The NSW government's move to ban greyhound racing could reduce gaming giant Tabcorp's 2017 earnings by up to five per cent, but the company may make that up as punters switch to other forms of racing.
Tabcorp has said the NSW ban, to be implemented from July 1, 2017, would affect five per cent of the group's wagering turnover, and it expects a significant substitution to occur to other wagering such as thoroughbred racing, harness racing, sports betting and animated racing.
Morningstar analyst Ravi Reddy says the NSW ban places about $650 million of Tabcorp's wagering turnover at risk, or about $80 million in revenue and $15 million in earnings.
"In a worst case scenario, the development could reduce our fiscal 2017 EBITDA (earnings before interest, tax, depreciation and amortisation) forecast by up to five per cent," Mr Reddy said in a research note.
But he agreed with Tabcorp's view that a significant level of substitution will occur.
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Nonetheless, Tabcorp had lost some of the "safe haven" premium built into its share price.
The NSW government's ban follows Tabcorp's trading update in May which showed softness in the wagering division.
There was also a risk that other states and territories may follow the NSW government's ban.
Tabcorp shares were down four cents at $4.35 at 1125 AEST on Friday, after falling 4.4 per cent on Thursday.
