Tabcorp’s Sun Bets brand reports £28m full-year loss
Australian wagering giant could terminate deal in 2019 if brand doesn’t hit revenues of £16.5m
The Tabcorp-powered Sun Bets brand recorded a loss of AU$46.2m (£28m) in its first full year since making its debut last August after struggling to gain a strong foothold in the UK market.
The Australian gambling giant this morning revealed its joint venture with News UK recorded turnover of $203.6m (£123.4m) and revenue of just $4.6m (£2.8m) in FY17.
Tabcorp has payment obligations to News UK in FY18 of £11.1m and in FY19 of £16.5m and said it could terminate the agreement in 2019 if Sun Bets does not achieve revenue equivalent to the minimum fees payable.
“The initial performance of Sun Bets has reminded us of the challenges of start-ups,” Tabcorp’s chairman, Paula Dwyer, said in the company’s annual report.
She added: “As a consequence we have reviewed its operating model, capability and financial plans and have undertaken a range of initiatives to maximise the prospects of success in FY18 and beyond.
“The strategic intent of Sun Bets is to gain a position in the attractive UK online wagering and gaming market, using the powerful News “Sun” brand, while developing and building a wagering and gaming platform that Tabcorp can replicate in new growth markets in the future.”
Tabcorp-powered Sun Bets was launched in partnership with News UK last August
According to the Melbourne-based corporation, Sun Bets will now focus on improving integration with The Sun’s Dream Team offering, enhance its product suite and implement revised marketing and CRM strategies to improve performance.
Elsewhere, Tabcorp said the overall group had recorded a $20.8m loss last year, while revenues increased 1.9% year-on-year to $2.2bn.
“FY17 was a strategically important year for Tabcorp as we reshaped the business for growth,” Tabcorp managing director and CEO David Attenborough said.
He added: “We made investments in acquiring Intecq, establishing Sun Bets and progressing the combination with Tatts, which we expect to complete by the end of the year.
“The increase in operating expenses was driven by the acquisition of Intecq and planned investments in capability, technology, marketing, risk and compliance. We expect our investment in these areas to reduce the risk associated with the Tatts integration.”
Tabcorp said it expects to complete its merger with Tatts Group by the end of 2017.