Tabcorp announced a modest wagering profit increase of 1.4% to $148m for the first half of the 2009/10 year. Casino profits suffered a 10% drop due to increased taxes in Queensland and with keno sales up 5% and poker machine throughputs steady, the overall company profit rose just 0.8% to $264m for the six months to December 2009.
One pleasing trend was the growth in internet sales by 38%. The take-up in self-service technologies was significant, rising to 35% in Victoria whilst later New South Wales installations see the use of self-service terminals at only 7% thus far.
The introduction of the Luxbet business grew fixed odds revenues (profit) by $12.5m.
Of concern to the thoroughbred code will be the continuing growth in market share of the Harness and Greyhound codes. The increase in Greyhound revenues in NSW & Victoria combined was 3.5% and harness achieved similar growth. However thoroughbred growth was a more modest 1.8%.
During the half, Tabcorp progressed important strategic initiatives. The company expanded fixed odds coverage of racing in Victoria and New South Wales, launched a loyalty program in its New South Wales business and entered into a partnership with Australia Post that will give account holders access to their accounts nationwide. In addition, Tabcorp announced the expansion of Sky Racing from one channel to three channels, offering customers more choice anda dedicated thoroughbred racing channel.These initiatives are designed to improve Tabcorp’s wagering offer to customers and strengthen its competitive position in a national market. Last year, the racing industries in each state announced the introduction of new race fields arrangements, under which they would charge product fees to wagering operators for betting on their racing product. In the first half of the financial year, race fields payments increased by $6 million compared to the first half of 2009. This increase is consistent with Tabcorp’s previous estimate that the annual cost of the new fees is approximately $30 million.
Distributions to the racing industry grew in the first half, with the Victorian racing industry receiving $176.3 million, up 2.0%, and the New South Wales industry receiving $126.7 million, up 2.8%. These distributions exclude the additional race fields fees paid by the company.
Chief Executive Officer Elmer Funke Kupper said that the company had responded well to the uncertain economic conditions without compromising its long term investment program. “We adjusted our short term plans to ensure that the company delivers acceptable financial results and improves its market position in its key businesses. We were encouraged by the performance of Star City casino and our wagering division. Our overall casino result has been affected by a weak Queensland market and higher gaming taxes. At the same time, we continued with our investment programs in Casinos and Wagering. These programs are on track and are starting to have a positive impact on our performance.”
“2010 is an important year for the company, particularly in wagering. Greater clarity will emerge in the regulatory environment and we expect that the Victorian Government will award the post-2012 Victorian wagering licence. These events will allow us to chart the future direction of the company with greater clarity,” Mr Funke Kupper said.
