GAMING GIANTS LOSE BIG IN HIGH COURT
Written on the 2 March 2016
AUSTRALIA'S largest pokies operators have suffered massive setbacks totalling more than $1.2 billion in the High Court of Australia.
In separate judgments for related matters, Melbourne's Tabcorp Holdings' (ASX: TAH) appeal for $686.83 million in compensation from the State of Victoria has been dismissed, and Brisbane's Tatts Group (ASX: TTS) has been forced to hand back $540 million in lost pokies compensation.
Previously in June 2014, Tatts scored the $540 million windfall from the Victorian Government, which included interest of almost $90 million.
Tatts, previously headquartered in Victoria, will feel the brunt of $540 million plus additional interest and the state's costs of appeal and proceedings in its full-year results.
The company claims the verdict will not affect its ability to continue its stated dividend policy of a high annual payout, and says its net debt to EBITDA ratio 'is still comfortably serviceable' considering cashflow, profitability and outlook.
The Tabcorp judgment had already affected earnings in previous financial years and the company says it will not be further impacted.
The High Court found the companies weren't entitled to payment by the Victorian Government because a new gaming operator license was never issued.
This stems back to 1994, when the companies were handed an 18-year license to operate Victoria's pokie machines outside of Crown Resorts' (ASX: CWN) Melbourne Casino.
By 2008, the companies held a duopoly in Victoria and the Labor Brumby government decided to hand over the management of pokies in Victorian pubs and clubs to venue operators instead.
The new regime began in 2012 and both companies took the matter to court in 2014.
Tatts shares were put in a trading halt after the decisions were handed down.
Pictured: Tatts Group CEO Robbie Cooke