- Australian gaming group Tabcorp will pay £39.5 million ($A71 million) to News UK to get out of the Sun Bets partnership.
- The CEO of Tabcorp says: “we didn’t get it right.”
- Tabcorp expects to record a significant item of $91 million after tax in its full year results.
Australian gaming group Tabcorp has successfully negotiated an exit from its struggling Sun Bets online wagering and gaming business partnership with Rupert Murdoch’s News UK.
The company says Sun Bets will cease trading and Tabcorp will make a payment to News UK of £39.5 million ($A71 million) to end the agreement.
Tabcorp will also take a $91 million after tax hit on its full year results in 2018 and another $10 million in costs in 2019.
At the close, Tabcorp shares were 1% higher at $4.71.
The diversified gambling entertainment group last month said a review had found that trading was “challenged” at the UK online wagering and gaming business.
Tabcorp and New UK have operated the UK online wagering and gaming business in partnership since 2016.
The partnership brought together Tabcorp’s capability in global wagering and News UK’s customer base and media assets, including The Sun newspaper and associated sports and racing products such as Dream Team FC, Favourite and Goals.
The agreement was structured as a revenue share with News UK responsible for media promotion. The Sun has more than 10 million readers a week and 1 million football fans.
“The performance of Sun Bets has been below expectations and we do not expect a material improvement over the next 18 months,” says Tabcorp’s Managing Director and Chief Executive Officer David Attenborough.
“While we didn’t get it right, we have taken valuable learnings from the Sun Bets start-up process and operations which will inform our approach across our portfolio.
“I would like to acknowledge the Sun Bets team for their efforts in building the business from start-up phase. We continue to have a strong relationship with News Corporation.”
Tabcorp expects to record a significant item of $91 million after tax in respect of Sun Bets in its financial statements for the year to June 2018, up from $52 million in the latest half year financial statements.
This includes the exit payment to News UK. Tabcorp is expected to incur other closure related costs of up to $10 million.
Tabcorp, an ASX100 company, owns the TAB and Keno in Australia. In December last year Tabcorp and Tatts combined in a $11 billion merger.
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