Australian gaming operator Tabcorp has confirmed that it is pulling the plug on its Sun Bets online gaming venture in the United Kingdom against a £39.5m exit payment to News UK.
The Sun Bets gaming brand was launched in 2016 but failed to perform as expected, with the business placed under review by Tabcorp in late 2017.
Tabcorp announced in June that it was in discussions with News UK regarding an exit from the Sun Bets partnership after the brand posted a AUD$22.5m EBITDA loss for the half-year period ended December 31st.
Commenting on the decision to exit the business, Tabcorp managing director David Attenborough said: "The performance of Sun Bets has been below expectations and we do not expect a material improvement over the next 18 months. As such, we have reached an agreement with News UK to exit the agreement.
"While we didn’t get it right, we have taken valuable learnings from the Sun Bets start-up process and operations which will inform our approach across our portfolio," he added. "I would like to acknowledge the Sun Bets team for their efforts in building the business from start-up phase."
In addition to the £39.5m (approx. AUD$71.0m) exit payment, Tabcorp expects to incur a further $20.0m expense as a significant item in its financial statements for the year ended June 30th, 2018. It also expects to incur up to a further $10.0m in costs related to the exit in its 2019 financial year.
Shares in Tabcorp Holdings Ltd. (ASX:TAB) closed in Sydney Friday up 1.07 per cent at AUD$4.71 per share.