Isle of Man-based gambling giant Entain has been confirmed as the preferred candidate to take over the commercial rights of government-owned TAB NZ in a deal worth more than NZ$1 billion. The company managed to oust rival operators Tabcorp and Sportsbet from the competition following the final bid presentations given by the three groups in Auckland on March 20th, 2023.
Earlier today, TAB NZ confirmed that Entain had been named as the selected bidder for the 25-year strategic partnership agreement that would guarantee at least NZ$1-billion funding to the New Zealand’s brand for the first five years to support the revival of the local racing sector. Although Entain has received approval as the preferred candidate to take over the commercial rights of TAB NZ, the proposed deal remains subject to New Zealand Ministerial approval.
The Australian financial services firm Barrenjoey and law firms Allens and Chapman Tripp were the ones advising the strategic arrangement.
The specific terms of the deal would remain confidential until final approval is given to the arrangement. According to earlier speculations, the proposed commercial rights takeover agreement involved an upfront payment worth NZ$250 million, with most of the money set to go to the local racing industry. Reportedly, the deal would also include a profit-sharing arrangement between Entain and the country’s racing sector.
Entain Had to Meet Multiple Criteria to Be Chosen as Preferred Bidder
According to media reports, Entain was selected as the preferred bidder based on a large number of criteria, such as cultural alignment with TAB NZ, operational expertise, as well as its commitment to TAB NZ’s responsible gambling efforts and minimisation of gambling-related harm policy. Sources familiar with the application process revealed that Flutter Entertainment-owned Sportsbet was the one that actually made the highest takeover offer but contributions made by gambling operators to the local racing industry with money generated through their online gambling platforms on New Zealand-based racecourses have caused some controversy.
As The Australian reported, in recent times, Entain has been contributing to government-owned TAB NZ for such bets.
The deal for the commercial rights of the company has caused increased competition but also faced some capital constraints and rising costs, as well as other setbacks that have affected TAB NZ’s ability to guarantee adequate funding to local sports and racing sectors. In a previous statement, the company noted that those challenges were expected to become even more serious, so as a statutory entity and the only New Zealand’s betting licence holder, it was trying to find a way to boost the fortunes of racing and sport.
The operator further noted that it has engaged with international gambling companies over the past six months in terms of forging a strategic partnership agreement. As a result, it received a number of compelling proposals.
As mentioned above, Entain was announced as the preferred candidate for the commercial rights of the company based on a wide range of criteria.
TAB NZ Has Been Facing Uncertain Future Due to Lack of Strategic Partnerships
Mike Tod, the chief executive officer of TAB NZ, described the future of the company as uncertain, especially considering the growing presence and influence of international gambling companies that the operator was unable to compete with. As Mr Tod explained, the absence of a strategic partnership deal would cut TAB NZ distributions over the upcoming financial year.
On the other hand, the boss of Entain’s Australian operations, Dean Shannon, revealed that the Isle of Man-based gambling giant had made a commitment to withhold from job reductions for no less than 24 months after the completion of the deal.
Under the provisions of the agreement, a significant substantial upfront payment is set to be made in case a piece of legislation preventing unlicensed foreign gambling operators from providing their products and services in the country is enacted in New Zealand.
According to TAB NZ, the 25-year commercial rights agreement is likely to result in an overall increase in the NZ$5-billion payments received by sports and racing as a result of the declining commercial performance of the company due to strong international competition and historic lack of investment in the business in major areas such as technology, retail, operations, and broadcast. The deal also includes some extra support to the local racing industry, including an enhanced racing carnival sponsorship worth NZ$10 million and some linked initiatives in other communities.
Previously, market analysts have revealed that Entain was probably negotiating a TAB NZ deal a year ago.
Currently, TAB operates a total of 527 outlets in the territory of New Zealand, including 472 in local clubs and pubs, along with on-course tote terminals, phone betting, online and touch-tone betting channels. The company, which is operated by the New Zealand Racing Board, offers a large variety of fixed-odds betting and totalisator products.
- Author
Olivia Cole
