Fitch lifts Tabcorp margin outlook to 18% on reforms and tech strategy

Regulatory changes and the BetMakers deal underpin Fitch’s upgraded profitability path, even as AUSTRAC and cost-of-living pressures linger.

Key takeaways:

• Fitch expects Tabcorp’s EBITDAR margin to reach approximately 18 per cent by FY29, up from 15 per cent in FY25 and 16.5 per cent in FY26.
• The agency forecasts EBITDAR net leverage to peak at around 2.0x in FY27 before falling to about 1.5x from FY28.
• Tabcorp’s proposed BetMakers acquisition is viewed as incremental support for modernising its tote platform and adding B2B revenue.
• Victorian licence reforms have narrowed Tabcorp’s cost disadvantage versus online bookmakers; NSW reforms remain uncertain.
• The ongoing AUSTRAC investigation into AML/CTF controls is a material uncertainty that could raise compliance costs or trigger penalties.

Australia.- Fitch Ratings expects Tabcorp Holdings to improve its operating margins and reduce leverage over the next two years. It cites the company’s market position, strategic initiatives and regulatory changes in Australia’s wagering sector.

The ratings agency has affirmed Tabcorp’s Long-Term Issuer Default Rating at BBB- with a Stable outlook. It also maintained the BBB- rating on senior unsecured notes issued by Tabcorp Finance Pty Ltd, a wholly owned subsidiary.

Fitch forecasts Tabcorp’s EBITDAR margin to increase to approximately 18 per cent by FY29, up from 16.5 per cent in the financial year ended 30 June 2026 and 15 per cent in FY25. It cites the early results of the company’s strategy renewal, which aims to strengthen customer engagement through its exclusive licences, media assets and retail network and revive totalisator betting. However, cost-of-living pressures continue to weigh on wagering activity, with Fitch expecting revenue growth to broadly track Australia’s GDP.

Tabcorp’s proposed acquisition of BetMakers Technology Group is expected to provide additional support by modernising its tote wagering platform and increasing its control over key technology capabilities. The transaction would also give Tabcorp access to BetMakers’ international operations, potentially supporting expansion outside Australia.

The agency expects Tabcorp’s EBITDAR net leverage to peak at approximately 2.0 times in FY27 before falling to around 1.5 times from FY28. These projections account for licence payments and the cash consideration for the BetMakers acquisition.

Changes to Australian wagering regulations have also improved Tabcorp’s competitive position against online bookmakers. In Victoria, changes to Tabcorp’s licence arrangements have brought wagering taxes and fees closer to those paid by competitors and removed joint-venture obligations involving the state’s racing industry. New South Wales is considering further reforms, although their scope and outcome remain uncertain.

Fitch views these developments positively, as they could improve Tabcorp’s relative profitability and help it compete with digital-only operators.

AUSTRAC investigation remains a risk

Despite the positive outlook, Fitch identified the ongoing investigation by the Australian Transaction Reports and Analysis Centre (AUSTRAC) into Tabcorp’s anti-money-laundering and counter-terrorism-financing controls as a source of uncertainty.

The agency does not expect the early-stage investigation to affect the company’s credit rating immediately. However, the case could increase compliance costs and expose Tabcorp to additional conduct and governance risks. Significant penalties could weaken its financial position, although Fitch considers the company capable of absorbing moderate costs.