Tabcorp agrees $51 million penalty to exit Sun Bets deal in the UK
Australian integrated gambling and entertainment company, Tabcorp Holdings (TAH.AX), on Thursday announced that it would pay Rupert Murdoch’s News UK a penalty of 39.5 million pounds ($51.4 million) to exit their struggling gaming joint venture with Sun Bets.
The parties that have operated the UK online wagering and gaming business together since 2016 after having announced their partnership the previous year.
Tabcorp further communicated in the official press release that in the coming days, Sun Bets will “cease trading,” with the firm’s Chief Executive Officer, David Attenborough, stating that Sun Bets’ performance has been “below expectations” and that they don’t expect to see a “material improvement over the next 18 months.”
The company that manages customer brands, including TAB, tab.com.au, Luxbet, Sky Racing, Sky Sports Radio, Tabcorp Gaming Solutions (TGS), Keno and Trackside animated racing game, formally declared last month that it intended to opt for an early exit from its joint venture and warned of the likelihood of a significant penalty for ending early its contract, which was effective through the end of December next year.
Attenborough reasoned, “While we didn’t get it right, we have taken valuable learnings from the Sun Bets start-up process and operations which will inform our approach across our portfolio. I would like to acknowledge the Sun Bets team for their efforts in building the business from start-up phase. We continue to have a strong relationship with News Corporation.”
The 55-year-old Attenborough joined Tabcorp in April 2010 as Managing Director – Wagering and then became Managing Director and Chief Executive Officer with the completion of the company’s demerger of its former casinos business in June 2011.
According to the news release, for the year ended June 30, 2018, Tabcorp expects to record a considerable item of about $91 million, post-tax, in respect of Sun Bets in its financial statements, up from $52 million in the 1H18 financial statements. The amount includes the $51.4 million exit payment to News UK, along with asset impairments. In Fiscal Year 2019, the company is expected to incur further costs related to the closure of as much as approximately $10 million, according to the press release.