Tabcorp has negotiated a 20-year deal to secure the Victorian Wagering and Betting Licence from August 2024, with its joint venture with the Victorian government ending in favour of a deal worth $864 million.

Tabcorp has held the Victorian wagering licence since 1994 and withstood significant challenges from other wagering companies, including market leader Sportsbet, to retain its exclusivity to run retail and totalisator licences until 2044.

The new deal will see Tabcorp contribute $600 million up front for the long-term rights, with a further $30 million per year to be paid in ongoing fixed payments from August 2025 to August 2043.

That puts the deal at $864 million, with Tabcorp freed from any further revenue-sharing responsibilities which existed under the previous joint-venture agreement. It also frees Tabcorp from any of the current industry funding obligations.

Tabcorp has described the deal as creating a level playing field in Victoria for taxes and fees and enhancing the company’s ongoing competitiveness in the Australian wagering industry.  

The share market responded positively to the news, with Tabcorp shares up 21 per cent to 90 cents in the first hour after the announcement was made on Monday.

“Today is momentous in the journey of our company post-demerger. This is a positive outcome for our shareholders, the Victorian Government and industry stakeholders,” Tabcorp managing director and chief executive officer, Adam Rytenskild said.

“I am particularly pleased with the terms we have secured under this new licence which directly addresses the structural reform required in the modern wagering environment. It’s a licence that will allow us to ignite our total Victorian wagering business.”

Rytenskild said the deal was especially significant in the aftermath of Tabcorp’s demerger from its lotteries business in 2022, which has placed significant scrutiny on the remaining wagering and media assets in such a dynamic wagering landscape.

“We are pleased to have worked with the Victorian government on a retail and tote licence that appropriately takes into account the structural changes created by the proliferation of online bookmakers licensed in the Northern Territory,” he said.

“This is a strong licence for the modern era and is the prototype moving forward – it ensures a safe wagering ecosystem for the community and incorporates stronger protections to ensure genuine retail exclusivity.”

Tabcorp now holds retail exclusivity in NSW until at least 2033, Queensland until 2044, South Australia until 2032, Tasmania until 2027 and now Victoria until 2044.

Its overall NSW licence extends until 2097, while it is 2098 in Queensland, 2100 in South Australia, 2062 in Tasmania, 2035 in Northern Territory and now 2044 in Victoria.

The previous joint-venture agreement in Victoria began in 2012 but has resulted in diminishing returns for both parties as the corporate bookmaker landscape has expanded, undermining the totalisator business model on which it was based.

In 2012/13, the JV returned $209 million to the Victorian thoroughbred industry, representing 72 per cent of the total wagering revenue, while in 2022/23, that had fallen to $128 million, or 33 per cent of the wagering pie.

The Victorian government and Racing Minister Anthony Carbines must now determine how it distributes the up-front $600 million Tabcorp payment and the ongoing $30 million a year from the new deal from August 2024.

From a thoroughbred industry perspective, the annual shortfall in revenue from the end of the joint venture will be made up to some degree by the agreement with the state government that the broader racing industry will receive 50 per cent of the government’s Point of Consumption revenue from July 2024.

The POCT rate will jump in Victoria to 15 per cent, with the state government agreeing to share 7.5 per cent with thoroughbred, harness and greyhound industries. 

Racing Victoria issued the following statement on Monday morning: “We’re aware of the announcement by Tabcorp regarding the Victorian Wagering & Betting Licence. We’re awaiting official confirmation and associated details from the Victorian government and Tabcorp. We’ll make comment once we’ve received and digested all relevant information.”