Tabcorp has declared the hiring of ex-Australian Rules Football League (AFL) chief executive Gillon McLachlan as its new chief executive and managing director.
McLachlan will join Tabcorp on August 5th and take on the chief executive position, contingent on the required regulatory approvals.
He joins Tabcorp after directing the AFL, the governing body of Australian rules football, for a decade. As chief executive, McLachlan oversaw the league’s expansion to 18 teams, while income more than doubled during his time in charge to reach AU$1.06 billion (£553.4 million/€655.6 million/$701.8 million).
McLachlan replaces Adam Rytenskild, who stepped down in March following accusations of using “inappropriate and offensive” language in the workplace. Rytenskild had been chief executive and managing director of Tabcorp since May 2022.
Chairman Bruce Akhurst assumed the additional role of Executive Chairman while Tabcorp searched for a replacement. Akhurst will continue in this role until McLachlan officially takes over in August.
“Gillon needs no introduction,” Akhurst stated. “He is widely acknowledged as one of Australia’s leading chief executives, and securing Gillon is a testament to the trust we have in Tabcorp’s future. We have established a strong foundation; Gillon brings a growth mentality and the capability to seize the opportunities before us.”
Gilss expertise in securing significant media rights agreements in Australian sports is a major advantage for us. He brings a new viewpoint, and we are enthusiastic about the possibilities for expansion in our wagering and media enterprises under his direction.
McLachlan emphasized the “enormous opportunity” at Tabcorp. He underlined his dedication to expediting Tabcorp’s growth in his new position, concentrating on their multi-channel entertainment offerings across digital, retail, and media platforms.
“Tabcorp is a leading company in betting, broadcasting, and integrity services. The challenge of propelling its growth is thrilling,” McLachlan stated. “Tabcorp is a proud Australian company that contributed over a billion dollars to the racing industry last year. It’s a key partner in the racing industry and holds the betting license in all states except Western Australia.
“This was a crucial factor in my decision. There are incredible prospects ahead, and I’m eager to lead the sports category and investigate other areas.
“Tabcorp is undergoing a substantial transformation. I’m looking forward to collaborating with the leadership team to expedite and capitalize on growth opportunities.”
Akhurst added, “Since the separation two years ago, we’ve made considerable improvements to customer service and implemented key structural changes in Queensland and Victoria.”
The metamorphosis of Tabcorp is still in progress, and I am thrilled to welcome Jill to our team to continue propelling transformation and expansion.
Tabcorp is striving to enhance its financial performance in the initial six months of the year. McLachlan assumes leadership following a challenging initial period for Tabcorp. Income decreased by 5.1% to A$1.21 billion in the six months concluding on December 31, with both core operations experiencing a downturn.
Betting and media revenue declined by 4.2% to A$1.12 billion, reflecting a contraction in the overall betting market. Within this sector, media and international revenue also experienced a decrease of 5.4%.
In gaming services, revenue fell by 14.5% to A$93 million. Tabcorp attributed this to the impact of the disposal of eBet and Max Performance Solutions.
Furthermore, elevated expenses posed a challenge, with a particularly substantial impairment charge of A$852 million. This, coupled with the decline in income, resulted in a net loss of A$641.7 million, a stark contrast to the net profit of A$53.2 million in the corresponding period last year. EBITDA also experienced a decrease of 34.7% to A$131.7 million.
However, there were some positive developments in the initial six months. In September, Tabcorp resolved a tax dispute with the Australian Taxation Office, and the company will receive a tax reimbursement of A$83 million.
Regulatory matters: a mixed bag
Tabcorp has also encountered a significant number of regulatory issues in the past year or so. Most recently, last week, the company was ordered to pay A$370,417 in Victoria after it admitted guilt to 43 charges of failing to prevent underage gambling.
The Victorian government has released a new directive aimed at curbing underage gambling and ensuring proper oversight of electronic betting terminals (EBTs). The Victorian Gambling and Casino Control Commission (VGCCC) charged Tabcorp and several establishments with underage gambling in September. These breaches took place between September 2022 and October 2023.
Tabcorp has been accused of 72 violations. If found liable, the company could face a total penalty of up to $1 million. Tabcorp’s potential fine could reach $969,236.
This case has also prompted other actions against Tabcorp in Victoria. In January, the VGCCC directed Tabcorp to convert most of its EBTs in the state to a cashless system. This was a direct response to the incidents of underage gambling.
In addition to the underage gambling case, the VGCCC also levied a record $1 million fine on Tabcorp for its conduct during a major system failure in 2020. Tabcorp’s betting and wagering system malfunctioned on November 7, 2020, during the Spring Racing Carnival.
On the other hand, Tabcorp secured exclusive rights to provide betting and wagering services in Victoria in December for a period of two decades. Tabcorp’s license period begins in August 2024, following the expiration of its current exclusive license.
Moreover, the New South Wales (NSW) government announced last week that it would consider a proposal from Tabcorp to increase the state’s point of consumption tax (POCT) to 20%.
Betting businesses in New South Wales, Australia presently pay a fifteen percent wagering tax. Tabcorp has proposed that the government raise this percentage to twenty percent, aligning it with other states.
Tabcorp’s suggestion also incorporates other aspects concerning reforming gambling laws and licensing necessities. These include mandating agreements with the horse racing sector and a ten percent shareholder limit. The government will consider these aspects as part of wider potential changes in New South Wales.
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