Under the arrangement, which remains subject to Ministerial approval, Entain will support Tab NZ with delivering wagering and broadcast functions in the country for a period of 25 years.
Tab NZ said it took the decision to enter such a partnership due to increasing competition, rising costs, capital constraints and other challenges that have impacted its ability to deliver adequate funding to racing and sports.
With these challenges expected to increase, Tab NZ said it spent the last six month engaging with a range of operators in relation to a strategic partnering arrangement and received a number of proposals, including the successful pitch from Entain.
Specific terms of the deal will remain commercially confidential until approval is granted, but it was confirmed that Entain was selected based on a wide range of criteria, including operational expertise, cultural alignment with Tab NZ and the commitment of the partner to uplifting its harm minimisation and responsible gambling efforts.
“Tab NZ faced an uncertain future in a David and Goliath battle with international wagering operators and a lack of capital to both compete and meet its potential,” Tab NZ chief executive Mike Tod said. “Today’s announcement is a significant milestone toward the transformation of Tab NZ and those who rely upon its growth and long-term success. In the absence of a strategic partnering arrangement, Tab NZ would be further cutting distributions in the next financial year.”
“This proposed strategic arrangement with Entain provides a certain, material and immediate uplift in the funding Tab NZ can provide New Zealand racing and sports ensuring that these industries not only survive but thrive. It will allow us to greatly improve our harm minimisation and responsible gambling efforts and provides immediate job security and long-term job creation in New Zealand to the advancement of our nation at large.”
Strengthened finances
Tab NZ said the proposed arrangement would enhance the viability of New Zealand racing and sport, as well as materially boost the fortunes of both, and has the support of key stakeholders including the three racing codes and Sport NZ.
Other key benefits cited included guaranteed funding to Tab NZ of greater than NZ$1.00bn (£507.1m/€576.5m/US$620.1m) in the first five years to support the revitalisation of the racing industry with material upside over the life of the arrangement.
Tab NZ said it would also significantly strengthen its financial position by facilitating an upfront payment to racing and sports, in addition to an increase in future payments over time relative to Tab NZ’s current trajectory of funding reductions. The deal could allow for approximately $5.00bn to be delivered over the 25-year period.
Meanwhile, the arrangement would allow for investment in and uplift in Tab NZ’s harm minimisation and responsible gambling efforts, as well as upfront payment to prevent unlicensed offshore operators from providing wagering services in New Zealand.
The partnership would include a 24-month employment guarantee for Tab NZ’s employees and a commitment to retain and refresh the Tab NZ brand, as well as additional support to the racing industry including a $10.0m sponsorship of an enhanced racing carnival and the establishment of other community linked initiatives.
“This is a unique opportunity to shape the future wagering experience for customers and to support New Zealand’s racing and sporting industries,” Entain Australia chief executive Dean Shannon said. “We have a compelling vision for the future of Tab NZ, which includes a renewed focus on innovation and technology, and a long-term commitment to all racing, sport and industry stakeholders.
“As the partner of choice for New Zealand, we have made a firm commitment to employment continuity for at least 24 months, with the team at Tab NZ essential to our future vision and growth of the market in New Zealand.
“We applaud Tab NZ for how the process has been run to date and we look forward to working with all stakeholders on necessary approvals to finalise the transaction.”