NT Ban Positive For Tabcorp, Tatts

This story features TABCORP HOLDINGS LIMITED. For more info SHARE ANALYSIS: TAH

-NT heading off federal intervention?
-Should arrest decline in TAH, TTS share
-Removes corporate bookmaker advantage
 

By Eva Brocklehurst

The Northern Territory government has surprised the market, initiating its own action as a result of the Commonwealth government's 2015 review and response to the impact of illegal offshore wagering.

The NT government has sent a letter to bookmakers telling them to stop offering click-to-call services within 28 days. Brokers consider the development augurs well for both listed wagering operators, Tabcorp ((TAH)) and Tatts ((TTS)).

Click-to-call enables customers to place a live bet via a smartphone, without talking to an operator, using the latest online and phone technology. UBS considers the ban by the NT government carries more weight than the Commonwealth's response because of the potential risk to licences, estimating the turnover from click-to-call products could be up to 10% for bookmakers offering the product.

This is significant, the broker contends, given the product only really works with sport, which is 25-40% of the volume for most bookmakers. The product has partly cannibalised other sport bets and, while low margin, is a key differentiator for those that offer it.

Tabcorp and Tatts do not offer a similar product – they take “in play” bets over the phone. Hence, UBS suspects the market share lost over the past 12 months as a result of not offering the product should ease back if click-to-call products are withdrawn. Citi also believes the levelling of the playing field is a small positive for both Tabcorp and Tatts.

The NT government decided to take immediate action to possibly head off future intervention by the Commonwealth, which may ultimately result in control of regulation of the online wagering industry at a federal level. The NT government stated it intends to show it is capable of regulating the industry responsibly without need for federal interference.

Deutsche Bank understands the NT action was prompted by suggestions from the NT Racing Commission that these bookmaker services should be stopped to head of future federal intervention in the territory.

The Commonwealth has indicated as a result of the review it considers click-to-call, in-play betting to be breaching the provisions and intent of the interactive gaming act, with plans to introduce legislation to clarify the act. Yet, it did not offer a formal time frame for operators to discontinue the offering.

The current federal minister responsible for the portfolio has reportedly welcomed the NT decision, stating the current government, if re-elected would introduce these laws clarifying the act as soon as possible.

Deutsche Bank agrees the ban would remove an advantage the corporate bookmakers currently enjoy. The NT amendment would prohibit a bookmaker accepting a bet on a sporting event, after the commencement of the event, in a manner that uses a recorded or synthetic voice. The broker also highlights the Federal Court has imposed a $2.75m penalty on Bet365 for misrepresenting a free bet offer.
 

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