Tabcorp hit hard by horse flu

The head of betting firm Tabcorp Holdings Ltd says horse flu has carved a $240 million chunk out of its turnover so far and that the amount will be double when the problem ends.

The chief executive of the online gaming and racing group, Elmer Funke Kupper, said the overall cost to pre-tax profit would be $30 million when equine influenza had run its course.

"We are down $240 million in turnover compared to last year, and when you translate that into profits by the end of horse flu, when it's back to normal, it's about half a billion in turnover, which translates into about $30 million before tax," Mr Funke Kupper told ABC television.

However, he said despite this, the Australian gambling and entertainment group was unlikely to sue for damages any time soon.

Mr Funke Kupper said any legal action would be investigated when the opportunity arose.

"We're not thinking about that right now," he said.

"Our focus is one hundred per cent on keeping the show going, which is in the interest of our shareholders and the industry."

Tabcorp is grappling with the losses caused by equine influenza just nine days before Melbourne Cup day swings into action on November 6, the largest day in Australia's racing calendar, which was initially threatened to be cancelled due to the virus.

The virus plagued race tracks in Queensland and NSW from August onwards, with Sydney's Randwick Racecourse placed under quarantine.

Investors knocked $335.95 million from the market value of Tabcorp after the NSW government said the discovery would spell the death knell for this year's Sydney Spring Racing Carnival.

Then, managing director of Tabcorp's wagering division, Robert Nason, said the cancellation of the Sydney Spring Carnival would have a severe effect on the industry.

However, authorities have now given the all clear for racing to resume in Sydney on December 1.

Mr Funke Kupper said there were some positives to come out of the equine influenza outbreak.

The racing industry was in need of reform because it was underperforming.

"It's the underperforming racing industry in Australia.

"One of the good things about equine influenza is that I think everybody right from the premier down to the clubs realises the importance of this industry for the state and the national economy," he said.

"So some of the reforms that might have taken four or five years in the political environment might now only take one or two years."

In casinos, Mr Funke Kupper said the company had under invested by "quite a material amount", despite being run extremely profitability.

"Half our casino business is Star City in Sydney and once we have the licence discussion with the government out of the way, assuming we get the right outcome, we'll invest $300 million in Star City to make that iconic property within Sydney."

As well as having wagering and poker machine operations, Tabcorp operates four hotel and casino complexes: Sydney's Star City Casino, Conrad Jupiters on the Gold Coast, Conrad Treasury in Brisbane and Jupiters Townsville.

For the 2006-07 year, Tabcorp booked a net profit of $450.4 million, down 17 per cent on the previous year as expenses soared, the company lost to high-rollers and smoking bans continued to deter other gamblers.

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