Tabcorp offices

Betting giants Tabcorp and Tatts Group are hoping to form a huge Australian partnership to fend off competition from overseas gambling companies. (Image: AFP)

Tabcorp and Tatts, the oft-warring giants of the Australian betting industry are set to join forces.

The shock development will see the gambling behemoths form a monopoly worth AUD11.3billion.

The hope is that eager overseas gambling firms keen on a takeover of either firm would be warned off.

In a media release, Tabcorp Holdings Limited announced that the two companies have reached an agreement via a ‘Tatts Scheme of Arrangement’. Shareholders in Tatts will get 0.8 Tabcorp shares plus 42.5c for each of their Tatts shares.

This is the third time the companies have tried to merge, following failed attempts in 2006 and 2015. Regulators poured cold water on the 2006 merger, while the firms couldn’t agree to terms last year.

The betting market now, however, is a much more competitive place compared to 2006. The eyes of the competition watchdog will take a close look at the proposals but could look favourably upon the merger considering how much of a foothold overseas firms have established Down Under.

Racing Industry Cheering Fund Rise

The deal, a Tabcorp statement read, “would provide a range of benefits for stakeholders”, and is expected to see around $50 million a year pumped into the Aussie racing industry.

With Tabcorp’s sportsbetting interests, and Tatts’ lottery business, the new tie-up will jointly oversee betting across the country.

That includes TAB outlets in New South Wales, Victoria, Queensland, South Australia, Tasmania, ACT, and NT, as well as the National Sky Racing business. In addition, Tabcorp acquire Tatts Group’s lotteries business, with the ability to grant licenses in those same states.

As a result of the deal, Tabcorp and Tatts will massively increase their share of online betting in Australia. Morgan Stanley estimate that the firms’ combined interests in internet betting will rise to 31 percent of market share. Tabcorp’s mobile betting business soared in the last financial year as more Aussies take to their smartphones and tablets to place wagers.

Aussie Giants Fend Off Overseas Interest

The massive deal will be a blow to any overseas betting companies interested in a potential takeover.

Tabcorp chairman Paula Dwyer said in the statement:

“In today’s rapidly-changing landscape, bringing together our businesses will create a strong and diversified business that is well-placed to invest, innovate and compete, both in Australia and globally.”

Tabcorp has grumbled in the past about overseas betting sites muscling in on its sportsbetting arm, and avoiding the kinds of taxes Tabcorp has to pay. In reality, both companies have struggled in the past year due to competition from offshore betting companies.

Many of the UK giants like Ladbrokes and William Hill have licenses in Australia and offer real-money sportsbetting online. However, they mostly have gaming licenses in the Northern Territory where operating taxes are considerably lower than the ones Tabcorp is subject to.

“The offshore bookmakers have been consolidating and have been penetrating our domestic market,” said Tatts chairman, Harry Boon, this week, echoing the sentiments of Ms. Dwyer.

“The merger of these two businesses creates a stronger platform for us to compete nationally and globally.”

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