Australian betting operator Tatts Group has won a A1 million judgment against the state of Victoria for not renewing the machine gaming duopoly Tatts had shared with Tabcorp Holdings.
The Victoria Supreme Court also ordered the state to pay interest on the award, which could bring Tatts’ total to $541 million.
The court, however, dismissed an even larger claim of $687 million by Tabcorp.
The two companies had signed deals in 1995 to share Victoria’s slots revenue, each company paying hundreds of millions of dollars upfront for the privilege. But when the contracts expired in 2012, Victoria decided to open the market to clubs, prompting Tatts and Tabcorp to argue that their upfront fees should be refunded.
Supreme Court Justice Kim Hargrave said Victoria’s rewriting of gambling legislation in 2009 wasn’t sufficient to override the terminal payment provision in Tatts’ contract. At the same time, Hargrave said the language in Tabcorp’s contract was “too strict to allow the alternative interpretation contended for by Tabcorp”.
Both Tabcorp and Victoria had 14 days to appeal.
State Treasurer Michael O’Brien called the ruling “a very material blow to the state’s budget.”
The state, in the meantime, is considering extending the term of slot machine licenses held by the pubs and clubs.
The announcement came in response to complaints from the industry that the current 10-year entitlement, set to expire in 2022, was tough on business.
An issues paper has been released which proposes a range of possible extension options, including 20 to 25 years, and a two-week consultation period was set up with the review to report back by September.
An alliance of churches and local governance groups criticized the government over the agreement, saying it is wrong to limit public consultation to two weeks.
Tom Costello, chairman of the InterChurch Gambling Taskforce, joined by the Victorian Local Governance Association and the Victorian Council of Social Service, said an independent panel should conduct the review.
“There is no justification for having this decision made behind closed doors. All submissions to the review and the interim and final recommendations to the government must be open to the public and available for scrutiny,” he said.
O’Brien said submissions to the inquiry will be made public. “The fact that the community has been invited to make submissions to the review demonstrates the government’s commitment to consultation and transparency,” he said.
