Tabcorp Faces Structural Challenges Despite Earnings Growth
Improved Earnings Mask Underlying Challenges
Australia’s leading gambling company, Tabcorp, is projected to report stronger financial results for the second quarter of 2025. Nonetheless, experts caution that deep-rooted structural problems continue to cast uncertainty over the company’s long-term outlook. Recent regulatory pressures and evolving policies in critical markets could pose significant risks if the operator does not effectively adjust its business strategies.
Impact on On-Course Betting Shops
Financial analytics firm Morningstar forecasts that Tabcorp’s earnings before interest, taxes, depreciation, and amortization (EBITDA) will increase by 17% year-over-year, reaching approximately AUD 371 million (around USD 242 million) for the year ending 30 June. This growth is largely attributed to the advantages gained from the new Victorian wagering license granted in August 2024. While this boost is expected to provide some short-term financial relief, overall wagering turnover is predicted to decline during this period.
Morningstar analyst Angus Hewitt highlights persistent strain in Australia’s wagering market. He references recent performance data from Entain, the operator behind the Ladbrokes brand, noting that Australia remains its poorest-performing region. Broader economic challenges have reportedly led to reduced wagering activity among punters.
Among Tabcorp’s operations, its on-course betting shops are predicted to experience the most immediate negative impact. These venues are seeing dwindling visitor numbers, largely due to the growing popularity of mobile betting platforms. Intense competition in the online betting space continues, with companies aggressively using promotions such as free bets to attract users, often sacrificing profit margins. Notably, Sportsbet has expanded its market share as one of the dominant mobile operators in recent months.
Stable Short-Term Forecast with Lingering Long-Term Concerns
Despite these challenges, Morningstar assigns a fair value of AUD 0.90 (USD 0.59) per share for Tabcorp, considerably higher than the closing price of AUD 0.71 (USD 0.46) recorded on 13 August. Hewitt anticipates wagering activity will rebound in fiscal year 2026, helping earnings grow through improved operating leverage if revenues rise as projected. Yet, long-term structural issues remain unresolved.
“We expect the firm will remain unparalleled in physical wagering,” Hewitt adds, recognizing Tabcorp’s dominant position in traditional betting outlets.
Regulatory and Policy Headwinds
Tabcorp is also confronting new regulatory hurdles. In June, the company was fined slightly over AUD 4 million (USD 2.61 million) for violating national spam regulations. As part of the settlement, Tabcorp agreed to significant reforms including an overhaul of its marketing practices, quarterly independent audits, and ongoing compliance reporting for three years.
Additional policy challenges are emerging. The Northern Territory government plans to increase wagering taxes, which has drawn criticism from industry participants. Meanwhile, New South Wales is considering tighter restrictions on cash betting, potentially limiting betting volume. Analysts emphasize that Tabcorp’s continued success will largely depend on its agility in adapting to evolving consumer behavior and managing an increasingly stringent regulatory environment.
