tabcorp chief executive Adam Rytenskild said the terms of the deal recognised the structural changes to wagering brought on by online bookmaking.
“This is a strong licence for the modern era and it’s the prototype moving forward– it ensures a safe wagering ecosystem for the community and incorporates stronger protections to ensure genuine retail exclusivity,” Rytenskild said.
Sportsbet had originally placed a bid which sought to split the licence between multiple bookmakers, before Tabcorp increased its offer. If Sportsbet had been successful, Tabcorp and Sportsbet would both operate betting shops in Victoria.
Tabcorp said the sole rights would have boosted its 2023 earnings before interest, tax, depreciation and amortisation by $140 million if finalised within the period.
Tabcorp’s existing deal with the Victorian government was finalised in 2011 when it paid $410 million in an upfront fee to exclusively operate retail outlets and TABs in pubs and clubs.
Victoria recently increased its point-of-consumption tax to 15 per cent to match NSW, WA, SA and Tasmania. This was hailed as a win for Tabcorp– which has long called for the levelling of taxes it and corporate bookmakers pay– and the state racing industry.
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