TABCORP has lost its appeal against the State of Victoria regarding the loss of the company’s pokies licenses.
The High Court of Australia also ruled on Wednesday that the Tatts Group, which was initially successful in its case against the Victorian government, will have to return $540 million in compensation payments.
The twin rulings conclude a lengthy legal battle which dates back to 2008, when the Brumby regime decided to award pubs and clubs control of their pokie machines upon the expiry of permits held by Tatts and Tabcorp.
The rival betting giants lodged separate appeals in 2012 in the Supreme Court of Victoria, which upheld the Tatts case but dismissed Tabcorp’s claim for $686.83 million in compensation.
Following the HCA ruling, the latter company announced it had already accounted for the unsuccessful claim in its financial reports.
“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 verdict comes as a huge blow to the Tatts Group, which had planned to use its compensation money from the 2012 Supreme Court finding to award a special dividend to its shareholders.
Tatts was originally successful in arguing that the State of Victoria’s 2008 decision breached a long-standing contractual agreement which entitled the company to a parachute payment upon termination of its pokies permits.
But the High Court ruled that because no new gaming licenses were issued, Tatts was entitled to no financial compensation as a result of the Brumby government’s actions.
As such, the company will now have to refund the $540m it was awarded four years ago.
In a statement to the ASX, Tatts revealed it had not logged the compensation fee as income in its accounts but had instead used the money to settle maturing debt.
“The expected financial impact in the 2016 full year accounts will be the payment to the state of the additional interest plus costs,” said the statement.
“Following repayment to the State, the group’s net debt to EBITDA ratio is still comfortably serviceable considering the group’s cash flow, profitability and future opportunities.”
The High Court’s announcement was welcomed by the State Government of Victoria, which will gain a massive revenue boost as Tatts repays its rescinded compensation.
Treasurer Tim Pallas said: “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.”