Tabcorp sees 10% increase in EBITDA for FY26, despite only 0.8% increase in revenue

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The Backstory

Turnaround gains meet a thin top line

Tabcorp’s latest result shows a company extracting more profit from a mature wagering base rather than riding a broad revenue rebound. The Australian group reported a 10.3% rise in EBITDA to AU$431.7 million for the year ended June 30, while revenue increased just 0.8% to AU$2.64 billion. Net profit after tax rose 43.6% to AU$71.1 million, underscoring the impact of cost control, operating leverage and tighter capital discipline under Managing Director and Chief Executive Gillon McLachlan.

The contrast between modest revenue growth and stronger earnings frames the next phase of Tabcorp’s strategy. Management says the company has moved through the early stages of its reset and is preparing to accelerate growth, including through the planned acquisition of BetMakers Technology Group. That deal, valued at AU$267 million, is expected to help Tabcorp launch products faster, reduce technology costs and pursue international revenue opportunities. The group is targeting AU$30 million in annualized cost synergies by the second year of ownership.

Earlier half-year figures signaled the same pattern

The annual result extends themes that were already visible at the half-year stage. Tabcorp’s first-half revenue rose to AU$1.344 billion and EBITDA reached AU$217.4 million, even as digital turnover weakened and active users fell 4.4% to 766,000. The company managed to increase overall wagering turnover by 0.3%, helped by stronger sports betting activity, but underlying wagering trends were uneven.

Racing remained the company’s largest wagering category, though its share of total turnover declined to 79.9% from 81.1% a year earlier. Domestic racing turnover fell 1.2% to AU$5.73 billion, while sports turnover rose 6.9% to AU$1.44 billion. The half-year report also showed how much yield volatility can affect earnings. Excluding the Victorian license introduced in 2024, wagering revenue dropped 2.5% because of below-average gross yields during a key period covering football finals and the spring racing carnival.

Those figures help explain why management has emphasized discipline rather than relying solely on market growth. As Tabcorp’s first-half results showed, the company was already cutting underlying costs, reducing wagering and media operating expenses and leaning on a broader mix of revenue sources, including international customers and retail cash performance. The full-year numbers suggest those measures continued to support earnings even without a meaningful acceleration in revenue.

BetMakers gives the strategy a technology leg

The BetMakers transaction is central to Tabcorp’s argument that the next stage of the turnaround will be built on faster product delivery and more efficient infrastructure. BetMakers brings wagering technology, racing content distribution and international relationships that could complement Tabcorp’s wagering and media business. For Tabcorp, the appeal is not limited to back-office savings; it is also about owning more of the technology stack that shapes customer offers and product speed.

Recent BetMakers agreements illustrate why Tabcorp sees strategic value in the asset. BetMakers signed a partnership with Kiron Interactive to distribute virtual horse racing, greyhound racing and harness racing through the BetMakers CoreAPI. The arrangement allows sportsbooks using BetMakers’ platform to add virtual racing without further system changes. That type of plug-in content can fill gaps between live racing events and support higher customer engagement across the betting day. The Kiron Interactive virtual racing deal also highlights BetMakers’ role as a content and technology intermediary for operators outside its home market.

BetMakers has also moved to deepen its position in Australian wagering technology. It entered a five-year agreement with Betfair Australia to power the relaunch of CrownBet in early 2026. Under that deal, BetMakers will provide its Apollo wagering platform, trading and risk management tools and content engine. The CrownBet relaunch agreement with Betfair Australia signals that BetMakers’ systems can support branded wagering products at scale. For Tabcorp, acquiring such capabilities could reduce reliance on third-party providers and help it respond faster to rivals in digital betting.

Digital pressure keeps the growth task difficult

Tabcorp’s main wagering and media division generated AU$2.45 billion in revenue for the year, up 0.7%, while EBITDA rose 9.9% to AU$361.8 million. Domestic wagering revenue increased 0.9%, reflecting improved trading conditions but also the earlier drag from weak first-half yields. International wagering revenue fell 3.7%, with softness in Hong Kong weighing on second-half performance.

The digital picture remains one of the company’s biggest challenges. The first-half drop in active users and digital turnover showed that Tabcorp’s retail heritage and media assets do not automatically translate into digital momentum. Rival bookmakers have built large customer bases around mobile-first products, aggressive promotions and faster personalization. Tabcorp’s path depends on improving product execution while protecting the advantages of its retail network, licenses, tote position and media distribution.

That is why management’s focus on a “differentiated customer offer” matters. The company has received regulatory approval to develop its Tap in-play betting product, a potential tool to modernize its wagering experience and appeal to customers accustomed to more dynamic betting markets. If the BetMakers acquisition proceeds, Tabcorp will need to show that added technology ownership can translate into better customer retention, not just lower costs.

Governance and regulatory risks remain close

The stronger earnings performance has come during a period of heightened scrutiny. Tabcorp’s share price has more than doubled over the past year, helped by cost-cutting, contract renegotiations and plans for a national tote by the 2026 financial year. That rally has increased attention on McLachlan’s compensation. Shareholders approved a second long-term options package for the chief executive, despite criticism from the Australian Shareholders Association, which described the arrangement as outlandish, according to The Sydney Morning Herald. The debate over McLachlan’s options package reflects a broader question: how much of Tabcorp’s rebound should be attributed to management execution and how much depends on market recovery, regulatory settings and investor expectations.

Regulatory risk is another overhang. Tabcorp disclosed that AUSTRAC, Australia’s anti-money laundering regulator, had opened an investigation into the company’s compliance with anti-money laundering and counterterrorism financing obligations. The announcement triggered a sharp sell-off, wiping more than AU$500 million from Tabcorp’s market value at the time. The AUSTRAC money laundering investigation remains important because gambling companies in Australia face rising expectations on compliance, customer protection and governance. Tabcorp was also fined AU$158,400 by the Australian Communications and Media Authority in February for accepting illegal bets.

The regulatory environment also affects industry economics. Operators have been calling for stronger enforcement against offshore betting sites, arguing that illegal competitors weaken licensed businesses and undermine responsible gambling standards. At the same time, domestic operators face political pressure over gambling advertising, safer gambling measures and wagering taxes. That mix can raise compliance costs and limit marketing flexibility just as companies are seeking digital growth.

Stakes for the next phase

Tabcorp is entering the next year with guidance for domestic wagering turnover growth broadly consistent with the 2026 financial year, capital expenditure of up to AU$160 million and operating expense growth between 3% and 3.5%. Those targets imply a company still balancing investment and restraint. The earnings improvement gives management more credibility, but the low revenue growth rate shows that the turnaround is not yet a demand-led recovery.

The BetMakers acquisition is therefore a test of execution. If Tabcorp can integrate the supplier cleanly, capture the targeted synergies and use the technology to improve its digital offer, the deal could shift the company from repair mode into expansion. If revenue remains sluggish or regulatory costs rise, investors may view the earnings gains as the product of cost discipline with limited runway. The latest results show progress, but they also raise the bar for proving that Tabcorp can grow beyond the efficiencies that powered the first half of its turnaround.