A marriage of inconvenience: Will the WA TAB find its wagering soulmate?

Tabcorp, so often seen as being at the altar with the WA TAB, has apparently ended its interest in a deal that would have given it a complete retail and parimutuel monopoly across Australia.  

The Australian Financial Review reported on Thursday that Tabcorp’s desire to pursue the WA TAB has faded under the current terms and it would walk away, leaving rival Entain in an even stronger position to win the day.

But you will forgive those in the Western Australian racing industry, and the WA taxpayers, for waiting to see the vows and rings exchanged with any new suitor before they start the popping corks and celebrating the TAB finally getting hitched after all these years.    

The privatisation of the WA TAB has been a nearly decade-long saga, with more matchmaking drama than a reality TV series.

Suitors have lined up to woo the WA government to give up its prized asset in the final state-owned monopoly in the country, but several false starts have left said suitors suitably exasperated.

It took five years of political wrangling just to get the required legislation through the WA parliament to get the deal, potentially worth $1 billion, on the table in the first place.

Then, in the midst of the early stages of the pandemic in 2020, the WA government ‘called off the wedding’, pulling the plug on the whole process, citing too much uncertainty in the market.

Undeterred, a suite of suitors turned up at the WA government’s door in 2022 bearing roses again for the WA TAB, which was officially back on the market.

A brash new beau by the name of BetR had swept everyone in WA off their feet in October 2022 and was considered a certainty to secure the WA TAB’s hand. But some last-minute cold feet saw a rapid U-turn, by whom it depends on who you ask.

The Mark McGowan-led government packed up the marquee, shooed away the guests and put the ‘cancelled’ sign up once again, rebuffing alternative options from Entain and Tabcorp, while BetR sparkled then faded and still faces a somewhat uncertain future.

A new premier, Roger Cook, saw a new opportunity to sell the farm, and the WA TAB was back on the dating scene in August last year.

When all this rigmarole started a decade ago, Tabcorp would have been an unbackable favourite to swoop in and win the day. That looked even more likely when it merged with Tatts in 2017, giving it a monopoly over retail and parimutuel betting in every state except WA.

However, a lot has changed in the Australian wagering scene since that TAB-Tatts merger. Sportsbet has easily surpassed Tabcorp as the clear leader in the segment, while other foreign-back rivals Entain and Bet 365 also ate into Tabcorp’s previously imperious position.

Meanwhile, the business model Tabcorp was built on, retail and parimutuel, has experienced continued decline across Australia, exacerbated by pandemic shutdowns. At the same time, increases in taxation and regulation have caused more uncertainty.

Put simply, Tabcorp is not the catch it once was, especially in a marketplace with plenty of fish in the sea.

What has also changed is the WA government’s expectation of what a new suitor may bring to the table.

The tremendous impact Entain’s multi-billion-dollar deal for the NZ TAB has made in New Zealand, not only in terms of investment, but in industry sentiment, has opened up plenty of eyes.

Could WA strike a similar deal, which would not only give the industry long-term funding, but the government the political capital it craves early in Cook’s premiership, with an election looming in March 2025?  

It would certainly be transformative to the business Entain operates in Australia through the Ladbrokes and Neds brands.

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According to the AFR, Tabcorp, fresh from striking a $864 million deal in Victoria to extend its tote and retail monopoly for another 20 years, and amid an apparent court fight with Racing NSW, has decided the terms of the WA deal doesn’t stack up at this stage.

With Sportsbet also reportedly cold on the WA option, the report suggested Entain’s chief competition may come from an outsider, like PointsBet, who are refocussed on their Australian and Canadian businesses after selling out of the United States recently.

It looks Entain’s to lose, but given all the water that has passed under the bridge and that we were in a similar position with another suitor less than 18 months ago, you get the feeling Tabcorp’s walkout won’t be the final dramatic turn in this story.