Tabcorp Holdings Limited (TAH) Earnings Call Transcript & Summary

Well, good morning and thank you so much for joining us today for Tabcorp's investor session. Before we start the formal presentation, I would like to acknowledge the traditional custodians of the land on which we meet today, the Gadigal people of the Eora Nation. I also acknowledge the traditional custodians of the various lands on which our business and assets operate. I would like to pay my respects to their elders, past, present and emerging, and I extend that respect to other Aboriginal and Torres Strait Islander people joining us today in person and on the line. This land was, is and always will be theirs, and I'm grateful for the opportunity to sharing it. My name is Jaimee Rogers, and I'm part of Tabcorp's media team. I work on Sky Racing and on the airways through the Big Sports Breakfast. Well, this is our first formal investor presentation since our demerger, and the new management team are looking forward to talking to you about our business and strategy. So presenting today is our CEO and Managing Director, Adam Rytenskild; our CFO Dan Renshaw; and our new Chief Customer Officer, Jenni Barnett. We'll be sharing with you today a demo of Phase 1 of our new app, which Jack Simpson and Pat Smith from our tech team will take you through. And after the presentation, we will open up the floor to questions. Now we're also joined today by our new executive leadership team. They're seated along the front row here, and they will be available to answer any of your questions. So they're looking forward to meeting you all, and you can chat to them about anything that you want. We've got a formal/informal lunch to stand up there just after the presentation. So without further ado, I would like to bring up to the stage, Adam.

