Never before in Australia has a big
takeover deal carried as much political risk as Unitab’s proposed
merger of equals with Tattersall’s. In fact, Unitab shareholders would
be well advised to take the relative security of Tabcorp scrip rather
than the far more precarious Tattersall’s alternative which relies on
heroic assumptions about what will happen to its outrageously lucrative
poker machine licence in Victoria after it expires in 2012.

As someone who is looking seriously at running in the Victorian state election on this vehemently anti-pokies platform,
I can tell you that the ducks are all lining up to maximise pressure on
the Bracks government for a substantial reduction in machine numbers.
For instance, the following appeared in The Age yesterday:

Labor’s decision to ignore new technology aimed at problem gambling in
this week’s budget has exposed the Government’s reliance on gaming
revenues, according to the former chairwoman of the state’s independent
gaming research panel. Linda Hancock, who will advise the fledgling
People Power party on gaming issues at this year’s state election, said
exceeding $1 billion in revenue from poker machines was “a big concern”.

The Liberal Party was already promising a cut in non-Crown machine
numbers from 27,500 to 22,500 before new leader Ted Baillieu came along
and declared all policy was up for review and a further reduction in
poker machine numbers was a high priority. When Baillieu took calls on
ABC radio yesterday, he was immediately confronted by reformed pokies
addict Gabi Byrne, who is People Power’s candidate in eastern Victoria.

But it goes much wider than that. Putative Greens leader Greg Barber,
who fancies himself to be leading a balance of power team in the
reconstituted upper house after 25 November, was given a minute to
respond to the state budget on Jon Faine’s 774 ABC Morning program on
Wednesday and chose to go with excessive reliance on poker machines as
his key gripe. Family First is also dead against the pokies and there
are elements of the Labor left that are toying with public campaigning
on the issue come election time.

all that with the extraordinary 21.5% state-wide vote that South
Australian No Pokies independent Nick Xenophon got in this year’s
election and the prospect that he will enter the Victorian contest, and
you have quite a political movement against Tattersall’s, not to
mention a Labor Party which remains embarrassed about gifting the $2
billion licence for free back in 1991. With Labor budgeting to borrow
$1.5 billion in 2007-08, the pressure will also be on to maximise any
new licence fee both Tabcorp and Tattersall’s will pay.

Gaming analysts, Unitab shareholders and the independent experts from
Deloitte really should consider all of this before making big
statements about the future prospects of Tattersall’s because some
close observers of the Victorian political scene reckon they are a
screaming sell. Tabcorp is also exposed, but at least they are far more