Tabcorp is said to be renegotiating online lottery ticket retailer Jumbo Interactive’s national lottery ticket sale deal ahead of its proposed move to Western Australia following a two-week trading suspension as reported by The Sydney Morning Herald
Jumbo, which has an agreement with Tabcorp that specifies its contract can be terminated with 12 months’ notice after May 2022, heads the OzLotteries website and registered $320m worth of Powerball, OzLotto and TattsLotto tickets during the last financial year.
Last Monday, Jumbo suspended its shares until June 29 ahead of an announcement which was relating to its reseller operations in Western Australia, with speculation mounting over a potential Tabcorp renegotiation.
This was sparked over a change in language by the company which stated that the announcement was now regarding ‘operations including in Western Australia’.
Jumbo chief executive Mike Veverka revealed that discussions relating to its Tabcorp contracts were ongoing and addressed the suspension of its shares: “It’s a voluntary suspension and we’ve given ourselves to the end of next week to have it all finalised.”
An anonymous source told The Sydney Morning Herald that Jumbo has appeared to be courting the Western Australian lotteries and has subsequently triggered high-level discussions with Tabcorp.
It is reported that a potential deal between Jumbo and a Western Australian lottery would reduce the retailer’s reliance on Tabcorp, which in turn would grant it leverage to renegotiate its existing agreement. In fact, the source suggested that Jumbo could become a possible competitor if Tabcorp cuts ties.
Simon Shields from Monash Investors, which holds Jumbo as one of its top-five investments, stated: “The company hasn’t said very much. Our initial view is that anything that is relating to WA for the company is probably not all that large in the scheme of things, and the range of outcomes is probably more positive than negative.”
Tabcorp is yet to provide comment on the situation.