As former AFL CEO Gillon McLachlan settles into an observer role before formally starting as Tabcorp CEO on August 5, one of the first things he’ll observe is a $600 million cheque going from Tabcorp to the Victorian government before June 30 as a downpayment on its new 20-year monopoly Victorian wagering license.
This is not something McLachlan will be familiar with. During his 20-year run at the AFL, the last 10 as CEO, he was very much accustomed to governments, gambling, and media outfits deluging money into his monopoly not-for-profit organisation, not the other way round.
As the Tabcorp announcement to the ASX declared yesterday, McLachlan “has a proven track record of delivering growth”, given that AFL revenues more than doubled from $502 million to $1,063 million during his 10 years as CEO.
Yes, but how much of that came from the toxic gambling industry?
Unlike the UK Football Association, which in 2017 tore up its sponsorship deal with Ladbrokes given the obvious conflicts of interest, the AFL doubled down on its gambling deals during McLachlan’s tenure, taking a slice of the revenue from each bet laid and more than $10 million a year in direct sponsorship payments from the likes of CrownBet/BetEasy and Sportsbet. It also enjoyed turbo-charged broadcast rights payments from Seven and News Corp’s Foxtel which are very much underpinned by their own addiction to gambling advertising.
It will be very interesting to hear how News Corp’s current campaign to have social media restricted from kids under 16 sits with the ongoing arrangements at the AFL, where you get the Sportsbet odds thrown at you every time you download the AFL app or look at its website.
Tabcorp has had its lunch cut in recent years by the largely foreign online bookmarkers, led by Sportsbet, which in calendar 2023 took $2.2 billion from Australian gamblers, a 7% drop due to softening interest in racing and cost of living pressures.
Meanwhile, Tabcorp’s total revenue in 2022-23 was only $2.43 billion, meaning that despite buying every state or territory TAB in the country besides WA, it doesn’t even have 10% of Australia’s world-leading $25 billion a year gambling market, $14 billion of which is poker machine losses.
When the Kennett government blazed the trail by floating Tabcorp in 1994, it had the traditional Victorian wagering monopoly, plus a 50% slice of Victoria’s emerging poker machine market.
Over the next 30 years, it has arguably been the most deal-focused company listed on the ASX. The first rival gambling outfit it bought was Sydney’s Star Casino in 1999, before moving on to Jupiters in Queensland in 2003, then demerging its casino business in 2011 into the modern day Star Entertainment, which is in a world of pain.
It also soaked up most of Australia’s lottery licences when it took over Tatts Group in 2018, but then it demerged that business as well in 2021.
What’s left today is a legacy operation that gets more than 80% of its gambling revenue from racing and is still running dinosaur, traditional TAB brick-and-mortar retail outlets across the country, plus paying for the fit-out of its walls of screens and gambling devices in thousands of pubs and clubs.
If Gillon McLachlan thought AFL politics was tricky, he’s got another thing coming diving full-time into the racing/gambling sewer.
He toyed with taking on the chair role at Racing Victoria, but gave that a miss as the board imploded in acrimony, as can be seen by this recent extraordinary attack article by billionaire plumbing mogul Jonathan Munz, the chair of Victoria’s Thoroughbred Racehorse Owners Association.
And if McLachlan wants to take solace across the border in NSW, he’ll have the joy of dealing with long-time Racing NSW CEO Peter V’Landys, who is currently suing Tabcorp for allegedly not promoting its competitor races to Melbourne’s Spring Racing Carnival sufficiently and is just off an unsuccessful four-year defamation campaign against the ABC and its reporter Caro Meldrum-Hanna over her coverage of animal welfare issues.
V’Landys and McLachlan will have one thing in common — both think it is perfectly fine to have unrelated second jobs. V’landys has been chairman of the NRL since 2019 — in addition to being CEO of Racing NSW since 2004 — and last week McLachlan signed on as a “senior adviser” to Blackstone, the world’s largest private equity firm which is the current owner of Crown Resorts.
As independent federal MP Kate Chaney noted in a tweet last week, McLachlan choosing to run an extensive auction between three gambling-related jobs for his post-AFL career “speaks volumes about the normalised deep connections between sport and gambling”.
As for whether McLachlan will be any good as Tabcorp CEO, AFR’s Chanticleer columnist James Thomson made this sceptical observation yesterday about what he called “a classic boys clubs appointment”.
“He has zero listed company experience. Zero experience in for-profit companies, outside a brief stint at Accenture after finishing uni. And perhaps most notably, zero experience in the competitive, complex and tech-heavy wagering sector.”
Yes, but Peter V’Landys has endorsed McLachlan’s appointment and he’s got lots of political and media mogul connections. It is those two groups that have so far failed to deliver on the gambling advertising ban recommended last year by the federal parliamentary committee, chaired by the late Peta Murphy.
McLachlan and the AFL have been a big part of the push to stop this from happening, which is pretty ironic when you consider that Tabcorp’s position is that gambling advertising should be banned.
However, the horse has already bolted in this regard when you consider the huge databases that the likes of Sportsbet, Ladbrokes, Bet365, PointsBet and the newly merged Bluebet/BETR have already created thanks to literally spending billions of dollars on gambling advertising since the High Court opened the door for them in 2008.
All of this will make for interesting fodder when McLachlan fronts his first Tabcorp AGM as CEO on October 23. The company’s 140,000 disaffected small shareholders are certainly fed up with recent developments which have seen the share price hit a low of just 59 cents after former CEO Adam Rytenskild was fired in March for making lewd comments about a female regulator.
On assuming the top job in 2022, Rytenskild’s big line was that Tabcorp was now “blowing off the cardigans”, as if to suggest it was still running like a public sector bureaucracy almost 30 years after privatisation.
Now they’ve hired a career not-for-profit sector operator to sort themselves out. Good luck Gill, you’ll need it!