Thank you. Thanks, Jaimee. Well, it's fantastic to be here. We've had train delays. We've had a truck stuck in the tunnel. We've got protests in the cities, and I think it's teachers and the like today, and yet we've got a full room, and we've got as many on Webex' webcast as well. So welcome. I'm really thrilled to be here. We're 28 days in. We've had a pretty fun few weeks. We've kicked a few goals. But one of the priorities that we said early pre-demerger is wanted to get in front of you, wanted to speak to you and wanted to give you an opportunity to talk to us as well. So thanks for being here. We've got what we think will be a fantastic couple of hours planned, and we want it to be -- when it comes to the questions later and when it comes to having a sandwich and meeting some of the team, we want it to be interactive and to be meaningful for you. There's a number of things we're going to cover. We've talked about being different, and we will be different. We think it's important for the company. We want to grow the organization, maximize the competitiveness of the company. And to do that, we need to be different. You can see things are starting to change, but it's going to take time. I'm committed to us changing. We're going to talk a little bit about that. There's areas we need to improve, totally acknowledge that and understand it. But we have some fantastic foundations to grow, and we're going to take you through those foundations and make sure you understand those. And then importantly, where we're going, where we're headed. I want to take you through our strategy to transform and grow the company and what are our immediate priorities so that you can follow us as we execute and understand what we're shooting for, and you can measure us along the way. And as Jaimee said, there's going to be an opportunity to ask questions, so please don't hesitate asking questions later on. Now we've got a new purpose. We're raising the game, and it's more than just words on a page. For us, it's about growth, it's about improving our competitiveness as a business and as a company and it's about financial strength. And they are the topics we're going to take you through today. Now internally, I view us as Australia's biggest start-up. That's something we've been talking about internally. And that's a mindset shift, a mindset change for us. We're Australia's biggest start-up with a fantastic foundation for growth. I'm going to share that with you today. Now to leverage that opportunity, we really do need to be different. We need to be more agile, more innovative. And we've got to have more heart and courage in changing this company in the way that I think we need to change it for us to grow and to realize the opportunity that we've always had. Now this needs to be more the torque and creating change, it doesn't just happen with a snap of the fingers. But when we do create change, it's going to be meaningful and powerful for us as an organization. And as I said, ultimately, I want us to be measured against what we deliver. We're going to measure ourselves, obviously. We're going to be really clear about our objectives and aspirations, but we want you to measure us too. I think that's important, and it's important you track us along the way. It's early days. But as I said, in the last few weeks, you've already seen a different approach and a different attitude starting to emerge from us as a company. And that generates momentum, generates positive momentum not just for me, not just from our team and my Board but everyone throughout the organization as we start to shift our thinking. Now change starts at the top, and we've got a new Board, a renewed Board. I've got strong alignment with them. We've got a really good early rhythm that started before the demerger, and we've hit the ground running. They're a very commercial Board, and they've got hands-on experience running businesses. So we have real conversations about customer, opportunities and also some of the challenges and how we're going to tackle them together. They've got a diverse skill set, including media technology and digital. And these are areas that are important for us today, but they're also important for the way that we're going to grow the company going forward. Bruce Akhurst is our Chair, and Bruce has led some of Australia's biggest technology and media companies in his exec career. He was CEO of Sensis, Director and Chair of Foxtel and Group General Counsel at Telstra. We're really excited to have Karen Stocks on the Board. Karen is an exec at Google. She's based in Silicon Valley. And previously, she was MD of Twitter Australia. This is very different experience for Tabcorp as a Board, and she's already creating a different conversation for us. Brett Chenoweth is one of Australia's leading media execs, having held key roles at APN Media, ninemsn and Village Roadshow. And he's currently Chairman of Madman Entertainment and sits on the Board of Vodafone New Zealand. Janette Kendall brings extensive marketing experience and customer experience, including previous exec roles with Galaxy Entertainment and Crown; and on Boards, including Nine Entertainment and Australia VenueCo. Now this is a business we're turning around, frankly, make no bones about that. And Raelene Murphy is a leader in this field. She was previously CEO of Delta Group and KordaMentha's 333 Management Practice. It's also important to retain knowledge and experience, and Justin Milne remains on the Board. Justin's a former Chairman of the ABC, NetComm Wireles and MYOB. And I know Justin's really enjoying the new rhythm and energy of the new Tabcorp Board. And David Gallup's a highly credentialed sports administrator. He is a long-standing CEO of the NRL and FFA, and he understands how Wagering & Media works in these environments. So this is a new Board with invaluable digital technology, media and business experience. And they've got a lot of energy, a lot of determination to grow and real strong align with me and the management team. And we've got a revitalized exec team with a blend of experience with new capabilities that Tabcorp hasn't seen before. We're now a much more focused team. Previously, functions such as technology, corporate affairs, strategy, they all sat in the corporate center and didn't have clear focuses on any of our businesses. Our culture and total alignment around our customers, I think will be the biggest change for our company when we look back in a few years' time. Ultimately, I think it's our culture and our approach to customer that is going to feed through everything we do that is going to make a real difference. This is a different exec. Tabcorp hasn't had a Chief Customer Officer before. We're going to focus more on customers, and that's why Jenni Barnett joined us, and she's going to talk to you a bit later. Jenni was previously exec director at Telstra Digital and held senior roles at the Commonwealth Bank in digital and in consumer. Alan Sharvin has come back to Tabcorp. He's got some unfinished business, and he's come back as our CIO. His career spans organizations that include Sportsbet, Amazon, Paddy Power Betfair, and will talk about technology a bit later. But Alan is known as a contemporary leader that attracts talent, and that's important for our technology function and our success in the future. Our tech gets mentioned a lot from external parties, including our competitors. And we do have some legacy systems, but I can tell you there's absolute opportunity in the way we work and the way we combine technology with product, marketing and customer and the way it can make a difference for what we deliver for customers. Angus Tiet has joined as our Chief Strategy Officer. Angus has spent his career growing digital organizations and has an immense understanding of digital gaming across multiple markets. He's been 10 years with Aristocrat, and he's been a key part of their growth journey. The combination of Jenni, Angus and Alan is very digital, and they've got core -- they've got key capability that's new for us that's going to be really important for us. But it's a combination that's going to be great, and we're already seeing that pay dividends even though we're only a few weeks in. Tom Callachor has assembled a crack team in corporate affairs, and we're determined to be proactive. And you've already seen some of that in the last few weeks. Dan Renshaw is our CFO. Dan understands all of our businesses, and like me, is passionate about transforming our company. And he brings a lens to performance that is totally connected with shareholder value. Rebecca Riant and Paul Carew both have a deep understanding of our businesses, bring great commercial expertise with a passion for turning strategy into really strong execution and transformed operations. Sharon Broadly is focused on our culture and transforming us into a simpler, nimbler and more passionate organization. And John Fitzgerald, who hasn't quite started with us yet even though he's here today, he's a seasoned executive with strong experience in regulated markets. He's also a customer, and he's got a very pragmatic view of risk, which I think is important for us as a betting organization, a gambling entertainment organization. So that's our team, but most importantly, all of us, every one of us, including me, we're here to change the company and transform the company to make us more competitive and to grow. We're not here for BAU. We're not here just to keep the wheels turning. I've talked a little bit about leveling playing field for a while now. Structural reform is essential to support a well-funded and flourishing industry. Our Aussie Fair Play campaign is the type of proactive approach you can expect from us. Leveling the playing field is an absolute must. Level fees and taxes across all operators will help us be more competitive and create a simpler, more customer-focused business. And Queensland is a great example. We've now got an example of what this means. Not only do our legacy racing industry fees fall away once this is implemented, but the agreements -- the operational agreements we have with Racing Queensland also fall away. So we've got less obligations, and that will make us simpler and enable us to focus more on customers, some of the things we're going to talk to you about today. In New South Wales, the point of consumption tax going to 15%, and Tabcorp receives transition payments for 18 months, which is great. But most importantly, the government has put on the agenda a review of the tax and industry funding regime. And I also hear it on good authority that the ACT is looking to move to 20% in their budget coming in August. So we look forward to that. So this is a good step forward, but there's more to do. As I said today, we have strong assets, and they give us a strong foundation for growth. We've got a unique betting ecosystem that's got scale. The market has grown and we've now got around 25% of the digital market, digital share and around 40% when you include the cash betting in the venues. For the first time, our strategy focuses all of Tabcorp, every ounce of Tabcorp, on increasing digital market share over the next few years. Our extensive customer base is high quality and is valuable. 60% are omnichannel customers, which means they bet with TAB digitally and in venues. In terms of spend, these customers are around 2x more valuable than our digital-only customers, and we plan to win and retain more of these high-quality customers. Put simply, they bet with us more often, they're stickier and they churn less. Our customers love the social environment in pubs and clubs. Our venues are a vibrant destination for betting, both with cash and digitally. In April this year, we surveyed 2,000 punters across Australia. They told us that TAB is Australia's most trusted betting brand. 42% rated TAB as #1 most trusted. And people have flocked back to pubs and clubs since COVID. The social environment, I can tell you, is more vibrant than ever. And it's a young audience. 63% of 18- to 34-year-old punters preferred to bet socially. Our research also reiterates the value customers place on Sky Racing. 77% of punters explicitly said they value racing and sport vision as part of their betting experience. And 36% of punters prefer to watch Sky Racing in a venue. They love being social. Combining social experiences and vision is something we're determined to be better at and to maximize for TAB. Our betting ecosystem provides us with strength. To create growth, we need to leverage these better. Our media is a key driver of TAB's betting experience and turnover. However, it's also important across the market and provides us with a positive B2B revenue stream. We provide the best aggregated content, effectively a 24/7 betting channel that's totally unique. And now this is attractive to punters and hence, valuable to rights holders because it drives turnover. And you can see the various distribution channels and revenue models for our Media & International business. We've changed the mix of revenue deliberately in this business over recent years that's more digital, and we're less reliant on venue fees, fees at pubs and clubs pay. Our portfolio of international rights are distributed to operators in 65 countries. Now this means that these pictures, this content, this vision is exposed to more than 80% of the world's legal betting market. That's huge. This includes Sky Racing World in the U.S. with distributors to operators such as BetMGM, Caesars and TVG. It's a good business today, and we're thinking about how we can grow this more effectively going forward. We also own 100% of PGI, which is a global tote hub, providing access for international premium customers into tote pools. Another B2B revenue stream comes via our Gaming Services business. Our monitoring business performs a key role for government. This is stable, contracted, long-term revenue. We monitor 120,000 machines daily across thousands of venues throughout Australia, and our capability in this area is incredibly strong. We have an extensive Gaming Services footprint that not only provides us with high-quality revenue, but more importantly, gives us exposure to the increasingly important integrity services market. We think there's an opportunity for us to grow in this space. Now we're a gambling entertainment business. It's -- we absolutely have to look after our customers and deliver products safely. ESG capability is critical to long-term sustainability of our business and the market, and we'll continue to prioritize it and invest in it. We've got a good foundation in ESG today, as you can see, and we've received recognition from multiple sources already because of this. A key priority for me in our ESG agenda is customer care. This isn't just a tick-the-box exercise. It's very personal to me. And if our product is not delivered safely, it can cause disruption in people's lives, and that's not something we want to happen. I want us to deliver products safely and for customers to enjoy racing and sport in a positive way when they bet. Our customers are absolutely central to the company going forward. They're central to our strategy. You're going to hear more and more about that today and customer care essential to that. We take it really seriously. Now as I said, I see us as Australia's largest start-up. That's fantastic. So let's talk about where we're headed. Now ultimately, our strategy is about maximizing our competitiveness and growing. It's really that simple. It all comes back to that. I feel that we've had 2 hands tied behind our back, both hands tied behind our back: one externally with the structural issues that we're now on the front foot and working through; and the other internally because we've been a bit risk-averse, a bit conservative, and our operating model wasn't set up for us to succeed in a very competitive market, probably the most competitive market. So it's fantastic to be loosening the shackles. We need to disrupt ourselves, and we need to create a culture and operating model that is relentless around our customers to be more competitive to move faster, and ultimately, be more profitable. And as I said, there's 3 areas we want to talk about in that context today. The first being growth. Now growth's a mindset, and we plan to grow. I spoke to our foundations, and we have an opportunity to better combine the core elements of our betting ecosystem and to drive our assets harder. For example, in our media -- in media, our strategy will be focused on differentiated content and information to enhance the TAB customer experience whilst also remaining active in wholesale distribution. This will drive digital growth across all of our channels and digital market share. And this growth is going to be more valuable when we level the playing field. Jenni is going to speak in a moment and give more detail on our strategy around customer and digital growth. Enabling our competitiveness by leveling the playing field. It's about competitiveness at the end of the day. This is the answer for a flourishing industry. It's absolutely right for racing, it's right for government, that's right for pubs and clubs, and it's ultimately right for punters too. I'm absolutely confident that when we look back in 5 years, we'll see that's the case. Other markets globally that face similar challenges are going to see that, too, and are already starting to recognize what we've been doing. Queensland know that, and New South Wales have taken a step in that direction, too. Third is our commitment to financial discipline. We regard our capital as your capital. I respect these are your dollars, and it means we're not going to do anything that does not make sense commercially. We'll be disciplined, including on licenses. We're committed to creating cost efficiency throughout the organization, and we've already kicked off a rigorous program to deliver that. Our strong execution in these areas will transform the company over the next few years. What today is about, this is the start of that journey, and I want you on that journey with us. Now I'm now thrilled to hand over to Jenni Barnett, our Chief Customer Officer, to talk to you more about how we're going to bring this to life.

