Source : THE AGE NEWS
Thousands of pubs across Australia that host Tabcorp betting outlets are just weeks away from getting their gambling commissions slashed, as the gambling giant pushes through with the biggest ever change in its commercial relationship with the hospitality industry.
Tabcorp’s new chief executive – former AFL boss Gillon McLachlan – is resetting the deals that have underpinned the company’s retail network for decades as of July 1. It will drastically reduce the commissions pubs receive from gambling, with Tabcorp instead planning to spruce up the outlets and spend millions of dollars on advertising to lure more patrons into the pubs.
Another big draw card of Tabcorp’s new strategy is to introduce in-play betting on pub punters’ mobile phones – a feature none of its sports betting rivals can match, which are currently being trialled in NSW.
Ex-AFL chief Gillon McLachlan took over as Tabcorp CEO in August.Credit: Marija Ercegovac
McLachlan, who joined Tabcorp in August last year, has spent months selling the potential of this transformation, which he describes as the biggest upgrade to the retail network in the company’s history, to investors and the pubs.
“These changes will bring more punters to pubs and clubs, new offers and products that are only available in our retail network,” he said.
“We are going to invest more in retail, and we think it will be for mutual benefit. I want to grow the size of the network and I want to invest to grow.”
But Australian Hotels Association (AHA) boss Stephen Ferguson has flagged concerns about the changes hurting small pubs that will not meet the $10,000 weekly threshold they need to keep receiving commissions from any bets made there.
“TAB is relying on those small guys wearing the losses,” he said. According to AHA, more than 600 pubs will watch their income drop to zero. Country pubs are excluded from the changes proposed by Tabcorp.
Tabcorp is using its physical presence to take share from its mobile-based wagering competitors like Sportsbet. Credit: Getty Images
Another issue, according to Ferguson, is the kiosks that will allow pub patrons to tap their phones and make in-play bets for the first time.
AHA boss Stephen Ferguson says Tabcorp’s new strategy will strangle small pubs. Credit: Elke Meitzel
“TAB is asking everyone to take this big leap of faith,” he said.
Investors, however, have been happy to take the leap of faith, with Tabcorp shares almost doubling since September last year. The stock is up more than 25 per cent since details of the revamp emerged in April this year.
A research note from Morgan Stanley’s gambling analysts, headed by Melinda Baxter, highlighted the prospect of improved profit margins in Tabcorp’s retail network as it takes market share from rivals.
“We see the opportunity to take share through product innovation, such as the evolution of in-venue in-play betting, as supportive of developing structurally profitable retail operations,” Baxter said.
Morgan Stanley pointed to the experience of international markets to show the potential for in-play sports betting. In the US, in-play betting accounts for half of wagering turnover. In Australia, current restrictions mean its share is in the low single digits.
Tottenham’s Australian fans will be able to do more than celebrate. The ability to place bets on races and games while they are in-play is the lure that Tabcorp’s hopes will revive its retail outlets across Australia. Credit: Sam Mooy
“While the in-play in-venue betting is expected to be incremental versus step change for Tabcorp, it highlights strategic initiatives that the group is trying to make to improve retail profitability, creating a more credible pathway to share gain.”
For the immediate future, Tabcorp’s plan is to boost its retail business, with a revamp of its retail channel featuring large screens and signage which have already been proven drivers of an uplift in business – along with $50 million worth of promotions to help bring more customers to the pubs and clubs.
Meanwhile, McLachlan continues to sell his vision to the pub owners who will be instrumental to this plan.
“It couldn’t be more important to me to get this retail discussion right. I’m available to every single person who wants to call me or get in touch with me,” he said at a recent town hall event for the 3700 TAB outlets.
“There is no more important part of the strategy of TAB going forward than the retail network.”
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