Tabcorp has opportunities to tap into fantasy sports; Morgan Stanley

Wednesday 13th of January 2016

Tabcorp's earnings are under pressure from intense online competition, though expansion of its fantasy sports deal may be its saving grace, The Sydney Morning Herald cited a Morgan Stanley analyst as saying.

The report estimates the wagering behemoth’s share of online wagering turnover will fall to 23 percent in 2018, down from 30 percent in 2010, as a result of increasing pressure from foreign-backed online bookmakers.

"Our previous view was that Tabcorp was in a position to slow this market share loss because of the strong investment it made in this area resulting in flat share over the next three years," said Morgan Stanley analyst Mark Goodridge. "We have now reduced those forecasts to show that Tabcorp continues to lose online share in three years down to 23 percent."

However, Tabcorp may be able to recover some of its losses by putting more focus on the rapidly growing fantasy sports industry, Morgan Stanley says. By leveraging opportunities from a recently signed partnership with UK-based The Sun, Tabcorp may be able to tap into new sources of revenue by building on The Sun’s “Dream Team” fantasy football competition, currently boasting over 1 million registered members.

"If Tabcorp was to launch its own daily fantasy sports site this could be used as another subscriber acquisition tool which would allow Tabcorp to start to monetise this new subscriber with racing products," says Goodridge says. "This is exactly what Tabcorp currently does with its sports products."

"News Corp in Australia runs the largest NRL fantasy league and also the soccer fantasy leagues, hence we do not think it unreasonable that Tabcorp could partner with News Corp in Australia for daily fantasy sports.", Goodrich continues.