Well, thanks, Adam, and good morning, everyone. I've been here about 8 weeks now and have certainly hit the ground running. Some things are crystal clear to me already even this early in, and I'm really excited about all the opportunities for this company moving forward. So the main thing that has stood out to me is the depth and breadth of the channels and the assets that we have. We have more touch points and eyeballs than any of our competitors. If you couple this with our unique aggregated content position, it's pretty powerful. We need to sweat what we've got and do more with what we've got. There's enormous potential. So our customer growth strategy is going to unlock this potential, and we're going to create an integrated, easy and relevant experience for our customers wherever and whenever they choose to engage with us, be it at the home, at a destination or digitally. So this unique ecosystem that you can see on the screen there is the core of our customer strategy, utilizing media to drive our wagering business and connect the customer experience across retail and digital. This is a combination others just simply do not have. We also need to get back to basics and first principles. Simply put, we need more customers doing more things more often. So we're going to sharpen our focus on acquisition, conversion and retention of customers, of course, in a very, very responsible way. So customer care remains critical for us and top of mind moving forward. Adam spoke to some of the stats a bit earlier. We know the power of content to drive preference and action, and we know the value of omnichannel customers. Our connected channel strategy across Wagering & Media and all our touch points powered by data will deliver a sticky and more engaged customers. So how are we going to do this? So firstly, we need to win in digital. It's very obvious, I know, and we've been slow for a number of reasons. However, we can absolutely catch up and accelerate our impact on the things that matter. This means fixing our digital journeys that are broken. For example, if we take our sign-up journey, only 6 in 10 customers get through it. The rest fall out. So even just moving this to 8 out of 10, it means we convert more customers that are already coming to us. And you can start to imagine the impact of this. If we take this approach across all the key customer journeys and experiences, the sum of the parts will drive impact. I really did want to emphasize this point, and I'll be asking the team to become quite obsessive about it as it's a core part of our customer growth strategy. We have more customers coming to us. We just need to convert more of them. In addition, the answer to customer issues and pain points with our digital journeys can't be contact the contact center for everything. This drives cost and poor customer experience. So when I talk about doing more with what we've got, these examples go to the heart of it. This is the sort of data that we need to utilize as input to make choices about what we're going to focus on in the future to create our brilliant customer experiences. We're also going to rebalance our marketing spend and get sharper on ROI. Our digital spend is 25% of our total marketing spend. Most companies would be closer to 40% or 50%. So we want more quality demand generation and less awareness. We're also going to use the reach we have on course and in our venues to shift share from our competitors. So as people head back to their local or the race track, we have unique propositions for customers in our venues. For example, Venue Mode which provides location-based offers, no one else does that. We just need to grow that, and we need to extract the value. Secondly, we simply need to move faster. Alan, Angus and myself have seen what great looks like in terms of agile operating rhythms, and we believe that we can unlock a lot of value just by looking at our operating rhythms and our ways of working. This practically means bringing product, design and tech teams together in cross-functional teams aligned to goals, fast quality discovery and customer validation and an operating rhythm to drive pace. Driving a continuous delivery approach and mindset will unlock a lot for us. It pains us to say that providing new features and values to customers has been slow, very slow. The new app will be our first major customer update in over 2 years. It will take a little bit of time to unpick this. However, our aspiration will be to move to monthly releases and customer drops and then fortnightly. And we're absolutely aligned on this as a management team that we simply must get here -- get there. The prime objective, of course, is to deliver speed to value for our customers. We want to build, measure, learn and innovate as you've seen any digitally led company. We're also going to start with the business and customer problems to solve. We have lots of insight. We just don't utilize it as effectively as we could. And this is a strong signal of customer-led organizations in my experience. I did want to reiterate this point as it means we also avoid spending time and money on the things that don't matter or someone's pet project, and I'm sure we've all seen those before. And we need to get on the front foot being organized with a valid forward-thinking product and customer road map is a must. More proactive, less reactive, and we need to chart our own course. Thirdly there, how are we going to focus on our differentiation? So customer segments, states, products, customer needs, they're not the same across all those dimensions. So we will start to look at our marketing strategies at a more local level to get sharp on what matters and where it matters to create value for our customers and our shareholders. We will also need to double down on our analytics and data capabilities to drive value for the organization and our customers. And Sky and our Media business has been called out several times today already. It's a unique aggregated content asset and content, I believe, will be a key way for us to differentiate the TAB customer experience over others moving forward. And finally, we all know there's a war on talent, and we need to double down quickly in the areas that you can see on the screen there. So I hope that gives you a very good view of my initial observations 8 weeks in and what we need to go after. To go back to where I started, we have an enormous opportunity as a company. We also need to remember, though, that we already have a strong $1 billion digital business, and that's without any of the things that I just talked through. So let's move on to technology. Companies like ours are, of course, often asked about technology. Alan Sharvin, give everyone a wave, Alan. I think you'd be popular at lunch probably as our CIO. Alan is 10 weeks in, and he's also hit the ground running, and it's all ready to -- amazing to work with him as a contemporary CIO. Our tech framework is going to focus on 3 pillars, and it's already been put into motion by Alan. People, very importantly, of course, focusing on evolving our culture and technology. We have some new tech leaders coming in who understand contemporary architecture and come from digital businesses. And this, I think, is really exciting for us. Process. We need a high-quality pipeline of initiatives much faster, and we need to optimize how we work, so accelerating throughput with automation, modern engineering practices and digitization where it makes sense. And our technology approach needs to be aligned to business value and customer needs, high impact aligned to strategy, less shiny new toys. Uptime and technology resistant -- sorry, resilience, operational excellence remain nonnegotiable. It's critical for a business like ours, which goes without saying. So our new app, Phase 1.0, is an example about how we'll create and build things differently into the future. It's built on Google Flutter technology, which means we build once and deploy to many, ultimately delivering flexibility and speed to value across all our channels, be it retail or mobile. Our new digital platform sets us up very well to accelerate customer impact into the future. So I just wanted to share with you the approach that we're taking to the app. So with digital, as most of you would know, it's not a case of set and forget. You win in digital by constant iteration, optimization and staying ahead of the curve and anticipating customer needs, and driving personalized experience will be key for us moving forward. So Phase 1 is primarily about our replatform. Yes, the app will have a fresh look and feel, and some of our experiences will be uplifted. We'll fix some core customer pain points, which Jack and Paddy will show shortly in the demo, which means it's going to be easier for our customers to find and do the things they love to do the most. But importantly, it does allow us to move faster into the future, and it's a much more efficient technology platform. Also, quite frankly, means we'll be able to attract critical tech talent, people who want to ship things to customers far more frequently than 2 years and also work with contemporary tech. Phase 2, we're going to close the gap on some of the product gaps that we know of. This is not happening after Phase 1. It's already in place, so it's happening in parallel, so particularly around our multi-experience and our social betting experiences. Phase 3 will be around content and data integration across our channel and brands. And then Phase 4, we need to get on the front foot, as I said, chart our own course into the future and anticipate customer needs. So we're going to bring the new app to life in a short video, and then I'm going to ask Jack and Paddy, 2 of our design and product leaders, to take you through the new app journeys actually with working software. [Presentation]

