Tabcorp's Margins Improving, Debt Declining

Fitch Ratings expects Tabcorp Holdings, Australia's leading betting group, to improve its operating margins and reduce its debt over the next two years. The agency cites the company's strong market position, its strategy renewal and regulatory changes that reduce its cost disadvantage against online rivals.

Fitch affirmed Tabcorp's long-term issuer rating at BBB- and kept the outlook stable. According to the agency, the company's credit metrics will be sufficient to support the rating over the medium term despite pressure on spending. On the other hand, weak betting volumes, competition from digital-only operators and an ongoing review of the company's compliance procedures stand out as risks.

The agency's forecast is that Tabcorp's EBITDA margin reached 16.5 percent in fiscal 2026 and is expected to rise to about 18 percent by fiscal 2029. It notes that the margin was 15 percent in 2025. The agency states that cost-of-living pressure has limited gambling activity, while revenue will move in line with GDP growth.

The company plans to use its exclusive licences, media assets and retail distribution network to grow customer engagement and revive tote betting. Fitch views the acquisition of BetMakers Technology Group as a modest contribution to the business model. According to the agency, the move increases the company's control over technology and could lay the groundwork for international growth.

Fitch expects the net leverage ratio to peak at about 2.0 times in 2027 and fall to about 1.5 times from 2028. The decline is said to depend on BetMakers generating a full year of earnings and Tabcorp delivering cost savings.