Australian Online Gambling Firm Tabcorp Holding Ltd Bets on Demerger

In greyhound eats greyhound world, it isn’t too often that you here of companies taking an amicable leave of each other. Much more commonly, word comes of the great white sharks eating the shrimps and then depositing unwanted assets (such as redundant personal) on the seabed floor.

Australia’s largest gambling firm, Tabcorp Holdings Ltd., however, has decided that a separation from their casino operations is in best interest of both resulting companies. According to Tabcorp chairmen John Story, the two untying business had begun diverging. A compelling business case had been made that investors would become better off with shares in detached companies.

Tabcorp will endow the casino spinoff with $430 million to ensure that it maintains feasible capital structures and enable “funding certainty” for pending growth initiatives. Both companies will continue operating under Austalian gambling laws and be listed on the Australian Securities Exchange (ASX), but pursue distinct investment strategies. The casino will profit from material capital investments. Meanwhile, the rest of tabcorp would jockey for position in the swiftly shifting internet and retail environment.

Though Tabcorp is large, their current internet stakes are still limited. They current own only three online sites, Race Tab, TAB Sport, and LuxBet. They also released the TAB Sportsbet iPhone application.

Nevertheless, the evolving internet could be of particular interest as currently licensed online casinos in Australia are forbidden from accepting Australian players and are only allowed to accept foreign players. Meanwhile, Australians themselves are allowed to gamble on the internet, but must visit online betting sites hosted outside of Australia and therefore pushes the patrons outside the protection of Australian laws aimed at protecting consumer.

The government is considering implementing filters which would attempt to prevent the people from visiting these sites. If successfully implemented, such a ban could result in more land-based traffic to either company. On the other hand, if the government is convinced to take a more mature and practical approach, a wealth of Australian players could be persuaded to visit online gambling sites that operate closer to home.

Tabcorp aims to finalize the demerger by July 1st, 2011, but the process is subject to regulatory agreement. Tabcorp’s name will be kept by the keno, wagering, and gaming company. The name for the casino operation is not presently available.