The ACT government has sold ACTTAB for $105.5 million in a 50-year deal with Tabcorp that will bring a significant boost to the territory budget. Tabcorp will also pay an annual licence fee of $1 million, indexed for CPI.
Tabcorp, one of the country's biggest gambling companies, owns the former government TABs in NSW and Victoria. Its deal gives it a guaranteed 50 years as exclusive owner of the totalisator licence. It also gets a sports bookmaking licence for 15 years plus extensions for 50 years, and rights over Keno and Trackside for 50 years.
Tabcorp said the totalisator and sports bookmaking licences were highly attractive, with the licence fee limited to $1 million a year and no betting tax on the totalisator licence. Tax on the sports bookmaking licence was less than 1 per cent of turnover.
Tabcorp has agreed to keep existing staff on current conditions for three months after the sale – which is subject to probity checks by the Gambling and Racing Commission and clearance by the Australian Competition and Consumer Commission – takes effect.
It has also agreed to to sponsor the local racing industry by at least $300,000 a year for 10 years, an increase on ACTTAB's $200,000. It will sponsor local community and sporting groups with at least $400,000 a year, in line with the amount from ACTTAB.
Treasurer Andrew Barr said Tabcorp had made some big commitments and he was happy with the price. "The fundamental issue for ACTTAB was that it needed a big investment of capital and it’s just got that,” he said.
But union organiser Rudi Oppitz said staff had received little reassurance. "What transpires after the three months is not so clear," he said.
"Tabcorp are saying that their intentions are that there will be a presence down here, that they do want to operate out of Canberra, but exactly what that actually means ... there's no certainty around that."
The 130 staff were anxious, Mr Oppitz said. "Having certainty for three months gives them small amount of comfort, but because the announcement lacks any detail in terms of what their futures might look like they're extremely anxious."
While the government gets a big boost to its budget – and expects the sale will qualify for the federal asset recycling bonus if it passes the Senate, worth another $16 million – it also forgoes an annual income stream from ACTTAB. In 2013-14 that amounted to $1.7 million in licence fees, $420,000 in income tax equivalents and just under $1 million in dividends.
ACTTAB has 53 outlets – shopfronts and outlets at pubs and clubs. Under the deal, Tabcorp has agreed to keep 20, but the government has not specified what kind.
The deal also provides for compensation if future governments make significant changes, through new taxes or changes to the licence.
Mr Barr said Tabcorp was likely to grow the business. "Obviously you need to talk to them about their future business plans but there’s every reason to think that having made an investment of this scale that they are going to want to grow this business in a big way and it might lead to more employment.”
Liberal Treasury spokesman Brendan Smyth said the price looked good, but only time would tell whether there were sufficient protections for the local racing industry and staff.
“We need to be careful that the government simply doesn’t wash its hands of the future of the racing industry in the ACT,” he said.
The government says it will continue to fund local racing by $8 million a year.
CLSA analyst Sacha Krien said the low-tax deal would give Tabcorp leverage in negotiations with the Victorian government when its licence in that state runs out in 2024.
“The company could effectively shift accounts to the low-cost ACTTAB without any change in the experience for phone and internet customers,” Mr Krien said.
JP Morgan analyst Matt Ryan said the low-cost licence gave Tabcorp “optionality” on where it directed its betting revenue from customers who lived outside NSW and Victoria.
Tabcorp was set up as a public company in 1994 by the Kennett government in Victoria. The NSW government sold its TAB by public float in 1997, then in 2004 the Victorian Tabcorp launched a successful takeover bid for the NSW company.
Tabcorp also owns Northern Territory online bookmaker Luxbet and the Sky racing channels and Sky sports radio. ACTTAB is a small bolt-on for Tabcorp. The annual amount bet by Canberrans, about $170 million, is less than what Tabcorp takes in on Melbourne Cup day – its busiest day of the year.
The West Australian TAB is the only one left in government hands.
- With Jessica Gardner