Tatts Group (TTS) shares fell more than 4% yesterday, but Tabcorp (TAH) shares edged higher yesterday after the High Court ended years of litigation between the companies and the Victorian Government.
Tatts shares ended the day on $3.74, Tabcorp rose 0.4% to $4.34.
As a result, Tatts will be forced to hand back $540 million in lost compensation to the Victorian government after the High Court dismissed its claim to keep the windfall.
The High Court found Tatts was not entitled to payment by the Victorian government because a new gaming operators licence was never issued. Tatts, which went into a trading halt, had been expected to retain the $540 million sum by winning the court case.
Tabcorp had been chasing $687 million in lost revenues from the government, but the High Court dismissed its appeal citing similar reasons to that in the Tatts case.
Tabcorp said the decision by the court on Wednesday brings an end to the proceedings.
“Today’s High Court judgment brings to an end a proceeding which has been running since August 2012," Tabcorp said in a statement.
"As a result of the Victorian Government’s decision in 2008 that Tabcorp was not entitled to the payment, Tabcorp incurred charges against its earnings in previous financial years. Tabcorp has therefore dealt with the original announcement in its financial accounts."
The companies were awarded 18-year licences by the Kennett Coalition government in 1994 to operate the state’s poker machines, outside of Crown Resorts’ Melbourne casino.
But in 2008, the then Labor Brumby Victorian government decided to make management of the 27,500 pokies in the state’s pubs and clubs the responsibility of venue operators, as opposed to Tatts and Tabcorp. The new regime was to start in August 2012.
Amendments to gaming legislation were made by the Brumby government, which acted on advice that it would not be liable to pay compensation.
Tatts and Tabcorp took the matter to court in 2014 – Tabcorp was unsuccessful in its argument it had a right to a payment whether or not it was awarded a new licence.
But Tatts succeeded in its action because it argued that on a contractual, rather than a statutory basis, that it was entitled to compensation. It referred to an agreement it entered into with the Gaming Minister in 1995 that provided for a termination payment.
Yesterday, the High Court said ’no’.