Hi, everyone. Welcome to the future. I'm Jack. This is Paddy. And we're just 2 of the product team members that have been working over the last 12 months to make it easier to bet with the TAB. Now we admit, historically, it's been a little bit tough to bet with us, particularly digital. Now for Paddy and I, yes, we've been working on this project but also our customers. We know every dead end, we know every clunky journey, and we're working hard to solve that very, very quickly for our customers so we can reshape the future for the TAB. The video speaks to speed, simplicity and ease of use. And that's what's at the heart of what you're about to see today. We're going to throw away all the talk. And the next phase of this conversation is going to be opening up the working software and giving you a real-life demonstration of working software that our teams are working on daily, deploying into our preproduction environments very, very quickly as we ramp up towards launch. Before we flip it open, and I'm really excited to show it to you, a couple of little things you need to be aware of. This is a better. We're going to step you through the journeys that matter today, the things that matter to our customers and the things that matter to us. It's in preproduction. So the races that you see are not going to be real. The data may be a little bit clunky at times, but it's there. That's the world of better, and that's what we're opening up for you today. As we go through our journeys, I'll also introduce Glenn Munsie, one of our senior Sky Racing analysts. We're going to behave like punters today, and we're going to do a bit of punting. Glenn's going to come in, and he's going to give us some tips like you'll see in time with the interaction between Sky and TAB. So we'll bring a bit of liveliness into this conversation. Paddy, you ready to open up?

Let's go.

Fantastic. Let's take a look. [Presentation]

So we've spoken to you about ease and simplicity. Hopefully, you see today that this new area for digital with the TAB is going to be great for punters, great for ourselves, simple, easy, and most importantly, fast, okay? That's all we've got for the demonstration today. I'm just going to close on a little bit of customer sentiment, and this is very, very important for us. So we've been testing this from early stages for over a year. The key messages from what you see on the slide today are: one, our existing customers view it extremely positively across racing and sport, and they'll support it, and that's the first objective. Very, very positive from existing customers. Importantly, when we think about growth, customers that don't bet with us today are more inclined to bet with us based on this new experience. And that's been consistent throughout all the customer testing that we've done. And we're super excited to bring it to market. Thanks very much for having me. I'll turn it back to Adam.

Thank you, guys. We're super excited about the new app, not only because it's going to be a fantastic customer experience, but we've taken a bit of time to pick some of the regulation out of our technology and out of our code. So as the guys, as Jenni mentioned, as Jack mentioned, we're going to be able to get product and updates to customers much quicker. We're going to do it once across every platform, iOS and Android initially. It's going to be a massively improved experience from Android that's c*** at the moment, frankly, for our customers. So this is going to be a game-changer. Everything we're talking to about today is increasing our competitiveness and about growth, ultimately about growth. And you've heard me talk about addressing the inequities in our license and regulatory framework. I've talked about that a few times. I've been talking about it for a number of months. And that's because it's right. And it's important for the industry, and it's really important for us. The graphs here show the margin differential. I'm surprised we've got as much market share as we have given these inequities. This worked when we're a monopoly. We haven't been a monopoly for years. This is the most competitive industry there is in this country, and the market has changed substantially. Our level playing field will also make our business simpler, as I mentioned earlier. We have a range of agreements in place that are unique to TAB. These are time consuming and distracting to manage. I just want us to focus on customers. Our new app is also a step towards greater simplicity, as I said, fewer regulatory approvals required every time we do a major product release, and in many instances, no regulatory approvals required when we do an update, which isn't the case today. And if you didn't pick up there, we've got new product we're building in parallel as well. So it won't just be a matter of launching the new app, we'll be following with some material new products not long after. Now Queensland is a great start for leveling the playing field. It's terrific for them. New South Wales is a good step as well. I'm confident that a level playing field is the right answer nationally. It's a combination of these things. That's why I'm talking about it together. Investing in customer, customer experience and leveling the playing field, that's going to be a game changer for us. Now in terms of sustainability, I want to focus here on the third pillar, our people and our culture. I want us to be relentless around customer, nimble, innovative and courageous and with heart in everything we do. Really importantly, for the first time, everyone in the organization, no matter where you work, they're going to be aligned behind the same goals and metrics. We're going to be shooting for the same thing. Now this is going to take time, but we've got very clear intent, and we're keen to create early momentum. It starts at the top. And I've talked to you about our very engaged and passionate Board, and this passion extends across the team that's here with you today. And before I hand back to Dan, I just want to touch on Gaming Services. We see a fantastic opportunity to reposition this business and to grow it in regulatory services and monitoring. Our business has scale. It's got leading capability. It's got a fantastic track record, and these are important and valuable things when it comes to gambling and gaming. We're a trusted partner sitting between regulators and venues. We deal with millions of data messages to -- every day across more than 4,000 venues and across multiple state regulators. This capability is unique, it's strong and it's valuable. And we're looking to pivot the business to focus more intently on integrity services, and we'll unpack that more for you when we meet with you again in the future. So I'll now hand you over to Dan Renshaw, who's going to take you through the stuff he love, the numbers.

