Victorian Govt. wins High Court case against Tatts Group, Tabcorp

SOMETIMES, you can’t fight city hall.

Even if you are among the biggest gaming companies in the nation.

A near four-year battle over compensation for poker machine licenses being taken away from the state’s former duopoly companies by the Victorian Government is over.

Considering cases involving Tatts Group and Tabcorp, The High Court of Australia ruled in favour of the Victorian Government in both instances.

It means that Tatts Group will now have to repay the $540 million (including interest and court costs) to the government it won during a 2014 court decision, Tabcorp won’t see a cent of the $687 million compensation is was seeking and the government escapes a potential $1.2 billion bill.

Victorian Treasurer Tim Pallas said he was “very relieved and very happy” with the rulings, and said the funds from Tatts would be used on infrastructure projects.

“It means the $540 million previously allocated to Tattersalls will of course be returned to the state and that means our budget position is strong (and) getting stronger as a consequence,” Pallas said.

“I’ve been very clear in my view about the need for the state to increase, in a very substantial sense, its investment in infrastructure.

“It’s our obligation to the future.”

But shadow treasurer Michael O’Brien said the High Court ruling ended “one of the greatest financial disasters in Victoria’s history”.

“Daniel Andrews and Labor cost this state $3 billion by botching the auction of lucrative 10-year gaming licences,” O’Brien said.

“The auditor-general found that Labor delivered a huge windfall to large pokies operators at the expense of the community.”

In 2008, the government decided to open up poker machine licences, handing them back to the pubs and clubs, angering both Tatts and Tabcorp, who enjoyed a duopoly over the 27,500 pokies outside of Crown Casino.

In the fine print of agreements between the two companies and the government, they were meant to have first dibs on new licences and they argued that the decision amounted to a new licence, which they were not privy to.

But the High Court found there had been no grant of new gaming licences, instead pointing to the gaming machine entitlements, introduced in 2009, which allowed holders to conduct gaming on an approved machine.

In a statement on its website, Tabcorp wrote: “The High Court of Australia has today dismissed an appeal in relation to Tabcorp Holdings Limited vs. State of Victoria.

“The judgment is in respect of Tabcorp’s appeal against the judgment of The Court of Appeal of the Supreme Court of Victoria delivered in December 2014 in favour of the State of Victoria.

“The initial proceeding related to Tabcorp’s claim for a payment of $686.83 million.

“As a result of the Victorian Government’s decision in 2008 that Tabcorp was not entitled to the payment, Tabcorp incurred charges against its earnings in previous financial years.

“Tabcorp has therefore dealt with the original announcement in its financial accounts.

“Today’s High Court judgment brings to an end a proceeding which has been running since August 2012.”

Tatts had not put its money down as income on its financial accounts, due to the long running legal action and therefore it will not impact their 2015-16 bottom line, aside from the interest and costs.

“The decision is not expected to affect Tatts’ ability to continue its stated dividend policy of maintaining a high annual dividend payout ratio,” the company stated.