Gaming giants Tatts Group and Tabcorp have lost their final chance for compensation over Victoria’s poker machines, with the High Court ruling against the foundation of their appeals.

After three and a half years and massive legal fees for both companies and the Victorian Government, the High Court has determined neither company is entitled to compensation for losing the duopoly on the State’s poker machines they had held for the scheduled 20 years, since 1992.

Legislation took effect in August 2012 that removed Tatts and Tabcorp as the sole controllers of Victorian poker machine entitlements, enabling pubs and clubs to operate the machines under their own licences or choice of licence-holder.

While the sell-off that followed was widely criticised, the gaming companies filed claims for more than half a billion dollars, citing the agreements that had governed the arrangement, set out in the Gambling Regulation Act 2003 (Vic).

On 27 June, 2014, the Supreme Court of Victoria ruled against Tabcorp but in favour of Tatts.

Tatts Group was awarded over $540 million, while Tabcorp’s submission for $670 million was rejected.

High Court of Australia
High Court of Australia

Both Tabcorp and the Victorian Government determined to appeal the rulings in the High Court, and on Wednesday the five justices announced that the applications of both gaming companies were overruled on the basis that the licences removed from them were not ‘new’.

They stated that 4.3.12(1) of the Act makes provision for the current licence holder to be compensated, but only “On the grant of new licences”.

“As no new wagering licence and gaming licence were issued under Pt 3 of Ch 4 of the 2003 Act, Tabcorp was not entitled to payment under the terminal payment provision,” said the ruling.

This effectively quashed both Tabcorp’s plea for reconsideration and overturned the 2014 ruling that awarded Tatts Group half a billion dollars.

Tatts will now be required to pay back the money to the Victorian Government, with interest accrued since receiving it in mid-2014.

Both companies say they have already accounted for losses incurred in the lengthy legal battle, and Tatts says it has not registered the $540,467,887.92 on its books as income and “The decision is not expected to affect Tatts’ ability to continue its stated dividend policy of maintaining a high annual dividend payout ratio”.

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