Fitch Affirms Tabcorp BBB- Rating on Projected Margin Rise to 18 Percent and Leverage Decline

Fitch Ratings affirmed Tabcorp Holdings Ltd’s Long-Term Issuer Default Rating and senior unsecured notes at BBB- with a stable outlook. The ratings agency expects the operator’s credit metrics to remain adequate for the rating over the medium term despite pressure on discretionary spending. Tabcorp’s established market position, execution of its earnings strategy, and regulatory reforms that narrow structural disadvantages underpin the assessment.

The EBITDAR margin improved from 15 percent to 16.5 percent in the financial year ended 30 June 2026. Fitch forecasts further improvement to about 18 percent by 2029 through exclusive licenses, media assets, and retail footprint that deepen customer engagement and revive tote betting. Revenue is expected to track GDP growth with cost and capital discipline key amid cost-of-living pressure.

Margin and Leverage Trajectory

EBITDAR net leverage is seen peaking at 2.0x in FY27 before falling to 1.5x from FY28. License payments and cash consideration for the BetMakers acquisition drive the interim peak. The transaction adds contracted business-to-business revenue and access to international footprint, though Fitch views the benefits as incremental rather than transformative given Tabcorp’s primary exposure to wagering and racing.

Regulatory reforms narrow the structural cost disadvantage versus corporate bookmakers that pay lower racing contributions and wagering taxes. Victoria’s license aligns taxes and fees with competitors and removes joint-venture obligations with the racing industry. New South Wales is considering reforms that Fitch regards as positive, though the outcome remains uncertain. Australia’s regulatory certainty relative to other jurisdictions supports the operating environment.

Market Position and Compliance Risks

Tabcorp ranks as Australia’s second-largest wagering operator by turnover with a retail network in every state and territory except Western Australia. Long-dated exclusive licenses create high barriers, support brand recognition, and generate contracted, CPI-linked revenue from electronic gaming machine monitoring in several states. High per capita gambling spending and regulatory barriers to entry offset concentration in Australia and smaller scale than rated international peers.

An ongoing AUSTRAC investigation into anti-money-laundering and counter-terrorism-financing compliance increases sector scrutiny. The probe is likely to raise compliance costs and conduct and governance risks. Enforcement action could produce civil penalties that weaken the financial profile, although Tabcorp can absorb moderate costs. According to reporting by Inside Asian Gaming, Fitch notes these factors while maintaining the stable outlook.

Reporting: Inside Asian Gaming

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