Tabcorp staring at 32% revenue hit due to coronavirus crisis

Australia’s major retail betting, wagering and media company, Tabcorp Holdings Limited, has warned the Australian Stock Exchange (ASX) that it is facing a loss of up to 32% of revenue, although the firm admits it has no idea how bad this could get.

Tabcorp noted last night’s announcement by the Prime Minister of Australia following a National Cabinet meeting which agreed on the closure of certain types of venues in a bid to contain the spread of coronavirus (COVID-19). These measures will result in the temporary closure from midday today of Australian licensed venues (hotels and clubs), casinos, and, potentially, TAB agencies which offer Tabcorp’s Wagering & Media, Keno and Gaming Services products.

Tabcorp believes that convenience stores and other such outlets, which distribute Tabcorp’s Lottery products, are not covered by the measures and will remain open. It is expected that newsagencies, which also distribute Tabcorp’s Lottery products, will remain open, but this is not yet confirmed.

Tabcorp is aware that many national governments and sporting bodies have announced the cancellation and/or postponement of major sports events around the world and in Australia to slow the spread of COVID-19, such as the AFL plan to postpone the season for two months. The 2020 NRL season at this stage is still progressing.

Thoroughbred, harness and greyhound race meetings in Australia are currently still being conducted with restrictions on public attendance and otherwise in accordance with social distancing rules summarised in the Prime Minister’s media statement. While racing events were not specifically mentioned, their ongoing status may require further clarification from relevant state governments.

Victorian Racing Minister Martin Pakula has this morning gone on record to say that while racing will continue for now, “how long that remains the case for we can only wait and see”. He added, “I believe this is the case around the country. Today and tomorrow has the green light. I think we should enjoy it while we can.”

In the first half of the 2020 financial year TAB agencies and on-course outlets accounted for around 28% of Tabcorp Group revenues. Sports betting revenues accounted for approximately 4% of Tabcorp Group total revenues.

Tabcorp’s Managing Director and CEO, David Attenborough, is looking to the company’s online gambling digital channels to support the business over the next few months. He said, “Despite the impact of these changes in licensed venues and, potentially, TAB agencies, we continue to offer customers Wagering & Media and Keno products through our digital channels.”

However, even Tabcorp acknowledges that it does not know how bad the situation will likely be. The company said in a statement, “Given this evolving situation, and the high level of uncertainty regarding the impact of COVID19 on the Group in 2020 financial year and, likely in to the 2021 financial year; Tabcorp is not currently in a position to provide specific guidance on earnings or financial impacts.”

“Tabcorp is seeking to partially mitigate the impact of these changes by reducing operating and capital expenditure where it reasonably can, encouraging retail customers to use digital alternatives and actively promoting remaining available products.”