Australian wagering giant Tabcorp on Thursday confirmed its exit from Sun Bets, its flagging UK online wagering business that it has been operating in partnership with News UK since 2016.
In an ASX filing on Thursday, Tabcorp Holdings said it will make a payment to News UK to the sum of GBP 39.5 million to exit the agreement, adding that Sun Bets will cease trading in the coming days.
The wagering giant first announced it was considering exiting the venture in October last year, after acknowledging that the venture has been performing lower than expectation, and subsequently launched a strategic review of the business.
In June, Tabcorp said it had concluded its review and is now in discussion with News UK about a proposal to exit its agreement to operate Sun Bets.
“The performance of Sun Bets has been below expectations and we do not expect a material improvement over the next 18 months. As such, we have reached an agreement with News UK to exit the agreement,” said David Attenborough, managing director and CEO of Tabcorp.
The CEO went onto to say that the company has taken valuable learnings from the Sun Bets start-up process, and thanked the staff at Sun Bets for their efforts in building the business.
Tabcorp said it expects to record a significant item of approximately $91 million (after tax) in respect to Sun Bets in its financial statements for the year ended June 30, 2018, up from $52 in the 18H1 financial statements.
The amount includes the exit payment to News UK. Tabcorp says it also expects to incur other closure related costs in FY19, up to approximately $10 million.