Tabcorp uncertainty persists as NSW government drags heels on funding review

Ten months after NSW treasurer Daniel Mookhey promised a comprehensive review of the structure of funding of racing in the state, specifically concerning the long-term deal it has with Tabcorp, key stakeholders seem stuck in radio silence.

After a submission from Tabcorp early last year, Mookhey made a bold pledge in June 2024 to review the Tabcorp deal with a loose deadline of the end of 2024 for a decision.

“The NSW government will apply strict scrutiny to Tabcorp’s proposal. Change will happen if it is clear that the public will be better off,” he said. “Gambling companies should always be paying their fair share.”

But nearly four months into 2025, there has been no announcement.

At the heart of the review was said to be Tabcorp’s current retail and totalisator exclusivity agreement, which runs until 2033, as well as its long-term totalisator licence which runs until 2097.

“This is a positive step towards ensuring the sustainability of the NSW racing industry. Tabcorp looks forward to working constructively with the NSW government and the NSW racing industry during this process,” a statement from Tabcorp said at the time.

Tabcorp has been seeking to orchestrate a similar deal to the ones it has in Queensland and Victoria, where it negotiated what it describes as a level playing field with its key rivals.

The NSW deal has been a significant drag on the company’s bottom line, and it drove the lion’s share of a $1 billion impairment in the publicly listed wagering giant’s annual result from 2023/24

While Tabcorp chief executive Gillon McLachlan has been busy restructuring the wagering business since his arrival in August last year, he did identify the NSW review process as a priority.

“The NSW review process is underway,” he told the AGM in October. “It will be difficult but I’m personally participating in this process to deliver a level playing field in which we can compete more fairly and more evenly. This is very important.”

It is believed the NSW deal is also crucial to the prospects of establishing a national tote product, something that McLachlan has also identified as a priority.

It could also represent an opportunity for Tabcorp to extract itself from two pieces of legislation in NSW, which restrict one party from holding more than 10 per cent of the company.

The Tabcorp agreement also plays a major role in the funding of NSW race clubs, including the Australian Turf Club.

The ATC has expressly said that decline in its returns from wagering through the TAB distribution agreement has led it to consider the highly contentious sale of Rosehill.

But while ATC members will vote on that proposal on May 27, there is unlikely to be any clarity of what future wagering funding for the embattled club may look like.

The Straight understands that there has been little indication of government movement on any reform or announcement.

The state budget in June would seem a logical point to announce any changes, and there are rising concerns on the broader wagering industry that a revised Tabcorp deal may mean the government looks to increase the state’s Point Of Consumption Tax to 20 per cent, despite Tabcorp not requesting this. However, there is no indication that will be part of Mookhey’s plans when he presents the budget.

Diminishing returns from the current 15 per cent Point Of Consumption Tax regime in NSW, which has been in place since 2022, have become a point of irritation for the Minns government.

The treasury revised its initial 2024/25 forecast for Point Of Consumption Tax revenue, which the NSW racing industry derives 30 per cent, downwards by $20 million in its half-year review in December.

The overall figure across the next four years is $92 million less than what it was predicted to be when the 2024/25 budget was released last June, which is around $30 million less under the current POCT funding regime.

In Victoria, the racing industry achieved a boosted return of 50 per cent of POCT share, in return from Tabcorp existing the joint-venture agreement. That new deal led to a $36.4 million uplift in the company’s EBITDA in the first half of the 2024/25 financial year.

The Queensland regime, which has been in place since December 2022, has also been beneficial for Tabcorp.