Tabcorp eyes early Sun Bets exit
Australian operator in discussion with News UK about ending their joint venture, with several sportsbook suppliers understood to be vying for the contract
Tabcorp is planning to pull the plug on its partnership with News UK, following the substantial losses incurred by the Sun Bets brand since its launch in early 2016, EGR can reveal.
The Australian operator first initiated a review of the Sun Bets brand it powers back in August 2017 following a £28m FY17 loss.
And following continued poor results in H1 2018, Tabcorp confirmed today the review had been concluded and it is now in discussions with News UK about an early exit from their agreement.
“These discussions remain ongoing and an agreement has not been reached at this stage,” a Tabcorp spokesperson told EGR.
“Tabcorp has commenced collective consultation with Sun Bets employees regarding the proposal, in line with UK employment law obligations.”
Tabcorp originally signed a ten-year agreement with News UK but has a break clause on 31 December 2019.
The Australian firm has minimum payment obligations to News UK of £35.7m by that date and would be forced to pay compensation if it pulled out the agreement early.
Tabcorp is also considering whether it might be more cost efficient to see out the conract until 2019 by cutting costs – it holds offices in the Shard – and improving its strategy.
However, EGR understands News UK is making plans for an early end to the agreement and is in discussions with a number of sportsbook suppliers to replace Tabcorp, including the likes of Kambi, SBTech and FSB.
A spokesperson for News UK said: “The Sun is the number one newspaper website in the UK and we believe that this reach, and the power of its brand, still represent a great opportunity for readers to take a punt using Sun Bets. We will let customers know if there will be any change to the service.”
One source with knowledge of the situation predicted a brighter future for Sun Bets with a new supplier, adding: “Tabcorp were simply the wrong partner.
“Sportsbook knowledge is all racing and retail. Even Australian racing is different to the UK market.
“Plus they’ve got no experience of in-play betting or casino, so 80% of the overall revenue opportunity they have no real experience or expertise in.”
The Tabcorp/Sun Bets venture was beset by problems from its inception, including an £84,000 penalty package from the UK Gambling Commission for the infamous ‘Piegate’ incident, and the premature departure of its managing director Jamie Hart.
Hart said after his departure the brand would have fared much better if it had properly leveraged its relationship with The Sun newspaper, in a similar vein to Sky Bet and Sky.