Fitch Ratings expects Tabcorp Holdings to improve its operating margins and reduce debt over the next two years, citing the Australian wagering group’s established market position, strategy renewal and regulatory changes that have narrowed its cost disadvantage against online competitors.
The ratings agency affirmed Tabcorp’s Long-Term Issuer Default Rating at ‘BBB-‘ and maintained a Stable Outlook. It also affirmed the ‘BBB-‘ rating on senior unsecured notes issued by Tabcorp Finance Pty Limited, a wholly owned subsidiary.
Fitch expects Tabcorp’s credit metrics to remain adequate for its rating over the medium term despite pressure on discretionary spending. However, soft wagering turnover, competition from digital-only operators and an ongoing investigation into the company’s compliance procedures remain risks.
The agency forecasts Tabcorp’s EBITDAR margin to rise to about 18% by FY29, up from 16.5% in the financial year ended June 2026. The margin improved from 15% in FY25 following the initial stages of the company’s strategy renewal.
“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,” Fitch said in its press release.
Tabcorp plans to use its exclusive licences, media assets and retail distribution network to strengthen customer engagement and revive tote betting. Its established presence in Australia’s wagering market provides a foundation for that strategy, although the company still faces pressure from changing consumer spending and competition from online bookmakers.
BetMakers deal supports technology strategy
Fitch expects Tabcorp’s proposed acquisition of BetMakers Technology Group to provide a modest benefit to its business profile. The deal is intended to modernize Tabcorp’s tote wagering platform and give it greater control over key technology capabilities.
The acquisition would also add contracted business-to-business revenue and provide access to BetMakers’ international footprint, potentially 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,” Fitch said.
The agency’s assessment indicates that the transaction could broaden Tabcorp’s revenue base, although wagering and racing will continue to dominate its operations. The benefits will depend partly on the earnings contribution from BetMakers and the savings Tabcorp can achieve after completing the acquisition.
Fitch forecasts that Tabcorp’s EBITDAR net leverage will peak at about 2.0x in FY27 before declining to approximately 1.5x from FY28. The forecast takes account of licence payments and the cash consideration for BetMakers.
However, the projected reduction in leverage depends on BetMakers delivering a full year of earnings and Tabcorp realizing cost savings. The company has set its own target of keeping EBITDA net leverage below 2.5x, and Fitch expects it to remain within that limit as management considers further opportunities.
Tabcorp’s financial performance will therefore depend on the execution of its operating strategy and its ability to manage the costs associated with the acquisition and its licences.
Regulatory changes ease competitive pressure
Changes to Australian wagering regulations have also supported Fitch’s assessment. Historically, Tabcorp faced a structural cost disadvantage compared with corporate bookmakers, which pay lower racing-industry contributions and wagering taxes.
“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.
In Victoria, Tabcorp’s licence arrangements align wagering taxes and fees more closely with those paid by competitors and remove joint-venture obligations involving the state’s racing industry. New South Wales is considering further reforms, which Fitch views positively, although their eventual scope and outcome remain uncertain.
The agency said Australia’s comparatively predictable regulatory environment supports the company’s operating conditions. The changes could help Tabcorp compete more effectively with digital-only operators, which have challenged traditional wagering businesses.
Tabcorp’s distribution model remains a central part of its competitive position. The company combines retail outlets, digital channels and tote betting, while domestic corporate bookmakers offer online fixed-odds products. Its retail network includes more than 4,000 venues, spanning standalone outlets and pubs, and is the largest of its kind in Australia.
Digital operations contribute about 40% of Tabcorp’s revenue, providing another source of earnings alongside its physical network. International wagering and non-wagering activities account for approximately 20% of revenue, offering some diversification while leaving the company primarily exposed to its domestic market.
Fitch describes Tabcorp as Australia’s second-largest wagering operator by turnover. Its retail presence extends across every state and territory except Western Australia, while long-term exclusive licences create barriers to entry and support brand recognition.
The company also monitors electronic gaming machines in several states under long-dated licences, generating contracted revenue linked to the consumer price index. Fitch said high per capita gambling spending and regulatory barriers help offset Tabcorp’s concentration in Australia and its smaller scale relative to rated international peers.
AUSTRAC investigation remains a financial risk
Fitch identified the Australian Transaction Reports and Analysis Centre’s (AUSTRAC) investigation into Tabcorp’s anti-money-laundering and counter-terrorism-financing compliance as a source of uncertainty.
The agency does not expect the early-stage investigation to affect Tabcorp’s credit rating immediately. All outcomes remain possible, including a decision to take no further action.
Nevertheless, the investigation could increase compliance costs and expose the company to greater conduct and governance risks. Any enforcement action resulting in civil penalties could weaken Tabcorp’s financial profile, although Fitch believes the company can absorb moderate costs.
The case also brings additional scrutiny to Australia’s wagering sector more broadly. Its eventual impact will depend on the investigation’s findings and any action taken by the regulator. For now, Fitch’s Stable Outlook reflects its expectation that Tabcorp will maintain credit metrics consistent with its current rating while improving profitability.