I'll give everyone else a chance as there 2 or 3 more of you want to get [indiscernible] now is the time. Otherwise, you'll distract me while I'm trying to impart such important information. So thanks, Adam, and I'm excited to be here. It's really good to be part of new Tabcorp and a new story. And today, I'm going to focus on 5 key areas. We won't go for long, but there's some good stuff in there. Number one, you've asked for more disclosure around Media & International in particular. And so we're going to show you that on the revenue side today. Secondly, we're going to be providing some more insight and update as to how we are emerging from the impact of the COVID lockdowns. Thirdly, we know that free cash flow is a lens that the market looks at us from. And so we're going to give you the outlook for CapEx for F '23, not just the amount but where we're going to spend it. Fourth, I'll touch a little bit on the balance sheet that we've got that we're really happy about. And number five, we've launched a new OpEx program called Genesis, and we'll provide a bit of detail about how we're thinking about the way we manage OpEx. So firstly, to the new disclosure on Media & International. You can see here on the left-hand side that we've provided you with the disclosure by splitting that part of the business its revenue out going back to FY '19. If you're looking closely, you'll see a real change in FY '21. What happens between FY '20 and FY '21 is that our ownership of PGI goes from 50% to 100% during the period. Another little thing that happens within that time frame is that there's a change in the mix of revenues, particularly in media. We end up with less retail subscription revenue for Sky, and we end up with more digital revenue from Sportsbet and now others. So these are our historical numbers, but they clearly are heavily affected by the COVID-related impacts, as you can see on the right-hand side of the page. The worst thing about this was for you coming into the demerger was that the biggest impact from COVID actually happened in the 6 months leading into the demerger. So it meant that our historical has made it very difficult for everyone to understand what does this look like going forward. So in that sense, FY '23 will be the new base. Here, we're talking a little bit about the recovery we're having from COVID. I'm happy to say that the market conditions have improved for Tabcorp, particularly since that first quarter. In February at our half year results, Adam commented that we were back in retail to around 90% of the pcp as venues were reopening. Happy to say that that's continued through Q3 and Q4. You might be saying, "Oh, it looks like you've ticked up a bit in Q4." The insight on that one is that in the pcp, Victoria went into lockdown. If you remove that one, you're at about 91%. So really similar theme right through since we reopened. You have heard us speak continually that we're a better digital business when retail is open because of all of the features and our omnichannel offering that we have that Jenni spoke to. Happy to say that market share has stabilized and improved since the retail network has reopened. These signs are encouraging across whether it be straight cash digital or whether it be our digital business, and we're hopeful, therefore, that FY '23 will be a new base that we can work off. So that's the first couple of things done. We've got more disclosure, and we've given you an idea of how we're going since COVID impacts have largely left the business. Now I want to talk about our free cash flow CapEx. On this slide, we have provided our pro forma historical CapEx, operating cash flow and cash conversion profile. You can see our history of strong operating cash conversion. And our business will have relatively negative working capital requirements. That's important. It means that when it comes to trying to fund the business, we don't have drag on the cash flow and on the balance sheet because of spikes in working capital. So our cash-generative nature of the business actually then feeds into funding all of those initiatives that Jenni spoke to. So when it comes to CapEx in F '23, here, we're really talking about how much are we going to spend, giving you an idea of that, and where are we going to spend it. I want to say from the outset, though, that our focus will be on disciplined investment. I've been clear about that since the demerger road show commenced. And we'll be investing that capital in areas that create value over the medium to longer term right within the strategy that we discussed with you today. For us, that means we're going to be allocating capital across 3 main buckets, and we'll keep talking about this as we meet with you further on. Firstly, growth in transformation. This includes our investment into customer and digital. And the overriding premise is, of course, that any investment must justify -- must be justified from a value-accretive perspective. You've just heard Adam talk pretty passionately about the need for investment in risk and sustainability. He said it can't just be talk. That means you've got to put dollars towards it. We felt the pain of not having as much strength when it came to sustainability and risk some years ago. You've seen that flow right through the equity market in all different sectors. It's not something you can deal with once and then just move on. We'll continue to invest in it. And you can see here that, that will take up about 10% to 25% depending on the year moving forward. To put some meat on the bones for you, what does that mean, it means we're doing investment in AML, transaction monitoring and compliance reporting. We have high reporting obligations when it comes to regulators and cybersecurity investments. Finally, we've called out a maintenance CapEx bucket as well. These are sensible projects. To give you an idea that this is really important, an area that goes into this bucket is the work that Alan and his team will do in the lead up to Spring Racing Carnival. As you can imagine, Spring Racing Carnival is the absolute peak of bets processed in a very short period of time. As a result, you need to make sure that those systems are going to stand up under that heavier load, and it grows every year. So when you've got these systems carrying $1 billion of bet per year or in spring 100,000 bets per minute, going down during that period is just not an option. And part of what we invest in every year is CapEx to make sure that Alan has the systems ready and willing and able. You can see on the right-hand side that we're committing in F '23 to $150 million -- or up to $150 million. We'll put about 50% of that into category one, growth in transformation; 10% to 25% into risk and sustainability, as I mentioned; and 35% to 40% into that maintenance buckets that I've just touched on. The takeaway from all of that really is that -- the trends in those numbers: more into growth and transformation, less into maintenance, pretty constant investment into risk and sustainability. Just wanted to touch on the balance sheet here. There's not a lot of new information other than the CapEx that I've just mentioned previously on this slide. But we're really happy with the balance sheet we've got. It's the right structure both in the types of debt we've got and how much we've got. It gives us capacity. It gives us flexibility. That's really important over this next 1 to 2 years as there's a lot of things on the agenda. However, made it really clear that we're going to be disciplined with that capacity. Before I get to that, I did just want to outline that there's 2 main tranches of debt. We've got a 3-year $400 million revolving facility and a $550 million 5-year revolving facility. The combination of that flexible balance sheet and the strong cash generation -- generative nature of the business means that we're ready to deploy capital into the areas that are going to drive the accretion. So as I said, $150 million -- up to $150 million is what we're going to spend in FY '23. F '22, we're letting you know we'll be somewhere between $130 million to $140 million. The reason for the slight tick up in F '23 versus F '22 is F '22 is slightly depressed by not spending as much on Gaming Services with venues closed. So it's great on balance sheet and capital discipline that has to be complemented by OpEx discipline, and that's what we will be doing. You've heard from old Tabcorp over the last year or 2 about what we -- was called the 3S program. The businesses that are under new Tabcorp are responsible for 75% of the cost savings that were achieved in that program. We've been the businesses under the most amount of pressure. We've been thinking about our cost for the last year or 2 already. We've got momentum behind that, but we want to move to a more systemic approach to driving a really efficient cost base. Two things I want to mention. We've launched a new cost program called Genesis. That's going to do a few things. It's going to change the way we work. It's going to address and change where we work, the way we build technology, the way we use it once it's deployed, and it's also going to deliver savings from suppliers through procurement. We're really passionate about this. We know this is a big part of driving the earnings outcomes and value accretion for shareholders. For FY '23, I think everybody knows, and you guys know better than anyone, there is a lot of inflationary pressure in the economy. For FY '23, we're looking to contain that cost pressure on an FY '22 pro forma that we'll provide at the August results. We're looking to contain that to 3% to 4% in FY '23. The momentum in FY '23 will build. The Genesis program will deliver stronger benefits in the second half versus the first half. So I expect the cost performance in H2 to be better than H1. I'll now hand you back to Adam to talk through our immediate priorities and wrap up.

