Top 3 differences between Tabcorp and Tatts that you must know

Tabcorp caputres lowest VCM.

According to Nomura, they recently compared the structural price/cost advantages and disadvantages for Tabcorp versus Tatts,versus the corporate bookmakers in accepting a fixed odds sports wager across each company’s various State licenses.

Generally, the firm determined that firstly Tabcorp captures the lowest variable contribution margin (VCM) for incremental fixed odds sports bets (at c4.5-7% for online sales in VIC and NSW respectively) due to profit-share agreements and taxes; followed by the corporate bookmakers (at c7.5% for the larger scale operators), and then Tatts (at 9.0-10.5%).

Here's more from Nomura:

Secondly Tabcorp and Tatts appear to enjoy structural price advantages over the corporate bookmakers, with c75-80% of fixed odds sports wagers being placed via each operator’s retail network (as opposed to online) at a c20-30% yield premium to that captured by the corporate bookmakers online.

Lastly, that despite the structural yield advantage, Tabcorp captures a lower VCM for retail network fixed odds sports wagers than corporate bookmakers do for online wagers, whereas Tatts’ retail network VCM is comparable to the online margin captured by the more profitable of the corporate bookmakers.

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