The Australian state of Victoria is now open to free competition when it comes to gaming machines.
Until this year there was a duopoly of operators, Tabcorp and Tattersalls, but the state government has now decided not to renew their exclusive licences. Each venue received a fixed daily fee for the use of its floor by either of the two companies.
Now clubs and pubs can apply for a licence for each machine and keep all of the proceeds. The state has 30,000 slots, with a maximum AU$5 stake.
But the transfer of industry power may be expensive for the Victoria government. Tattersalls Group went on record in Australia at the end of August with a report of a 15 per cent increase in net profit to $319m from increased revenues at 6.3 per cent. Tattersalls - and its rival Tabcorp - enjoyed their most profitable business from their poker machine licences. Last year Tattersalls’ poker machines contributed $225.1m in EBITDA.
Now Tattersalls has started legal proceedings against the Victoria government claiming $600m in damages for the loss of its licence. The legal action was possibly going to take two years. The company has partially offset the loss of the poker machine revenue by acquiring Tote Tasmania for $103m and it is still absorbing integration benefits from its $850m purchase of the NSW lotteries business in 2010.
Also, Tabcorp is going to sue the Victorian government for $690m for the loss of its share of the duopoly.
