They have now sold the Topbetta retail site to concentrate on...

They have now sold the Topbetta retail site to concentrate on the wholesale market.

Recent acquisitions of Dynamic Odds and Global Betting Services has given them profitable service businesses to the corporate bookmakers here and around the world, which creates terrific synergies for The Global Tote.

Both DO and GBS are profitable and trusted businesses in their own right.

Global Tote will be the exponential growth driver. It is a pure technological disruption play against the incumbent Tabcorp here in Australia as they charge the bookmakers less, give racing bodies more, and offer better odds to punters.

The NT approval for Ned’s to bet into the Global Tote pools is significant. The final regulatory resistance that Tabcorp could muster has now been broken. I expect we will see a string of similar announcements stating that Ladbrokes, Beteasy, Sportsbet etc are going to take up Global Tote.

The Global Tote is a “clip the ticket” model that skims  percentage off the top of each turnover dollar. As more dollars are pumped through the pools, exponential revenue can be achieved.

it is better for the corporate bookmakers to bet through the Global Tote for their best odds markets etc because they can divest the risk on those bets and still make more than 5% on their turnover. Eventually, other exotic pools and bet types will be offered, giving the bookmakers a wider range of options to provide to punters and reducing any need for bookies like Sportsbet to cut off winning punters. In this Global Tote scenario, it matters not if winning punters play, as it is a pure turnover result for the corporates.

Racing bodies are also in support because they earn a higher fee from Global Tote than they do from Tabcorp.

Tabcorp runs their Tote pools on a 17% rake, whereby 17c in every dollar bet into win pools is taken for payments to racing bodies, taxes, costs and profit to shareholders.

Global Tote has much smaller overhead costs (ie no physical shopfronts, less staff etc. so they don’t need to take out 17c in the dollar.

This immediately results in better odds for punters, and simply by being more generous to the racing bodies and making it more attractive to the corporates to direct their turnover through the Global Tote, it becomes a win win situation for the whole industry (bar Tabcorp).

Think of Global Tote as the Uber against the Taxi Industry or the Afterpay of the payments industry and you are on the right track.

As someone who has a decent holding and someone who has followed this story for a long time, it’s crazy to me that we are only looking at 8c per share after this validation. We previously ran to 40c in anticipation of this NT approval and it was only the delay tactics by Tabcorp to slow the process down that has caused this slip in SP.

DYOR and IMO etc.

Have a great day!