Australian racing and wagering giant Tabcorp Holdings Ltd is well positioned to improve its operating margins and reduce leverage over the next two years, with its established market position, execution of its earnings strategy and introduction of regulatory reforms that should continue to narrow the “structural disadvantages” it has historically faced all positive indicators, according to Fitch.
The ratings agency on Friday affirmed Tabcorp’s Long-Term Issuer Default Rating (IDR) and its senior unsecured notes at “BBB-” with a stable outlook, which it said is based on the expectation that Tabcorp’s credit metrics will remain adequate for its rating over the medium term, despite pressure on discretionary spending.
Fitch’s “BBB” rating indicates that expectations of default risk are currently low and its capacity for payment of financial commitments considered adequate, although adverse business or economic conditions are more likely to impair this capacity.
In a note, Fitch said Tabcorp’s EBITDAR margin, which improved from 15% to 16.5% in the financial year ended 30 June 2026, should further improve to about 18% by 2029 as the company uses its exclusive licenses, media assets and broad retail footprint to deepen customer engagement and revive tote betting.
“Cost-of-living pressure continues to weigh on gaming activity and we forecast revenue to track GDP growth, with cost and capital discipline remaining key,” the ratings agency said.
Similarly, EBITDAR net leverage is seen falling to 1.5x from FY28 after a peak of 2.0x in FY27, driven by license payments and the cash consideration for BetMakers – the gaming technology firm Tabcorp recently agreed to acquire in order to modernize its tote wagering platform and strengthen control over key technology capabilities.
According to Fitch, the acquisition should improve Tabcorp’s business profile by adding contracted business-to-business revenue and opening access to BetMakers’ international footprint, supporting Tabcorp’s overseas expansion.
“We view these benefits, at this stage, as incremental rather than transformative, as Tabcorp would remain primarily exposed to wagering and racing-related activities,” the ratings agency said.
Also aiding Tabcorp’s strategy are regulatory reforms that have looked to level the playing field between Tabcorp and Australia’s online sportsbooks, including market leader Sportsbet.
“Reforms have narrowed the structural cost disadvantage Tabcorp faced against corporate bookmakers, which pay lower racing-industry contributions and wagering taxes, improving relative profitability,” Fitch said.
“Tabcorp’s Victoria license aligns wagering taxes and fees with competitors’ and removes joint-venture obligations with the state’s racing industry. New South Wales is considering reforms, which we view as positive, but the outcome is uncertain. Australia’s regulatory certainty relative to other jurisdictions supports its operating environment.”
Of some concern, Fitch observed, is an ongoing AUSTRAC investigation into Tabcorp’s anti-money-laundering and counter-terrorism-financing compliance.
This, it said, increases scrutiny of the wagering sector as a whole and is likely to raise compliance costs and conduct and governance risks. Enforcement action could result in civil penalties that weaken Tabcorp’s financial profile, though it can absorb moderate costs, the ratings agency explained.
Importantly, Tabcorp’s market position in Australia remains largely protected.
“Tabcorp is Australia’s second-largest wagering operator by turnover, with a retail network in every state and territory except Western Australia,” Fitch explained. “Its long-dated, exclusive licenses create high barriers and support brand recognition. Tabcorp also monitors electronic gaming machines in several states under long-dated licenses, generating contracted, CPI-linked revenue.
“High per capita gambling spending and regulatory barriers to entry offset its concentration in Australia and smaller scale than rated international peers.”
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