Tabcorp delivers double-digit earnings growth as cost cutting offsets soft sports wagering

Tabcorp (ASX: TAH) has delivered a steady first-half performance for FY26, posting double-digit earnings growth despite challenging conditions across Australia’s highly competitive wagering market.

The wagering and media group reported revenue of $1.34 billion for the six months to 31 December 2025, up 1.0% on the prior corresponding period. Group EBITDA rose 14.3% to $217.4 million, lifting the EBITDA margin by 190 basis points to 16.2%. Net profit after tax before significant items jumped 61.5% to $35.7 million.

The result comes against a backdrop of intense competition in Australian sports betting, where corporate bookmakers including Sportsbet, Ladbrokes and PointsBet continue to invest heavily in promotions and digital customer acquisition. Operators were also hit by below-average gross yields during the AFL and NRL finals series and the Spring Racing Carnival — key wagering periods in the domestic calendar.

Managing Director and Chief Executive Officer Gillon McLachlan said the company’s performance demonstrated improved consistency and discipline.

“We’re executing on our game plan while delivering ongoing cost and capital discipline,” McLachlan said, noting that diversified earnings and tight cost control helped offset softer yields earlier in the half.

Domestic wagering turnover edged up 0.3%, with sports betting turnover increasing 6.9% and Digital-In-Venue turnover rising 12.3%. While domestic wagering revenue increased 1.1%, underlying revenue — excluding the benefit of the reformed Victorian licence — declined 2.5% due to weaker yields through September to mid-November. Performance improved late in the half, with stronger margins in November and December.

Wagering and Media EBITDA climbed 15.8% to $181.4 million, supported by a 130 basis point lift in variable contribution margins to 38.1%. Operating expenses declined 1.8 per cent, reflecting restructuring and cost program benefits, partly offset by inflation and licence-related costs.

A central plank of Tabcorp’s strategy is leveraging its integrated TAB and SKY assets to deliver what it describes as a differentiated omnichannel experience. Products such as “TAB Takeover”, “TAB Time”, “Mega Pot” and “Miss By One” are designed to link digital, retail and broadcast offerings in ways online-only rivals cannot easily replicate.

Integrity Services, which provides monitoring and compliance services for electronic gaming machines, also contributed to earnings growth. Revenue rose 4.1% to $91.7 million, lifting EBITDA 7.5% to $36.0 million.

The balance sheet strengthened during the half, with net debt reduced to $631.2 million and leverage falling to 1.5 times. In November, Tabcorp issued $300 million of 5.5-year notes under a new Australian Medium Term Note program, extending its weighted average debt maturity to 5.4 years and boosting liquidity to more than $1.08 billion.

An unfranked interim dividend of 1.5 cents per share — up 50% year-on-year — will be paid in March, representing a payout ratio of 56% of adjusted earnings.

Looking ahead, Tabcorp expects second-half wagering turnover conditions to mirror the first half, with continued focus on cost management and reinvestment in venues. Additional marketing spend is planned ahead of the 2026 FIFA World Cup, as the group seeks to consolidate its position in an evolving and tightly regulated Australian wagering landscape.