Analysts Flag Structural Challenges for Tabcorp Despite Earnings Lift

Australian gambling giant Tabcorp is expected to post improved financial results in Q2 2025. However, analysts warn that deeper structural issues continue to loom over the company’s future. Recent regulatory issues and policy changes in key regions could further undermine the operator’s position if it fails to adapt.

On-Course Shops Will Be the First to Feel the Squeeze

According to financial services research firm Morningstar, Tabcorp’s EBITDA will rise 17% year-over-year, reaching AUD 371 million ($242 million) for the 12 months ended 30 June. This impressive jump is primarily due to the benefits of the operator’s new Victorian wagering license, which took effect in August 2024. While analysts believe this uplift will give the company breathing room in the short term, wagering turnover will likely decrease for the period.

Nevertheless, Morningstar equities analyst Angus Hewitt cautioned that the underlying wagering market in Australia remains under duress. He cited recent results at Entain, the gambling giant behind the Ladbrokes brand, where the business described Australia as its worst-performing region. Hewitt noted that broader economic challenges were causing punters to cut back on wagering.

According to Morningstar, Tabcorp’s on-course shops face the most immediate pressure, with visitor numbers steadily decreasing due to rising pressure from mobile betting. Competition in the online sector remains fierce as operators aggressively use free bets and other inducements to attract customers, often at the expense of margins. Companies like Sportsbet, one of the leading mobile operators in the region, appear to have gained further market share in recent months.

Short-Term Prospects Remain Stable

Despite these rising challenges, Morningstar has set a fair value estimate of AUD 0.90 ($0.59) on Tabcorp shares, well above the AUD 0.71 ($0.46) closing price on 13 August. Hewitt expects betting growth to pick up again in FY26, with operating leverage helping earnings if revenue rises as expected. However, the long-term issues remain.

We expect the firm will remain unparalleled in physical wagering.

Angus Hewitt, Morningstar analyst

Tabcorp also faces fresh regulatory and policy challenges. In June, the company received a fine of just over AUD 4 million ($2.61 million) for breaches of national spam laws. The penalty included a court-enforceable undertaking requiring Tabcorp to overhaul its marketing framework, submit to quarterly independent audits, and deliver regular compliance reports for the next three years.

Policy shifts are also a concern. The Northern Territory plans to raise wagering taxes, drawing criticism from industry stakeholders. Meanwhile, New South Wales is considering introducing stricter controls on cash betting, which could weaken betting volume. Analysts warn that Tabcorp’s future success will ultimately depend upon how well it can adapt to shifting consumer trends and navigate an increasingly demanding regulatory landscape.