Sun Bets contributes to heavy losses for betting giant Tabcorp
Heavy losses at Sun Bets pushed Australian giant Tabcorp into the red in 2016-17 as their start-up bookmaker, a joint venture with News UK, owner of the Sun newspaper, reported losses of A$47.6 million (approximately £29m).
Launched in August 2016, Sun Bets' operating loss dragged Tabcorp down to an overall loss of A$20.8m. The firm also wrote down the value of its Sun Bets assets by A$20.7m.
Tabcorp chairman Paula Dwyer said: "The initial performance of Sun Bets has reminded us of the challenges of start-ups. As a consequence we have reviewed its operating model, capability and financial plans and have undertaken a range of initiatives to maximise the prospects of success."
Tabcorp results at a glance
A$20.8m - Losses for financial year 2017
A$169.7m - Profit for financial year 2016
A$47.6m - Sun Bets operating losses for financial year 2017
Chief executive David Attenborough added: "Performance in our UK start-up Sun Bets was disappointing. We have taken steps to reset its leadership and operations to drive improved performance in 2017-18, and the business is focused on customer acquisition and product development."
Sun Bets underwent a 'reset', including a change in leadership and redundancies, earlier in the summer after struggling since launch last year.
The Sun Bets agreement with News UK, which receives a revenue share from Tabcorp, has an initial ten-year term. However, Tabcorp has a termination right in December 2019 which can be exercised if the venture is not meeting performance targets.
Tabcorp's planned merger with Tatts Group – due to be completed by the end of 2017 – has also incurred significant costs, while the firm was additionally forced to pay a record settlement of A$45m after failing to comply with Australian anti-money laundering regulations.
Attenborough added: "Overall, in the 2017 financial year we have made significant investments to better position Tabcorp to deliver sustainable future growth and the cost of these investments is reflected in our results."
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