New Zealand’s Tab NZ Blames Inflation on June’s Turnover and Revenue Objectives

Tab NZ, New Zealand’s government-owned and sole sports betting provider, has missed the mark on its June forecasts for both revenues and turnover. In Tab’s latest report, they have placed the blame on multiple factors, including Covid restrictions, a jittery economy, inflation, and an increasing cost of living.

Revenues and turnover down on expectations

One of the requirements of Tab NZ is to perform predictions for profits, operating expenses, turnover, and other financial indicators for the upcoming financial period. This is then measured against the outcome following that period, and the process itself is standard practice in publicly owned businesses and government agencies.

In this latest report for the month of June 2022 figures show:

• Turnover of $197.3m was down 3.9% on predictions or a total of $8.1m

• Gross Betting Revenue of $31.6m was down 3.2% on predictions or a total of $1.0m

• Gross Betting Margin of 16.1% was up 0.1% on predictions

• Reported Profit of $11.0m was down $1.7m on predictions

• Operating Expenses of $10.0m was down $0.2m on predictions

• Reported Profit for the Year to Date of $146.1m was down $3.4m on predictions

• Operating Expenses for the Year to Date of $107.1m was down $3.4m on predictions

• Distributions and other payments of $13.2m was up $0.1m on predictions

Contributing factors

It’s easy to surmise the reasons behind Tab’s predictions for the month falling short. Times are tough in NZ, as has been widely reported on now for many months. In a study conducted by YouGov, it found that a quarter of Kiwis have difficulty making ends meet at least once a month, and one in six face that struggle weekly. Along with inflation for the year at 7.3%, a 32 year high, many people are cutting back on non-essential goods and services, such as entertainment and gaming, of which sports betting falls under.

While New Zealand is not officially in a recession, like much of the world, this is certainly a hot topic - a ‘will they or won’t they’ situation. This inevitably leads to much slower consumer spending across non-essential industries who are similarly reporting slow or negative growth.

Outlook for the sector

No doubt the rising cost of living has hit everyone and many online casinos and sports betting operators alike. Indeed, apart from Tab NZ, many real money online casinos in New Zealand have had to deal with similar desolate results. Nevertheless, this could be a passing phase and the situation shouldn’t be seen as too bleak. Ultimately the iGaming industry has been an ever-growing sector for the past couple of decades.

And that’s what the figures and outlook show. According to new research by technavioPlus, the global sports betting market is projected to increase by US$143.73 billion (or NZ$232.85 billion from 2021 to 2026. This represents a CAGR of around 10.68%. The report also highlights that 42% of the growth will be attributed to the APAC region, which New Zealand is a part of.

While presently there are plenty of economic worries globally, sports betting will most certainly bounce back once global markets accordingly bounce back. Even if there is a global recession, which is typically difficult to define, there is always a correction afterward - such is the nature of these events.

iGaming, or online betting, in particular, is in a particularly exciting phase due to advances in technology and changing legislations overseas. Punters are able to really appreciate the speed of being able to bet from one’s mobile phone, as well as the sleek modern interfaces offered by sports betting providers. With the metaverse gearing up, it’s not hard to imagine a future where consumers can place bets in VR while watching a game - or multiple games - at the same time.

Outlook for Tab NZ

Tab NZ’s (and the NZ Racing Board’s resulting incomes) future, however, looks bright. As the sole sports betting provider in the country, there is a monopoly in the market. This means that their future profits will bounce back once the industry bounces back. With online offshore providers - which are not usually accessible to Kiwis - as their only competition, this means that they are far less privy to fluctuations in fickle consumer sentiment, which can occur when there are multiple providers.

At present, there are no talks to privatise Tab NZ, nor change the monopoly situation in the country. And while this takes the pressure off Tab NZ to be revolutionary in the market or provide the very best betting experience, customer service, and offers, they should also look to overseas providers to gauge industry best practices. This way, New Zealand will be able to offer a world-class service.

This article does not necessarily reflect the opinions of the editors or management of EconoTimes