Tatts Getting Ready to Battle for Victorian Lotteries Contract
After successfully winning the tender to monitor the 100,000 poker machines in NSW in February, Tatts Group is looking towards the tender for the Victorian Lotteries License. The company is expecting stiff competition, but is well-positioned to retain the license it currently holds.
The Victorian government is currently reviewing initial registrations of interest for the license that will run from July 1, 2018 for a period of ten years. Tatts is expecting competition from rival bidders which include IGT and Scientific Games.
“We expect the tender to be competitive with both Scientific Games and IGT likely to seek to build upon their lotteries and gaming equipment positions in Australia and New Zealand; however both companies have high leverage ratios following recent acquisitions,” commented Deutsche Bank in a recent note to its clients.
Tatts has held the lotteries license since 2007 when it won the tender for the ten year deal with a bid of just $19 million.
“We believe Tatts is well-positioned to retain its Victorian Lotteries license as the Victorian government has not changed the terms of the license, thereby ensuring that Victoria remains the lowest-margin jurisdiction in Australia,” Deutsche Bank stated. “Tatts is the incumbent operator and there is no requirement that a successful applicant be able to participate in the bloc.”
Tatts is expected to need to pay around $250 million in 2018 in order to secure the tender for the ten-year license.
The NSW pokies deal that Tatts won in late February came at a cost of $209 million, which has recently been revealed was almost double the $110 million that was bid by the Clubs NSW and Hotel Association of NSW joint venture. Tatts also outbid international operators Intralot and Scientific Games for the license.
April 16, 2017