James Packer's Crown Resorts puts CrownBet in play

James Packer's Crown Resorts puts CrownBet in play - 24th November 2017

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Crownbet, led by Matthew Tripp, spent $80 million in marketing in 2016. Arsineh Houspian

by John Stensholt James Thomson

James Packer's Crown Resorts is set to divest its 62 per cent stake in online bookmaker CrownBet, a move that could spark merger and acquisition activity in the betting sector.

Crown is understood to consider CrownBet a non-core asset and is keen to shift it from its balance sheet and concentrate on its core casino assets in Melbourne and Perth as well as the construction of its Barangaroo casino and hotel. Crown has land in Las Vegas for sale and also sold its stake in Macau's Melco Crown this year.

CrownBet could shift into a new entity and combine with the local operations of a rival, such as William Hill, a deal CrownBet chief executive Matthew Tripp first discussed with William Hill management in late 2016.

Mr Tripp is understood to have held further talks this week in the United Kingdom, where William Hill is listed on the local stock exchange. The stock rose 2 per cent on Thursday night.

William Hill's Australian operations are run by Tom Waterhouse.

Crown said on Friday it was in discussions concerning the future of its 62 per cent stake in CrownBet, which it acquired almost three years ago when it agreed to a joint venture with Mr Tripp's then BetEasy.

In a terse statement released to the market, Crown said it noted media speculation about "consolidation in the online wagering industry" and specifically a potential tie up with William Hill.

"Crown evaluates opportunities regarding its investments from time to time," the company said.

"Crown confirms that it is in discussions concerning its interest in CrownBet. There is no certainty as to whether any transaction will eventuate."

Australia's crowded online wagering sector is seen as ripe for consolidation, as existing players come to grips with soaring marketing costs and fight for market share as the pending merger between Tabcorp and Tatts Group creates a market giant.

Corporate bookmakers such as CrownBet are in a race to scale up to compete with Tabcorp and Sportsbet, now the biggest online bookmaker in Australia, and deal with regulatory challenges, such as a new point of consumption tax in several states and a ban on credit betting.

CrownBet's accountants for the 2017 financial year showed the company spent a whopping $99 million on marketing expenses in the year to June, up from about $80 million in the previous year,

The 2017 figuring included CrownBet's big wagering partnership with the AFL, sponsorship of sports such as Supercars, horse racing advertising and spots on live television sports and events throughout the year.

CrownBet broke even before tax, depreciation and amortisation in 2017, with gross revenue of about $1.5 billion and wagering revenue of $224 million, up from $157 million in the previous year and halved its pre-tax loss from $24 million to $12.7 million.

(The Australian Financial Review)