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Tabcorp and Tatts Experience Heavy Losses With their Poker Machines

On April 12th, 2008, Tabcorp and Tatts experience a bad trading day, with about $12 billion lost, as they shed off more than 20% after returning to dealing following the loss of their monopoly on the Victorian Poker Market.

Tabcorp Chief Executive Officer Elmer Funke Kupper is widely expected to hold a series of emergency meeting with senior officials of the company to make a plan which will steer the company into a new direction. Some gambling analysts even said that the two gaming organizations should merge to cut down on the expenses and make a more cost efficient organization to take advantage of the growing opportunities after the 2012 gaming market.

But the investors from the two companies sold almost all of the stocks after being frigthened by the potential loss of profits and the specter of a prolonged legal standoff with the State Government over its decision not to pay the government a total of $600 million in compensation. The day after the decision to put an end to duopoly of the two companies over 27,500 poker machjines from 2012, the two gaming organizations experienced their worst trading day on the stock exchange.

During heavy trading, Tabcorp slid down twenty-one percent to $11.33 and Tatts slid down twenty-seven percent to $2.70-with stocks of both companies now near the analyst's revise twelve month target price. The market value of Tabcorp slide down from $7.5 billion to just $6 billion, while Tatts lost around $1.3 billion.

Both gaming organizations is expected to modify their business models to expand the reach of their sports betting and casino interests while trying to maximize revenues from their poker machines over the next four years. Sources from Tabcorp commented that the organization is still weighing its options and the company will release their future plans on bidding for keno and poker licenses on 2012 as soon as possible.

But CommSec gambling analyst Craig Shepherd is optimistic that the sell down of both the companies' shares could give a good opportunity for market investors to get some stocks as the stock market settles down.

 

Tuesday, May 06 , 2008
Brian Letendre