According to JP Morgan, Tabcorp will continue to face “resilient” pressure from its online rivals in Australia.
Australia.- Recent tax raises in Australia seem to have had little effect on online bookies, according to JP Morgan. The investment bank projected that the iGaming segment will continue to threaten local giant Tabcorp, even after it continues to benefit from the merger with Tatts Group, which has generated savings and synergies for its business.
“Regulatory changes such as the point-of-consumption tax may slow the rapid share gains of corporate bookmakers,” JP Morgan analyst Donald Carducci said, “however, integration risks from merger remains a likely distraction.”
The new tax applied to revenue generated through bets places was enforced on January 1 in the ACT, Victoria, South Australia, Queensland, New South Wales and Western Australia. Betting operations will be taxed at 15% in ACT, South Australia, Western Australia and Queensland, while NSW set a 10% tax and Victoria an 8% one.
Taxes are expected to create profit margin pressure on digital corporate bookmakers and restrict their marketing budgets, which, according to Mr. Carducci, “has served as an opportunity for Tabcorp to increase marketing efforts to attract new customers.”
Nonetheless, the JP Morgan analyst expects bookies to remain “resilient” and said: “We envisage further yield compression from persistent bookmaker share gains with minimal relief from the point-of-consumption tax as price increases are likely to be passed onto the consumer.”