Tatts Group Ordered to Repay $541 Million to the Victorian Government
The Australian High Court has ruled against the Tatts Group and found they are not entitled to keep a $541 million payout they received from the Victorian Government in compensation for lost pokies.
Tatts and their rival Tabcorp Holdings held a duopoly on the operation of all pokies outside Crown Casino in the state of Victoria. However, in 2008, the state announced that it would open up the market to competitors from 2012. The two companies sued the state claiming compensation for the cessation of their duopoly over their combined total of 27,500 machines.
Tatts argued on a contractual basis that an agreement it signed with the Gaming Minister in 1995 provided for a termination payment.
Tabcorp’s $687 million claim was rejected due to the language in the contract, but Tatts was awarded $541 million in damages. Tabcorp appealed, as did the Victorian government. While Tabcorp’s appeal was rejected, the High Court found in favour of the government and ordered Tatts to repay the full amount it was awarded, plus legal costs.
This win for the government comes at a time when it is looking for ways to fund its infrastructure projects and Victorian Treasurer, Tim Pallas was “very relieved and happy” with the ruling.
“Taxpayers have had a substantial win,” Pallas said. “Victorians will be able to get more infrastructure that they need, quicker as a consequence of this ruling.”
“We’ve said all along that the state was not liable – and we are pleased that the High Court has found in favour of the state in relation to both proceedings.”
According to investment bank Macquarie Research, Tatts had been prudent by not recognising the funds paid out as income in its financial results, but only using it to pay down debt as it matured.
April 16, 2017