The Australian Competition Tribunal this week approved the proposed merger between industry giants Tabcorp and Tatts Group, clearing the way for their long-awaited marriage to finally go ahead.
The tribunal has the power to block corporate mergers that aren’t in the best interests of the broader Australian market, so this week’s news is a significant hurdle cleared.
There were some large industry objectors at the hearings: most notably Racing Victoria, who argued that the coming together of the two businesses would have an adverse impact on the competitive process when their totalisator rights are renewed. RV claimed that as TAB and Tatts were the two businesses that traditionally bid for the tote rights, their merger meant that there would be no competition for the rights. The tribunal ultimately rejected this argument.
But most importantly… what are the impacts of the merger for punters?
With Tabcorp operating the Victorian (SuperTAB) and New South Wales totes, and Tatts running UBET, the merger brings all Australian totalisators under the one body (other than Western Australia, which remains government-owned for now).
This has led to immediate speculation that pools will be merged into a national tote, providing deeper pools. Both companies immediately flagged better products and returns to punters.
“It gives us a national footprint and create a pathway to larger wagering pools,” said Tabcorp Chairman Paula Dwyer when the merger was announced.
“We are excited by this opportunity, which we believe will deliver an enhanced wagering experience for our customers and, in turn, will generate stronger returns to the Australian racing industry.”
Tatts Chairman Harry Boon echoed those sentiments.
“The benefits of this combination are also very clear for the racing industry and for customers who should, in due course and with racing industry support, be able to access deeper and more liquid wagering pools,“ said Boon.
Still, it’s by no means a certainty, illustrated by the separate totes for Victorian and New South Wales, despite both long being operated by Tabcorp. The issue of course is that small point from Boon: “…with racing industry support”.
Whist this merger would create what is effectively a national wagering and totalisator body, racing itself remains state-based. Any merging of tote pools would be dependent on state racing bodies agreeing on a split funding model, and agreement and co-operation is far from a certainty whenever racing bodies come together.
Fixed Odds Betting
In addition to the totes, both Tabcorp and Tatts operate fixed odds bookmaking on racing and sports – Tatts through their UBET brand, and Tabcorp with TAB.com.au as well as their corporate brand Luxbet.
Unlike the tote situation, punters may want as much separation as possible to remain here. Reducing these three brands to two or even one can only lessen competition in the marketplace.
Whilst there’s been little official indication at this stage regarding any potential merger of these brands, it’s been widely speculated that the UBET brand will be phased out, which suggests that the TAB brand will effectively go national. This would be in line with some suggestions that Tatts’ rollout of the UBET brand has not been as successful as was hoped.
Luxbet is licensed in the Northern Territory, which has a lower cost of doing business for wagering operators and hence a higher margin. It stands to reason that the combined body may want to retain a proportion of its business under this model, and hence may well retain the premium Luxbet brand.