Tab NZ, New Zealand’s sports betting monopoly, achieved higher turnover and gross betting revenue (GBR) levels in November, largely driven by major sporting events like the 2022 Fifa World Cup and prestigious horse racing competitions. However, the company fell short of its budgeted gross betting margin and profit due to various factors, including competition from unregulated offshore operators, reduced betting margin, and lower average bet sizes. As a result, Tab NZ has already announced a 9% reduction in distributions to racing codes for the 2022-23 financial year. Despite the profit shortfall, retail traffic remained strong following the easing of Covid-19 restrictions, and the overall field size across all three codes saw an increase compared to the year-to-date average.
Performance Overview:
In November, Tab NZ’s gross betting revenue exceeded expectations, reaching $40.6 million, which was 1.3% higher than the budgeted amount. However, the gross betting margin fell short of the budget by 0.9%, standing at 15.6% for the month. The reported profit amounted to $14.0 million, missing the budget by 10.8% ($15.7 million). Betting profit also failed to meet the budget, totaling $12.4 million against a target of $14.1 million. On the other hand, gaming profit achieved the budgeted amount of $1.6 million.
Factors Impacting Performance:
Tab NZ highlighted several factors that affected its profit figures. The continued competition from unregulated offshore operators put pressure on the company’s margins. Additionally, reduced betting margin, coupled with lower average bet sizes in key customer segments, contributed to the profit shortfall. Despite these challenges, retail traffic remained robust following the easing of Covid-19 restrictions, and the overall field size across all three codes witnessed an increase compared to the year-to-date average.
Distribution Reductions and Financial Outlook:
Due to Tab NZ missing its budget multiple times in recent months, the company announced a 9% reduction in distributions to racing codes across New Zealand for the 2022-23 financial year, ending on July 31, 2023. The reduced distributions are expected to amount to NZ$160.0 million. While the company faced challenges in meeting profit targets, it remains committed to supporting the racing industry and ensuring the sustainability of the sport in New Zealand.
Popular Events and Turnover:
Among the notable events in November, the Melbourne Cup emerged as the most popular racing event, generating a turnover of $11.5 million. In terms of sports events, the rugby union clash between New Zealand Women and England Women on November 12 topped the charts with a turnover of $1.2 million. These events demonstrated the strong interest and participation of New Zealanders in both horse racing and sports betting.
Although Tab NZ achieved higher turnover and gross betting revenue levels in November, the company fell short of its profit targets due to various factors, including competition from unregulated offshore operators and reduced margins. The company’s decision to reduce distributions to racing codes reflects its commitment to address the profit shortfall and maintain the long-term sustainability of the racing industry in New Zealand. Despite the challenges, Tab NZ remains optimistic about its future performance and will continue to navigate the competitive landscape while delivering a responsible and enjoyable betting experience to its customers.