DAVY VIEW

Tabcorp’s decision to demerge its Lotteries and Keno business, thereby retaining its much sought after Wagering and Media operations, has several implications for our coverage universe. In our view, it is the outcome likely to result in least change in the Australian wagering sector. Our initial sense is that Tabcorp will remain vulnerable from a competitive standpoint until at least June 2022 (when the demerger is completed) — a significant positive for its competitors, including the existing operations of Flutter Entertainment and Entain in the region. Of course, in the case of Entain, there will be an offsetting disappointment that it has not been able to successfully acquire the asset itself, thereby securing important market share, omni-channel, scale and operational improvement opportunities in the jurisdiction.