For several years Tabcorp, Australia’s biggest bookmaker, has felt the full force of foreign competition with Paddy Power, William Hill, Ladbrokes and others grabbing a large slice of its home market. Now the listed tote operator is turning the tables by teaming up with The Sun newspaper to enter the UK’s ?3bn-a-year online gambling market.
“It is a natural step for us,” says David Attenborough, Tabcorp’s chief executive, who cut his teeth in the industry at Ladbrokes in the UK. “We have worked with News Ltd closely in Australia and built up a high degree of trust. They have one of the strongest brands in the UK with half of the UK betting population regularly reading or engaging with The Sun.”
Sun Bets is scheduled to launch within six months, with Tabcorp providing the gambling platform and products while News UK promotes the joint venture through its titles. Under the deal Tabcorp will provide News UK with a share of the revenue from Sun Bets. Tabcorp, which made pre-tax profit of A$334m (US$240m) in 2015, is spending A$20m over 12 months to get the UK venture off the ground in what has become one of the world’s most competitive online gambling markets.
Web-based revenues are worth ?3bn a year and there are 427 licensed operators in the UK, according to research by the Gambling Commission. Mark Bryan, analyst at Bank of America Merrill Lynch, says the fragmented nature of the market and the tie-up with an established brand provides an opportunity for Tabcorp to gain share.
“The Sun newspaper in the UK has significant readership and is targeted at the C2DE demographic (working classes). It is an excellent platform for a wagering operation,” he wrote in High quality global journalism requires investment. Please share this article with others using the link below, do not cut & paste the article. See our Ts&Cs and Copyright Policy for more detail. Email firstname.lastname@example.org to buy additional rights. http://www.ft.com/cms/s/0/da806bf6-d6b6-11e5-829b-8564e7528e54.html#ixzz40zvGM1SU
“Brand and trust are so important. You can’t carve out a share of a new market without a brand people know,” says Mr Attenborough, who cites Bet365’s difficult experience in Australia where it has chalked up almost A$100m of accumulated losses since obtaining an Australian bookmaking licence in 2011. The Sun has more than 10m readers a week and 1m football fans engaged in its fantasy football competition, which is expected to draw customers to the joint venture. It also has experience of online gaming through its Sun Bingo unit.
a note published in December. Tabcorp says its deal with The Sun ensures it will not have to spend a lot of energy establishing a new brand. Instead it can focus on delivering innovative products and good customer service.
This is a reprint from ft.com. to view the original, click here.