Tabcorp Holdings Ltd (TAH AU) Equity Research

Research evidence excerpt

Tabcorp Holdings Ltd (TAH AU) Equity Research

suggest strong

Racing and Sports market performance over 2H26, with World Cup benefits strong given

friendly time-zone and retail participation (we forecast $40m net revenue over 2H26/1H27).

Limited update from AUSTRAC. Limited developments since the announcement of

AUSTRAC's investigation, although TAH has hired ex-AUSTRAC CEO as Chief Financial Crime

Officer. TAH seems committed to improving AML / CTF functions and complying with the

investigation, although this should presumably involve incremental headcount and cost added

to the business. While we expect 2H26 results to be strong given momentum in the underlying

business, this is likely to be overshadowed by any cost guidance provided for FY27 relating to

AUSTRAC or overall opex more broadly.

Operational risks plentiful. TAH has de-rated ~30% since the AUSTRAC investigation

announcement, which we believe reflects market expectations of a potentially material

financial fine and operational impact. AUSTRAC has shown in prior cases a willingness to

materially impact subjects of investigation (particularly in the Gaming sector) in terms of

economics/profitability to achieve a AML / CTF outcome, which to us would indicate nothing

is 'off the table'. We believe changes such as carded play in retail would be a possibility, which

would have a material impact to turnover (carded play drove a ~20% revenue decline at SGR

Sydney). Beyond this our industry feedback notes several venues have removed EBTs due

to regulatory risk (not commission model changes) which could suggest further operational/

earnings risk.

Kai Erman * | Equity Analyst

AUSTRAC risk outweighs earnings backdrop. We have previously been constructive on TAH's +61 293642997 | kerman@jefferies.com