Shares in Tabcorp, a flagship Australian gambling company/provider of betting and gaming products and services based in Melbourne, were on their way for the “best day ever” on December 18, following an event in which the firm officially managed to win an exclusive rights to the newest wagering and betting license in the State of Victoria for the period of the next twenty years.
Indicative license value:
An indicative value of A$864 million, which is approximately 578.53 million US dollars, would be paid by the firm for the license, which it has owned since 1994. In addition, the value of the company’s shares jumped 24.8% to A$0.918 starting as of 0213 GMT, which means they were put for a “record intraday surge,” breaking out as the biggest gainer on the ASX 200 (.AXJO) benchmark.
As for the license fee, the company will pay a fee of A$600 million to the Victorian State Government during June next year. But that’s not all; because it will also pay nineteenyearly payments of A$30 million, which will start from August 16, 2025.
In this regard, Adam Rytenskild, CEO and Managing Director of Tabcorp, commented: “Significantly, the terms of this agreement will place Tabcorp on a level playing field with our competitors for the first time in Victoria.”
Bidding war between local bookmakers:
Furthermore, it was formerly reported by the local media that there was a bidding war between the bookies, which involved wagering company Sportsbet. According to them, Sportsbet initially made a higher offer to share the license with Tabcorp in a bid for both firms to manage wagering shops in the aforementioned state.
As reported by Reuters, analysts at Jefferies see wining the exclusive license as a “positive outcome“ for Tabcorp, because the firm has an increase in yearly earnings prior to the tax (EBIT) and interest of A$132 million. On that note, Jefferies pointed out: “A positive outcome for Tabcorp all round.” That has to ease the uncertainty of the investors over the outcome of the license following media reports which suggested Sportsbet had “outbid“ the firm, and talks of joint license outcomes which “could have been operationally messy,” according to them.
Additionally, the betting and racing giant entered into an existing contract with the Victorian State Government 12 years ago, back in 2011, and officially paid an upfront fee of A$410 million for the exclusive management of club and pub retail outlets.
In other news, Tabcorp recently decided to bring in Coles Group’s Mark Howell as the company’s next CFO prior to June 2024.