TAB signs 25-year partnership with international betting company Entain

The international betting company Entain is taking over the day-to-day operations of New Zealand’s TAB as part of a 25-year contract.

Entain, which operates the Ladbrokes and Neds brands in Australia, has beaten out major market rivals Sportsbet and Tabcorp as the preferred partner for New Zealand’s TAB, with the two organizations signing their strategic partnership agreement on Monday morning.

That agreement has yet to be approved by Racing Secretary Kieran McAnulty, but that could be as soon as this week provided the minister is happy with the terms of the deal.

One of McAnulty’s main concerns, job preservation in New Zealand, was addressed with the Entain deal, which guarantees all 450 TAB employees jobs for at least two years.

The minister must also be satisfied that the deal meets his requirements in relation to the TAB, which honors his obligations to the racing industry and sports codes, and that winning bettors will be protected from greater restriction on placing bets.

He also needs to be sure that the deal meets harm reduction (problematic gambling) standards and safeguards around money laundering legislation, both of which are key areas of betting agency governance today.

But if all these requirements are met, it will be a big surprise if the minister doesn’t sign the deal and a new era of New Zealand gambling begins.

The TAB was left with little choice but to partner with one of the foreign betting giants as their costs continue to rise, key customers are being poached by offshore companies and the gambling market is changing so rapidly with a big move towards online betting.

These problems have resulted in declining returns in the racing industry and sports federations. Without a great partnership with the technology, skills, and investments they would provide, there were great fears that the trend of declining returns would continue.

While the exact numbers of the Entain deal remain confidential, the TAB says if signed, it will guarantee the New Zealand-based TAB a return of at least $1 billion over the first five years of the deal.

Other key factors and forecasts of the transaction are:

• Significantly strengthened TAB NZ’s financial position by facilitating an upfront payment to race and sport, in addition to increasing future payments over time.

• An additional and significant upfront payment should geo-blocking laws be enacted preventing unlicensed offshore operators from offering betting services in New Zealand.

• Over the 25-year agreement, the proposed terms have the potential to increase payments to race and sport by a total of $5 billion compared to what the TAB expects over the same period.

• Invest and grow in TAB NZ’s harm reduction and responsible gaming efforts.

One of the key treats for the New Zealand racing industry will be a $10m sponsorship of an expanded racing carnival, with Entain subsidiaries Ladbrokes and Neds already having a proven track record of sponsoring major races and racing clubs in Australia.

Most importantly, the deal doesn’t rely on geo-blocking other foreign betting shops, although the Home Office is still working on it.

Geo-blocking, effectively giving the new TAB/Entain business a potential monopoly on New Zealand race and sports betting, would require a change in the law, so would not come into effect before this year’s election and should be at least a year away.

But that sort of monopoly would greatly increase the value of today’s deal and trigger that significant new payment from Entain, as well as stop the poaching of New Zealand’s biggest players and huge revenue losses for foreign agencies who are far less likely to return to New Zealand racing and sport.

While racing code bosses who are privy to the deal are bound by non-disclosure agreements and therefore cannot tell racing industry participants how much of an initial windfall the deal will bring, the herald understands that all three race codes are very supportive and the first payouts could be within months.