So we've outlined our priorities for the next 12 to 24 months. And in setting our strategy and the actions that will flow from that, we're giving you an ability to measure us, and that's very deliberate and it's important. Our key focus is the launch of the new app. We really need to nail that. It's -- I'm really happy with where it's at, and we're on track to do that before Spring Carnival. We're still aiming for that. But we -- it's important for us, and we'll make sure it's ready, and customers are going to love it before we pull the trigger on that. We're incredibly focused and passionate about reinvigorating our culture and working differently. If we don't do that, none of this will be successful. So I'm very serious about that. We're going to continue to advocate for industry reform. And whilst Tabcorp has been risk-averse in the past, we're taking a more proactive approach going forward. So expect to see more of that. We're going to pivot our Gaming Services business more towards integrity services. We think that's aligned with us as an organization and be good for us going forward. And financially, we'll invest to grow in a disciplined way, and we're going to focus on creating shareholder value. We're here today because from the outset, I want you on this journey with us. We see ourselves as a new company, a new organization. We're determined to be different from old Tabcorp, from the Tabcorp of old. And it's early days, but we're building momentum. We've got a new Board, a refreshed exec, early reform and an imminent new betting app. We're raising the game, and we can't wait for the future.

Thank you, Adam. Well, I'd like to bring Jenni and Dan back up to the stage. It is time to open the floor up for some questions. We've got 2 roving mics to go around the floor. So if you have one, prop your hand up, and then if you could please say your name and your organization. Now if you don't want to ask a question in this forum and you want to be in a more relaxed environment, you can wait, and our entire leadership team will be up there over lunch as well. So feel free to ask any of your questions then. So who wants to go first?

It's Melinda Baxter here from Morgan Stanley. Just interested in how you're thinking about generosity and marketing spend. Now that we have seen some of that leveling the playing field, particularly in markets like Queensland, should we expect to, I guess, to meet some of the competition with this aspect of your business?

I mean what we don't want to do is create an offer war. That's not the strategy here. The strategy for generosities will be maximum impact, minimum wastage. We've increased our generosity spend because we've had to. We haven't had the customer experience where it needs to be with the app. So I don't anticipate a huge increase in generosity spend. What I'll be looking for is effectiveness of that generosity spend. And we're also quite under-indexed in certain segments. And so when I talked about that local approach before, we need to get really sharp on the customers that matter and the markets that matter and focus on that. So I'll be looking for efficiency and return on investment rather than a huge increase.

Larry Gandler, Credit Suisse. Well done. Nice to hear you back in live after 2 years of COVID. Really nice to be in front of people. So a few questions. First one is just in terms of sport, I think it's 10% of your revenue. You talked about a big opportunity there. What's the way to close the gap? Is it more markets? Is it focus on multis? What -- how do you close the gap there?

I'll just start and I'll hand it over to the expert. But it's a little bit higher than 10% but not much higher than that. And it is a massive opportunity for us. It has been for some time. It's really -- we've got plenty of markets. I think there's TAB app experience, Jack went through it a little bit today, that's very important. And we've got some product gaps as well. So addressing those will help, but we want to do much better in sport than we do today.

Yes. So it will be a key growth strategy for us. The other thing we know is that if we can bring customers in on sport, we're starting to see in the data there's an absolute transition into racing. And so you get that sort of stickier customer across both. Just to my point before, we are under-indexed in youth. We are under-indexed in sport. We have amazing sporting properties. To my point before, I'm kind of blown away [indiscernible] more than what we've got. So we've got all the vision rights for the U.S. sports. We know that absolutely is core for our younger audience. Again, we're just not leveraging it as well as we could. So we -- that will be a key area of focus for us moving forward, and you'll start to see us also change our marketing mix there. I mean people that are looking at those sports are generally not watching television. So back to my point around more localized smarter marketing strategies for the audiences, that's kind of what we're going to go after in the future.

Okay. Can I follow up with another question? Just in terms of media, it looks like based on the new disclosure, 20%, 25% of sales for media of the wagering business. But in your previous disclosure is more like 30% of contribution, so high-margin business. Just wondering if you could talk to what are the key customers and contracts there and the shape of those. Do they go forever? Do they have lives that we need to be aware of? If you could give us a little color on that media business.

What's your definition of forever, Larry? That's a long time. We don't have any contracts that go forever. Yes. We've got long dated -- we've got -- so the value in our media business, international and locally, is the aggregated content. It's a betting channel, and punters like to bet from one race to the next. That's been the value in it. And the right holders have value in that, too, because their funding comes from turnover with us and with our competitors. So we -- it's the breadth of our rights that is powerful because we're able to pull that together into that unique betting channel. And we've got -- they're all different lengths. They're generally across retail, digital, so retail being the in-venue, pictures we show on the screens, and pubs and clubs, et cetera, digital and then international. They're carved up into those 3 blocks. And we've got good tenure on our rights. Some of them are exclusive and some are nonexclusive digital, which means Victoria, for example, sells their pictures with that not part of Sky to someone else. But we've got all of the content. We package it up in a unique way. That's really powerful. What we're calling out today is we're not using that content enough to drive -- to be a differentiator for TAB. We think we can do more there. And as the playing field is leveled, such as Queensland, that's even more beneficial and more powerful because it generates more margin for us on that turnover. So -- but we've got good rights tenure.

It's David Fabris here from Macquarie. Just a question for Dan just on the Genesis cost-out program. Would you be able to possibly quantify what sort of benefits you're targeting? And then if we think about the old Tabcorp, you guys used to provide a target of OpEx to revenue. Is that something you'd be prepared to talk about?

Yes. So as I said, it's just started, as in we've just launched it. So we're not providing an actual cost-out target. What I'm trying to describe is better than inflation for FY '23. We'll talk more about what those targets look like. You're right, we did use to do an OpEx to revenue. As you can imagine, if we're trying to take market share and with the leveling of the playing field, there's 2 parts to that calculation and to the revenue side, which is the most important. And so you can start with an OpEx to revenue, but you might not be controlling your cost base but still achieve the number and vice versa, right? So I think it's a bit of an interesting one. Maybe an OpEx to VC might be a better one. We're still working through that. But F '24 and F '25, as we get going with Genesis, we'll provide more insight around that, David.

Great. And just a follow-up question just with Gaming Services. We didn't hear too much about that business today, but it's been highly capital-intensive previously. And you've spoken about, I think, a focus on integrity services. Is there going to be a change to the capital intensity of that business at all? Is it going to be back to where it was sort of pre-COVID?

No. Because, Paul, that business has been under review for a little while. Of all of our businesses in Tabcorp, that's one's been impacted the most by COVID, wagering substantially, but they will shut completely for a period of time there. So Paul has done a great job reinventing that business, making it more efficient and changing the model through COVID. So the services we're providing going forward require less capital outlay. So it'll be a less capital-intensive business than it was previously.

Just a little bit more color on that. The up to $150 million of CapEx, you could roughly put into your model and split that $150 million, call it, $115 million and $35 million. And to the point of your question, David, 2/3 probably of the $35 million -- or not quite, almost 2/3, call it 60%, would be on the more capital-intensive part, which actually tells you where Adam is describing the pointing of the business towards integrity services is actually very low capital. It's actually also complemented by low OpEx requirements as well. It doesn't need a lot of people.

It's Matt Ryan from Barrenjoey. So a lot of emphasis on the app to come out by -- that you said, the Spring Racing Carnival. Just curious on how you think we should judge the success of that app. And I guess, under what time frame would you be expecting that, that success would come through?

