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08-30-2007, 01:49 PM

Tattersall's, Tabcorp Shares Fall; Horse Flu Spreads (Update3)

By Robert Fenner

Aug. 30 (Bloomberg) -- Tabcorp Holdings Ltd. and Tattersall's Ltd., the nation's biggest wagering companies, slumped on the Australian exchange as horse racing in Sydney was canceled for two months after the nation's first outbreak of equine flu spread to thoroughbreds.

No races will be held at Sydney's main racetrack at Randwick for at least 60 days after eight thoroughbreds tested positive for flu, the Australian Jockey Club said today. Racing has been halted across the country since Aug. 25, threatening to decimate Australia's A$15 billion ($12.3 billion) horse-race betting industry.

The outbreak means New South Wales horses are banned from traveling across the state border to Victoria, where the nation's biggest racing carnival drew A$1.5 billion in bets last year. Analysts fear the status of the 50-day season, culminating in the Melbourne Cup, will be lessened, reducing revenue.

``Now that thoroughbreds have been impacted it really raises concerns,'' said Tony Pearce, who helps manage $3.5 billion at Legg Mason Asset Management in Melbourne. ``I don't think it will be a long-term problem but the market is taking it very seriously.''

Tabcorp fell 64 cents, or 4.2 percent, to a two-year low of A$14.77 on the Australian Stock Exchange. Tattersall's slumped 50 cents, or 10 percent, to A$4.40, their biggest decline since the shares were first traded on the exchange in July 2005. Both companies are based in Melbourne, the capital of Victoria.

`Devastating Blow'

Races in Victoria, which aren't affected by the Sydney ban, are due to resume tomorrow if no new infections are reported by 1 p.m. local time, Federal Agriculture Minister Peter McGauran told reporters in Melbourne today. The outbreak had previously only been identified among recreational horses.

``Incursion of equine flu into thoroughbreds at Randwick is a devastating blow to the horse racing industry,'' McGauran said. ``Victoria's Spring Racing Carnival will be deprived of some of its biggest stars.''

Ninety horses have tested positive for the virus on 19 properties in New South Wales, the country's most populous state, Ian Macdonald, the state's minister for primary industries, said yesterday. Test results are pending on more than 760 horses in quarantine, including at least five thoroughbreds, he said.

A national lockdown on horses meant those not already at a racetrack could not be transported to one.

Biggest Season

The Victorian Spring Racing Carnival accounts for 35 percent of the 2.1 million attendances for racing annually in the state.

The Melbourne Cup, a 3,200-meter handicap race, has a total purse of A$5.1 million and is known as ``the race that stops a nation.'' A public holiday is declared in the city, with the race seen or heard by 85 percent of Australia's 21 million people, according to Racing Victoria.

``Betting on horses is such an important part of Australian culture, people are all waiting for that to return,'' Tabcorp Chief Executive Officer Elmer Funke Kupper said in an interview today.

Tabcorp earned A$253.7 million before interest and tax from wagering in the 12 months ended June 30. It gets about 28 percent of profit from betting shops with the rest coming from casinos and slot machines.

``The six to seven weeks before the Melbourne Cup are very important with much higher than average turnover,'' said Craig Shepherd, an analyst at Commonwealth Securities Ltd. in Melbourne, who rates Tabcorp ``accumulate.''

Tattersall's stands to lose A$2 million a week in earnings before interest, tax, depreciation and amortization if the ban on racing is extended, the company said.

The company today reported a tripling in second-half net income to A$180.8 million in the six months ended June 30 on its acquisition of betting-shop owner Unitab Ltd. and increased wagering on horse races.

To contact the reporter on this story: Robert Fenner in Sydney rfenner@bloomberg.net

Last Updated: August 30, 2007 02:54 EDT

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