Tabcorp has declared the selection of the previous Australian Rules Football League (AFL) head, Gillon McLachlan, as its new chief executive and managing director.
McLachlan will join Tabcorp and assume the role of CEO on August 5th, contingent upon the required regulatory approvals.
He will take on the position after leading the AFL, the governing body of Australian rules football, for a decade. As CEO, McLachlan oversaw the league’s expansion to 18 teams, during which time revenue more than doubled to A$1.06 billion (£553.4 million/€655.6 million/$701.8 million).
McLachlan replaces Adam Rytenskild, who stepped down in March following accusations of using “inappropriate and offensive” language in the workplace. Rytenskild had been Tabcorp’s CEO and Managing Director since May 2022.
Chairman Bruce Akhurst took on the additional role of Executive Chairman while Tabcorp sought a successor. Akhurst will continue in this role until McLachlan officially takes over in August.
“Gillon is a well-known figure,” Akhurst stated. “He is widely considered one of Australia’s top CEOs, and securing Gillon is a strong indication of confidence in Tabcorp’s future. We have established a solid foundation; Gillon brings a growth mindset and the capability to capitalize on the opportunities before us.”
Tabcorps new CEO, David McLachlan, brings a distinctive viewpoint to the organization, having been involved in some of the most significant media deals in Australian sports history. McLachlan expressed his enthusiasm for the potential of Tabcorps wagering and media ventures to flourish under his direction.
McLachlan emphasized the “enormous opportunity” at Tabcorp. He underscored his dedication to speeding up Tabcorps development, focusing on its multi-channel entertainment offerings across digital, retail, and media platforms.
McLachlan stated, “Tabcorp is a leading wagering, broadcasting, and integrity services enterprise with a promising future.” He added, “As a proud Australian company, Tabcorp contributed $1.1 billion to the racing industry last year and remains a key partner in the industry, holding wagering licenses in all states except Western Australia.”
McLachlan revealed, “This was a crucial factor in my decision. There’s a significant potential for expansion, and I’m eager to propel the sports category, along with other areas.”
McLachlan concluded, “Tabcorp is undergoing a substantial transformation. I’m looking forward to collaborating with the leadership team to accelerate and capitalize on growth opportunities.”
Akhurst added, “Since the separation two years ago, we’ve considerably enhanced customer service and implemented essential structural reforms in Queensland and Victoria.”
Tabcorps metamorphosis is not yet finished, and I am delighted to welcome Gill to continue driving progress and expansion.
Tabcorp is striving to enhance its performance in the initial six months of the year. McLachlan assumes control after Tabcorp encountered a challenging first half. Income decreased by 5.1% to A$1.21 billion in the six months ending December 31, with declines across its core operations.
Wagering and media income decreased by 4.2% to A$1.12 billion, reflecting a downturn in the overall betting market. Within this sector, media and international business income also decreased by 5.4%.
In gaming services, income dropped by 14.5% to A$93 million. Tabcorp stated that this reflected the impact of the sale of eBet and Max Performance Solutions.
Then there was the matter of increased expenses, with the primary issue being an impairment charge of A$852 million. This, combined with the decline in income, resulted in a net loss of A$641.7 million, compared to a net profit of A$53.2 million in the preceding year. EBITDA also decreased by 34.7% to A$131.7 million.
However, there was some positive news in the initial six months. In September, Tabcorp settled a tax dispute with the Australian Taxation Office, and the company will receive a tax refund of A$83 million.
Regulatory Matters: Mixed Results
Tabcorp has also encountered a considerable number of regulatory issues over the past year or so. Most recently, last week, it was ordered to pay A$370,417 in Victoria after admitting guilt to 43 charges of failing to prevent minors from gambling.
Victorian authorities have taken steps to address underage gambling and the lack of oversight for electronic betting terminals (EBTs). In September, the Victorian Gambling and Casino Control Commission (VGCCC) accused Tabcorp and several locations of allowing minors to gamble. These breaches occurred between September 2022 and October 2023.
Tabcorp faces 72 charges. If found liable, the operator could face a combined penalty exceeding A$1 million. Tabcorp could be subject to a fine of up to A$969,236.
The case has also prompted other actions against Tabcorp in Victoria. In January, the VGCCC instructed Tabcorp to make most of its EBTs cashless in the state. This was a direct response to the underage gambling incidents.
Besides the underage gambling case, the VGCCC levied a record A$1 million fine on Tabcorp for its behavior during a significant system failure in 2020. Tabcorp’s betting and gaming systems malfunctioned on November 7, 2020, during the Spring Racing Carnival.
Conversely, Tabcorp was granted exclusive rights to provide betting and gaming services in Victoria in December, for a term of 20 years. Tabcorp’s license period begins in August 2024, following the expiration of its current exclusive license.
Moreover, the New South Wales (NSW) government declared last week that it would consider Tabcorp’s proposal to raise the state’s point of consumption tax (POCT) to 20%.
Gaming companies in New South Wales, Australia currently pay a fifteen percent gaming tax. Tabcorp has recommended that the government raise the tax rate to twenty percent to match other states.
Tabcorp’s proposal also includes other aspects related to reforming gambling laws and licensing regulations. These aspects include a deal with the horse racing industry and a ten percent shareholder limit. The government will integrate these aspects into a wider potential reform in New South Wales.
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