Okay. Then I'll give it to you. So this is not a one hit -- and Jenni said, this is not a set and forget. The real value in this, hopefully, we did a good enough job describing this to you. One of the challenges we've got -- sorry, we're regulated across 7 jurisdictions. These regulators are rigorous regulators, and we share the same regulators as the casinos. So over time, a lot of our technology -- we talk about old systems and legacy systems or our competitors like to talk about those actually. So our back end -- some of our back end, even if they're old, are fantastically performing systems. Our pari-mutuel system is the oldest, it takes more bets than any other pari-mutuel system anywhere and does it seamlessly. So the opportunity here for us that we saw wasn't just to launch a new app. It was how can we pick some of that regulatory overlay that's been built up, frankly, by our own internal build over time, not of all of which was necessary so that when we launch new products in the future or just when we do customer updates or fix something, we can do it quicker. So that's being achieved from day 1. I just want to explain that because that, to me, is as much value creation as the new app experience itself. So measure this over time over time. Over time, we want to grow digital share. I've said that before, and we didn't. We went backwards, but there's a number of things that have happened since then. The market's very different, and I'm very clear what we're doing and where we want to go. We want to grow digital share over time. But the biggest risk when we launched this thing initially with any new app, it doesn't matter how fantastic it is, that our existing customers, of which there's many, it's a $1 billion business today, we want to make sure they transition well on happily, and they love the new experience. So initially, make sure our existing customers love it, and then we'll grow from there. And then the team will release new products and will build the experience. But ultimately, we want to grow share.

And just with all the regulatory changes going on at the moment, if we get a deal like Queensland where you might actually save money, do we just assume that, that gets reinvested back into the product?

I think there'll be a combination of. So our simpler business means more efficient business. But there's a level of that translation of profit that -- whether it was $30 million based on F '21 in Queensland, there's a level of -- we expect to reinvest some of that back into customer and growth. There's a lot more opportunity for us if we can grow share in that state. So we want to give some back to customers to help make us more competitive and to grow. Ultimately, it's going to result in a more profitable and more sustainable and growing business. We're still working through that, but yes.

Just one last question just on Venue Mode and perhaps just the omnichannel stuff that you were talking about. How are you sort of measuring the success of where you're out there? And I guess, can you share any numbers on, I guess, how much it's costing you versus how much benefit you're getting and how that might compare to other sort of, I guess, value-orientated strategies that you've got?

Well, all I'd say is the capabilities in now, and it's been very difficult, obviously, with the venues closed. So we will see growth in it pretty quickly, particularly in the lead up to spring. And so the main thing is really just trying to extract the value out of that moving forward. No one else has it. We can get sharper on differentiated offers in the venue. So what I would say is positive return on investment so far, but there's a lot more to do to extract value in the channel and in the venues.

I might just elaborate because it's important one. And we talked about it up there that pubs and clubs, people talk about our retail network. We've got 4,300 venues roughly: 300 are stand-alone shops, 4,000 are pubs, clubs, social environments, and they're more vibrant than ever. We've gone okay with digital and venue and the like, but not -- there's still too many people on Blue and Red apps and other apps sitting in a pub. And as we get the combination of this strategy, level playing field, better customer experience, more focused marketing, we want to grow share, and that includes in a pub and a club.

It's Justin Barratt from CLSA. Just one question to follow-up on Larry's question about media before. I appreciate as the playing field, I guess, becomes more level and you can potentially grow your margin. But what about just top line revenue growth? What are the opportunities in media, I guess, over the medium and longer term to actually grow your revenue base?

I think it's a combination of things. So I think where we're under-indexed now is how much our fantastic Sky Racing and media business is driving TAB performance. Now partly, that is our own doing because we don't have a level playing field. So we look to maximize revenues in other areas to grow the profit base. But as that playing field levels, it makes more and more sense to focus all of our guns on to our customers and growing our customer base. So that is a real opportunity. Don't discount that. And I think we can do much more there, and we're not leveraging all of [ Glenn's ] colleagues enough in how we grow TAB. But we are very comfortable with selling the rights we have, whether it's either part of Sky aggregated content for the right price or separately, individually. So it's the Queensland content to Ladbrokes, for example. We're happy to sell pictures to them and for the right sort of commercial outcome. And -- now that's important for a couple of things. One is we won't win new rights because the rights holders want their content will be seen by all punters. So we need to be prepared to do that, and we are, but only on the right commercial terms. So there's an opportunity to grow both the B2B in a sustainable, sensible way, but focus on our content experience and out the information and the app to drive betting with TAB. And then internationally, there's opportunity there as well. We've got good businesses today. There's massive eyeballs in terms of a global betting audience that sees those pictures and that content. And it's a matter of what can we do more to grow and expand. We don't -- not saying any more of that at the moment, but that's part of Angus and the broader team's mandate to have a look at these assets and let's see what we can do more with for growth.

Great. And then second question just in relation to your app launch. You've been very clear in terms of Phase 1 and Phase 2. Phase 1 to be -- the app to be released before the spring carnival. Phase 2 sort of happening as we speak. Phase 3 and Phase 4 look like a bit more longer-term targets. Is there any way that you can sort of describe how long you think it might take to get to those phases?

Well, I think the plan for us around sort of key product gaps that we know we've got will be after -- so the release basically after spring, so this side of Christmas or things going well. Then what I would say is there's no big ta-da with these phases. A bit back to my point before, we need to work out what customers want. We need to work out -- get on the front foot and start charting our own course with some of the experiences and features and products that customers want. And then we'll iterate, we'll drop, right? So we'll be working on the app for the next 5 years. That's just kind of what we do in digitally-led businesses. So as I said, there's no ta-da here. So we're going into planning for FY '23. We'll have a capital envelope. We'll work out the business and customer problems we're trying to solve. We know those 9 product gaps. And then for Phase 3, we know the power of content. We've got to do more with that. We need to stitch our data across all the assets and channels we've got, huge opportunity. And we'll just chip away at the backlog and release an update, hopefully, I'm looking at Alan, we will move to those fortnightly releases. So think of it as a continuum of digital optimization, but we should start to see some really good uplift around converting more customers than we have, our new products, we should start to see a pretty immediate impact of that post the new app launch and then after that with the new products. So hopefully, that helps.

Anyone else want to ask a question? At the front here.

Matt Williams from Airlie Funds Management. I saw an ad on the weekend Responsible Gaming Alliance or Responsible Betting Alliance, but your name wasn't on it. Any reason for that?

Is that a question or statement?

Yes. That's a question.

Yes, you're right. We weren't part of that. Responsible Wagering Australia, they're a political lobbyists group funded by the foreign online bookies. And we're not a foreign online bookies. We're an Australian part of the heart and soul of the fabric of this great country. So we're not part of that. But we are very, very, as you heard, serious about customer care, responsible gambling. And so no, we're not part of that campaign.

Okay. Got it. Can I just follow up on the digital media question? So you said long tenure, good tenure, particularly in New South Wales, I think you've talked about. Does the relationship then on the distribution side match that? Or does the distribution agreements you have with the other -- the corporates come in earlier than that time frame?

