A weak full-year profit and a forecast of "another challenging year" has come from Australian gaming company Tabcorp Holdings.
The company reported a 3.8 per cent fall in full-year profit, but new CEO Elmer Funke Kupper outlined a spending programme for the group of AU$250m a year.
It will also spend a maximum of $300m on Star City Casino, provided that acceptable arrangements with the gambling authorities in New South Wales can be agreed.
The company was rising to the challenge from James Packer’s Crown Gaming, which had just announced a $320m investment programme for Crown and the Western Australian Burswood Casinos.
Tabcorp’s investment in the Star City casino in Sydney - the only casino in New South Wales - depends upon the casino licence renewal, which is now up for renegotiation.
All of this comes against a background where rumour persists that a second casino would be permitted in New South Wales - currently home to half of Australia’s 200,000 poker machines, but with only one of the 13 casino licences.
The favoured locations for a new casino licence appear to be either Tweed Heads or the Hunter Valley.
Tabcorp has held a 99-year licence for Star City since 1994 but its 12-year exclusivity period expires on September 12. "A second casino close to Sydney would not help anybody," said Funke Kupper. "I would like to think that just like Victoria, it’s a one-casino state and that’s what we’re assuming right now but we are not the government."
Tabcorp made a $515.6m profit in the year which Funke Kupper said was "unacceptable" in face of a market expectation of around $530m.
The decreased profit was blamed on a lower win rate from the international rebate business of $28m and $37.1m restructuring costs.
Kupper said that 2008 earnings were expected to be in line with 2007. The biggest division, casinos, saw a 5.1 per cent drop in earnings to $386.2m with the smoking ban in Queensland the main culprit.
