Why I’m shorting TAH

Hi All,

Would like to share some points as to why I’ve decided to short TAH and open up for discussion. As someone who has been working in the corporate online bookmaker space for ~10 years I feel I’m relatively qualified to comment on a few of these areas that seem to be going unnoticed by the general public. Whilst the lotto side of the business is sensational, I think the wagering part has been dramatically declining for some time now and doesn’t look like it will be able to resurrect itself. The impact of COVID19 to their wagering business is being underrated by the market. ~50% of their wagering revenue comes from their tote product which has taken a huge hit on the back of all their retail venues closing. The figures I’ve heard suggest the tote pools have seen a 50% reduction in stake over the last few weeks. The flip-side of this, is that online bookmakers (Sportsbet, Ladbrokes, BetEasy) have reportedly all seen big growth in active users over the same period as the TAB’s retail customer base look elsewhere. It’s widely accepted that the tab’s online offering is horrific compared to others in Australia, and once these customers have had a taste I think it will be very hard for the Tab to get some (if any) of these customers back. Retail outlets in particular will find it difficult to drag customers back through the door once they’ve been exposed to the online world. It’s a unique situation that has forced the hand of countless recreational retail customers to try online betting for the first time, and the majority of them appear to be doing at elsewhere.

A quick glance at the product offering (particularly Sports) during this trying time with limited content, will show that the Tab have basically given up. To be fair, there’s some Sports they aren’t legally permitted to bet on, but if you compare the options a punter has to bet on with any of the other corporates, it’s incredibly difficult to see the TAB retaining their current Sports customer base. They certainly won’t be acquiring any new customers.

Then finally the cash out debacle from the weekend. The numbers thrown around have the incorrect payout in the vicinity of $30 million. Whilst the rules for the TAB on palpable errors are nowhere near as helpful as those in place for corporates via the NTRC, I’m assuming they’ll get the majority of that money back. But I don’t think it’s a given that they get it all back. Best case scenario it’s a sloppy mistake that won’t cost them too much money, but I also think it’s a pretty good barometer of where their wagering business is at.

I certainly don’t have a great track record with investments (punting is more my go) but I think the next set of results released by TAH could be a bit a of jaw dropper as to just how bad the numbers really are. We’ll see.

Hoppy