Yes, they do. So I think, for example, the distribution agreement we've got with Sportsbet ends before those rights -- that deal, in particular, with the New South Wales racing industry. They're all different tenure of these rights. Because of different license structures, Victoria, we've got a license due to expire in August 2024. So some of the rights or options and things that are aligned with that. But the distribution agreement with Sportsbet and others tend to go beyond those -- sorry, within that time frame.

Right. And so what does that mean strategically? Who's got the upper hand here? I assume you do to renegotiate that -- those distribution.

Do you mean with the customer or with the rights?

No. No, with -- you sit on selling -- aggregating and selling on.

Look, ultimately, if Sky is still a -- it will come down to commercial negotiations and whether they still want the content. It runs through a few years yet. But ultimately, Sky is a driver of wagering and is valued by punters, it will be desirable to others, and we're happy to sell it or a level of it. And we're very focused on making sure it's a product that's desirable by punters.

Can I just ask -- sorry, Simon Conn from Investors Mutual. Can I just talk -- one question, firstly, does M&A play a part in your strategy and what is the course or the criteria on M&A? And secondly, what stops the content creators going direct to market just by broadcasting directly online?

We're not thinking about M&A right now. We might -- we've got a lot to do here and a lot of opportunity with the businesses we have today. It's a big market. It's a vibrant market that continues, and we'd like to have more of it. So we're focused on that. But as we execute and as we get some runs on the Board and as we demonstrate that to you over the next couple of years, then we'll look at ways to grow beyond what we do today, but it's not on the agenda right now. In terms of when other operators do the same, sure, they will. And you're already seeing that. Ladbrokes, in particular, is looking at ways to buy different pieces of content and integrate that to the experience. We've got the most content. We've got the aggregated content. We're looking to -- we've got that ecosystem of that social betting environment and venues. We're going to get better in digital. So we'll play to our strengths, but yes, they're good at what they do.

Sorry, it's [indiscernible]. Is the right way to think about the media business as a high operating leverage business or fixed cost business, where incremental revenue or luck thereof drops to the bottom line? Or to put another way, the rights you secured, are they fixed costs for their tenure?

It's Dan here. Historically, the rights agreements were very much fixed costs. But as we move into a digital world and distributing that, revenue sharing became more of a factor. It's still a very good, high-margin business. So what we do keep signing and what we do on sell does drop down to the bottom line quite well, but it's not all just fixed costs. Tends to be fixed on the retail side. Adam talked about different categories. On the retail side, it tends to be fixed; on the digital international, it tends to be rev share.

[ Jason Harlan, Caliber Investments ]. Just you talked a lot about necessary to change industry structure. Can you talk a little bit about sort of the Victorian license process and how you bookend the idea of value between exclusive and nonexclusive licenses and sort of how you're thinking about that, both in terms of revenue costs and sort of like your ability of the product to compete in that environment?

It depends on the terms of the license, frankly. What I am sure about is that any license, be it [indiscernible] WA or anything else, if we're going to spend money to enter into a new structure, it needs us to make us more competitive. And we've been clear here today, we want to be more digitally competitive. So it needs to achieve that. But there are terms that we think it's worth acquiring a license for on. To me, nonexclusive licenses are difficult. I'm not sure they really work for us. And even if there's no license in Victoria, we'll be a much higher-margin business, more competitive business than we are today. That's our -- the state that we have the lowest margin in. So beyond August 2024, that's going to be more positive for Tabcorp.

And so just one follow-up. You talked about investing in risk and sustainability. Just interested in what you can do around cash betting within retail, whether there's structures and systems in place there you can kind of put in that kind of give you more confidence on the sustainability of that with focus on cash betting and what that might mean for your retail business.

We have some very thorough systems when it comes to cash. When you think about managing gambling in an environment where you've got more than 4,000 venues and they're anonymous customers, you've got to be really good at what you do to be able to do that and for the regulators to be happy with the way you go about that. Frankly, it's much more difficult to do that than managing it in a single property like a casino. We do that really well. We've invested significantly in a Tabcorp patent issue with AUSTRAC about 7 years ago. In some ways, that was a bit of a blessing because we've invested significantly in that space since we've got really strong systems. You also got to remember that these are environments that are built for -- to serve alcohol. They built -- they have gaming machines, they have betting machines. So the operators, there's very strict training that the pubs and the clubs provide for people, and we provide that training with the systems, the online training and the compliance checks we have for the venues. So it's actually a very safe environment for people to go and enjoy betting whilst they enjoy their pub experience. We've invested in it heavily, and it's pretty unique capability.

In the event that a Victorian license doesn't eventuate, you got here that 21% of your bets are cash in venue. Does that relate to Victoria as well as a similar proportion in Victoria?

Yes.

So I can assume that for 80% of your Victorian customers, you know them, you've got account details, things like that?

Yes.

Okay. And with WA, can you talk to your current market share in WA as it stands today? And if you don't win a business there -- a license or a business, how do you, I guess, grow share or approach that market?

We have very little business there today. Some of the agreements we have with WA and media and other things have stopped us from using the TAB brand in WA. But you're absolutely right. So the way to look at WA, it's pretty much an untapped market for us. If you have a look at that license, that's something to take into account. If we don't end up with a license as it doesn't make sense or we don't win it. It's an untapped market, so being able to find a way to participate in that market could be valuable to us. That doesn't tell you the how, but it does tell you we've got that in mind.

You still [indiscernible] and using the TAB brand in that market?

Yes, we can't. We wouldn't be able to use a TAB brand in the sort of time frame that I'd like to be part of that market.

Dan, can I just have 1 follow-up on the CapEx number? How should we think about, I guess, that $150 million on a go-forward basis? I think you've kind of set out that 40% to 50% of it is growth in transformation. And there's obviously a lot you're doing in the business today to bring it up to speed with the market. So directionally, should that number continue to grow? Or should we think it's kind of stabilized at around that level?

Yes. I haven't provided FY '24 and '25 today deliberately. But we've been pretty deliberate in the language when we've said up to $150 million. We've said that because we think it's really important that we're as frugal with that money as possible and that it's not a, okay, start of the year, there's $150 million, go and spend it. It's more of a, we've looked at it from a [ easier ] Q1 capital internally. And as different things come up and as different demands on that cash flow come up, we will constrain other projects. We'll pause them and we'll go into the areas that are going to drive the biggest return. I think it's really important when we look at F '24 and '25 that we don't go and take -- as we get more margin through the P&L, we then go and get loose with capital, right? So you've got pro forma historical P&Ls. They're not particularly helpful to you right now. But in August, you'll get an FY '22 pro forma. You'll have a second half that will help you. And you can you can probably just plug in that will be disciplined in '24 and '25 relative to the '23.

Anyone else? Well, if there's no more questions, then we will wrap up the formal part of today's session. Thank you so much for joining us. If you have time, we'd love for you to stay and join us for lunch, which will just move up here. Our leadership team that have been sitting here in the front row are really looking forward to meeting you all. And of course, any more questions you have, they're all here ready and waiting. Thanks.