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Tabcorp pull the pin on a lemon named SunBets

In this week's least surprising news in the wagering industry, Tabcorp have decided to stop the haemorrhaging and get out of the lemon that is SunBets. For a firm to willingly pay around £40m to get out a deal, it must have an absolute shocker.

Let's examine a few of the reasons why:

1 - joint ventures between media companies and betting firms NEVER work.

Both sides think it's a licence to print money, and the deals are usually handled by people with limited knowledge of how the other business operates. In my time at Betfair, the powers at be signed two of these deals, with MSN and Yahoo. Does anyone remember those wonderful partnerships? Those from the betting firm think every reader of the site will sign up and spend lots of money, while those from the media operation are just as gullible, thinking their readers just want to piss money away with any new brand they point them at. Unrealistic expectations puts stars in the eyes on both sides and the contract becomes a disaster.

2 - The Sun is a toxic brand

It might work well with the white van man brigade (who probably prefer to do business in cash) but to many others, including anyone who supports one of England's most prestigious football clubs, they won't touch it with a barge pole. Losing a big chunk of your available market before you start isn't ideal.

3 - Tabcorp doesn't understand online in Australia, let alone abroad

Tabcorp are an enormous Australian wagering operator, based on their retail monopoly of every state in Australia bar one. They have been blown out of the water online in Australia by the international competition, changing the name of their fixed-odds wagering arm from TAB Sportsbet to because the Paddy Power-owned Sportsbet destroyed their market share and brand awareness. They tried another brand, Luxbet, to compete online with the very products Sportsbet, Bet365 and others led with - namely tote derivatives on horse racing. But that was a white elephant as well.

Tabcorp continually push for government help with blocking international competition (e.g. Pinnacle closing all Australian accts) and taxing their online rivals out of business (e.g. William Hill Australia selling up and states introducing Point Of Consumption tax to hit the online firms). It works a treat for them in Australia but it puts them at a massive disadvantage if they want to compete elsewhere.

4 - Clueless management

Two prime examples.

Piegate. A former insider told me 'a lot of us raised serious reservations about the ethics of doing this, is an extremely bad look for the industry. Effectively condoning spot-fixing'. A really dumb idea with a Gambling Commission who were cracking down on reckless promotions and the integrity of sport.

Barking up the wrong tree. A former colleague was delighted to get out of there. I can't remember his exact words were but they were something like "You've got a broken down Mercedes and the board are worrying about the hood ornament!".

So you have a News Ltd firm willing to push the envelope further than it should be, and the traditionally ultra-conservative Tabcorp side not prepared to take a good hard look at themselves and understand why they were miles off the pace.

Complete delusion about what their problems were and how to fix them. The Tabcorp name is worthless to UK punters, it holds no value at all. So you give away all the free bets you can to the white van men, and then you're left with the pros who pick you off anytime you go top price or best terms.

One has to wonder just how bad it was at SunBets for Tabcorp to have to save face by pulling the pin.

It is incredibly hard to build loyalty online. Those who are loyal lose constantly and every firm will pay a premium to get their hands on them. So much so that the firm has to keep shelling out on bonuses to keep those 'loyal' punters. And without the economy of scale of a massive customer base, that squeezes firms very tightly.

Gaming partnerships do work, the product is largely the same, the margins are set and you don't have the dilemma of dealing with customers who are smarter than the odds compilers. The price of running a bingo or casino site is nowhere near as exorbitant. The Sun name in gaming will no doubt continue but you can guarantee the wagering arm will forever be a lemon, like any media company joint venture.

ADDENDUM: A couple of comments have mentioned the likes of Sporting Life and SkyBet, which is a highly successful partnership. With similar ownership interests, they can exclude all their other advertisers and reap the rewards - something the Sun wasn't prepared to do. And the integration of SkyBet into SportingLife website is thorough, odds are linked into virtually every article and feature. Did the Sun manage to monetise any of their traffic?

I should have clarified that focused content, tailor-made for sports fans who love a bet should work every time if the sites are popular enough in the first place. It's the generic media platforms covering all and sundry that are doomed to fail.


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