The High Court of Australia has found against gambling giants Tatts Group and Tabcorp in their attempt to force the Victorian government to pay them $1.226 billion plus interest in compensation for scrapping their poke licences in 2008.
The Tabcorp and Tatts duopoly had rights to operate 27,500 poker machines, the only ones allowed in Victoria outside Crown Casino.
In 2008, the Brumby government scrapped their pokies licences from 2012 when they were due to expire and mandated that pokies from then be operated and owned by pubs and clubs themselves.
Tabcorp claimed $686 million in compensation using a clause in the arrangements to float what was then Victoria’s TAB in 1994 which promised the payment if the licences were scrapped.
Both companies took action in the Victorian Supreme Court in 2014. The court found against Tabcorp but forced the Victorian Government to pay Tatts $540 million.
The battle moved to the High Court where both companies lost, meaning Tatts will have to return $540 million to the Victorian government. It will also have to pay the Victorian government’s costs and an as yet undetermined amount of interest.
Tabcorp said it has already taken the hit in its accounts in previous years and will not be affected.
Tatts said in a statement it will have to return the money to the state but it will not affect its ability to pay dividends.
Tatts shares were put in a trading halt after the decisions were handed down.
The High Court found the term ”new licences” which the companies relied on in their arguments, referred only to licences under the old gambling regime, which was overhauled in 2009.
The overhaul saw the new licences known as “gaming machine entitlements.”