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Victorian wagering licence goes to Tabcorp

Tuesday 19 July 2011
By Megan Neil

Gambling giant Tabcorp Holdings Ltd has paid $410 million to keep its hold on Victoria's $4.4 billion wagering industry until 2024.

Long-term licence holder Tabcorp beat Tatts Group to the rights to operate off-course betting in the state for 12 years from August 2012.

The Victorian government described it as a great result for racing in the state, although exactly how much of the funds will flow through to the racing industry has not been determined.

Gaming Minister Michael O'Brien said there were two very strong bids from Tabcorp Wagering (Vic) Pty Ltd and Tatts Group's Victoria Licence Bid Co.

Mr O'Brien said Tabcorp's bid had an upfront premium payment of $410 million, but he wouldn't say what Tatts put up.

"I can say that on the whole, and on the financials as well, Tabcorp was the preferred bidder," he told reporters.

The government will not receive any annual payments from the licence but will get tax generated by the industry.

Mr O'Brien said the $410 million upfront payment represented "strong and fair value" in the current environment.

British betting giant Ladbrokes was originally on the short list for the wagering licence, but Mr O'Brien said the company decided not to bid at the last minute.

Tuesday's announcement ends the uncertainty about the licence for the bidders and the Victorian Racing Industry (VRI), which receives revenue through its joint venture with Tabcorp.

Racing Minister Denis Napthine said there would be further negotiations between Tabcorp and the VRI about the return to the industry, which would then be divided between the three codes of horse racing, harness racing and greyhound racing.

"This will deliver for Victorian racing an increased revenue stream in real terms over the 12 years of the licence," Dr Napthine said.

"This will help the three racing codes to grow and develop racing."

The VRI received $322 million in payments in 2009/10, when wagering turnover in the state's racing industry was worth $4.44 billion.

Tabcorp, formerly the TAB, has had a monopoly on off-course betting in Victoria for 50 years.

Currently its wagering licence is linked to its gaming operator's licence but they will operate separately from 2012.

The new 12-year wagering and betting licence allows it to conduct parimutuel (totalisator) and fixed-odds betting and to operate the only off-course retail network in Victoria.

It will also be able to establish a new betting exchange and conduct sports betting and simulated racing events.

More and more betting is done online, but Mr O'Brien said a lot of money was still bet on races and other events through off-course retail outlets, and the strength of the bids showed it was a very valuable licence.

"We think that this is a very strong result and some people were saying that we'd be lucky to get anything for this licence," he said.

He said the next licence offered from 2024 would be different but he believed there would always be a place for an off-course retail network.

Mr O'Brien said the $410 million would go into consolidated revenue in the budget but only represented a tenth of the funding that had been lost in GST receipts.

"It's a Band-Aid on a fairly gaping wound," he said.