The Lottery Corporation Locks in Victorian Monopoly Until 2068 for $1.1B
The Lottery Corporation secures 40-year Victorian lottery licence extension through to 2068
The Lottery Corporation has reached agreement with the Victorian State Government for a 40-year extension of its Public Lottery Licence, marking a significant departure from the historical 10-year terms previously offered. The extension, finalised through exclusive bilateral negotiations, pushes the licence expiry date from 30 June 2028 to 30 June 2068, securing the company’s position as the exclusive provider of commercial public lotteries in Victoria for more than four decades.
The company will pay an upfront $1,145 million Premium Payment to the State, representing a high single digit EBITDA multiple based on expected FY27 Victorian EBITDA. The payment will be fully debt funded through a new $1,000 million bank loan facility combined with approximately $145 million from existing undrawn debt facilities. The transaction implies valuation and return parameters consistent with the company’s prior long-term lottery licence acquisitions.
Through subsidiary Tattersall’s Sweeps Pty Ltd, The Lottery Corporation has held the Victorian Public Lottery Licence since 1954. The extended term provides long-term earnings certainty in the company’s second largest jurisdiction by lottery turnover and third largest by lottery EBITDA, removing a 2028 licence renewal overhang that had previously weighed on medium-term visibility.
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What does a lottery licence extension mean for investors?
A lottery licence grants the exclusive right to operate commercial public lotteries within a specific state or territory. For The Lottery Corporation, exclusivity is critical because it prevents competitors from entering the market and fragmenting the customer base during the licence period. The company operates as the exclusive provider of commercial public lotteries across all Australian states and territories except Western Australia, creating a near-national monopoly protected by state-based regulatory frameworks.
Longer licence terms reduce business risk by removing the uncertainty of periodic renewals and competitive re-tendering processes. When a licence approaches expiry, investors face questions about renewal terms, potential Premium Payments, and whether the operator will retain the licence at all. By extending the Victorian licence by 40 years rather than the traditional 10 years, The Lottery Corporation has pushed the next Victorian renewal event well beyond typical investment horizons.
Lottery licences are regulated state-by-state, meaning each jurisdiction sets its own terms, fees, and operating conditions. Securing long-dated licences in multiple jurisdictions builds a defensible national footprint that compounds competitive advantages. Once a licence is secured, the operator generates recurring revenue from ticket sales without heavy ongoing capital expenditure, creating a capital-lite business model where the licence itself is the primary asset. The $1,145 million Premium Payment for 40 years of exclusive Victorian operations equates to approximately $28.6 million annually in upfront cost, against which the company expects to generate material EBITDA each year.
How this reshapes the national licence portfolio
The Victorian Licence Extension materially reshapes the risk profile of The Lottery Corporation’s licence portfolio. The average remaining term across the company’s lottery licences increases from 18 years to over 25 years, with the next major lottery licence renewal now not until 2050 when the New South Wales licence expires. This 24-year runway without a major renewal event provides substantial operational certainty and removes a key overhang that had compressed the portfolio’s average remaining term.
The company’s Keno licence portfolio already has an average remaining term of 27 years, meaning the combined lottery and Keno portfolios now sit at similar maturity profiles. The Victorian extension also aligns with recent regulatory tailwinds. The Federal Government has announced proposed reforms to “crackdown on harmful and emerging online lottery products”, which, if implemented, would further protect the company’s regulated lottery business from unregulated digital competition.
| Jurisdiction | Issue Year | Expiry | Term | Remaining Term |
|---|---|---|---|---|
| NSW | 2010 | 2050 | 40 years | 24 years |
| QLD | 2012 | 2052 | 40 years | 26 years |
| VIC | 2018 | 2068 | 10 + 40 years | 42 years |
| SA | 2007 | 2072 | 65 years | 46 years |
| TAS | 2025 | 2030 | 5 years (renewable) | 4 years |
| ACT | 2015 | Indefinite | Indefinite | Indefinite |
| NT | 2012 | 2032 | 20 years | 6 years |
The Victorian licence now has the second longest remaining term in the portfolio after South Australia (46 years), and significantly exceeds the NSW (24 years) and Queensland (26 years) licences. The company also holds renewable permits in Tasmania and the Northern Territory, though these jurisdictions contribute smaller revenue shares. The portfolio shift provides investors with visibility over the majority of the company’s earnings base through to at least 2050, reducing execution risk and improving cashflow predictability.
Funding structure and capital management approach
The $1,145 million Premium Payment will be paid in two instalments. The first instalment of $250 million is due on 3 July 2026, with the second instalment of $895 million payable on 1 October 2026. The company has obtained a commitment for a new $1,000 million bank loan facility to provide funding certainty to the Victorian State Government, supplemented by approximately $145 million from existing undrawn debt facilities.
Following the Premium Payment, pro forma leverage is expected to initially rise to around the upper end of the company’s 3–4x target leverage range. The company expects to retain a strong investment grade BBB+ credit rating, reflecting its stable cashflow profile and the long-dated nature of its licence portfolio. The Lottery Corporation has indicated it will consider access to long-term debt funding markets in the coming months as part of its broader financing strategy, which may include refinancing the bank facility with longer-tenor bonds or other debt instruments.
The fully debt funded approach preserves financial flexibility by avoiding equity dilution while leveraging the company’s strong credit profile to acquire a long-dated strategic asset. The company’s capital allocation framework targets leverage within the 3–4x range while maintaining consistent dividend payments, and management expects to delever over time as EBITDA grows and cashflows are directed towards debt reduction.
Dividend policy update from FY27
From FY27, the company will amend its dividend policy to 80–100% of NPATA (Net Profit After Tax before significant items adding back total licence amortisation after tax), changed from 80–100% of NPAT before significant items. Forecast licence amortisation after tax for FY27 is approximately $44 million, meaning NPATA will sit $44 million higher than NPAT in that year, all else being equal.
The shift to a more cash-based measure is designed to support consistent and reliable dividends while helping to keep leverage within the target range over time. Licence amortisation is a non-cash accounting charge that reflects the gradual write-down of intangible lottery licence assets on the balance sheet. By excluding this charge from the dividend calculation base, the policy better reflects the cash-generative nature of the business and potentially provides a clearer view of distributable earnings capacity.
The Victorian Licence Extension is not expected to impact any FY26 dividends, meaning shareholders will see no immediate change to near-term distributions. The policy update takes effect from FY27, when the extended Victorian licence term and the associated amortisation profile will be fully reflected in the company’s accounts.
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Strategic rationale and outlook
Wayne Pickup, Managing Director and CEO
“The Lottery Corporation is delighted to have agreed an extension of the Public Lottery Licence with the State, securing our future in Victoria through to 2068. The 40-year extension strengthens our national licence portfolio and will help shape the next chapter of the Company’s growth. The longer term extension also significantly lowers the risk profile of the business and secures our position as the national lottery operator, with our next major lottery licence renewal now not until 2050.”
Approximately one in two adult Victorians play the company’s lottery games each year, with some games ranking among Australia’s most recognised brands. The extension allows The Lottery Corporation to continue delivering entertainment to Victorians while supporting a lottery retail network underpinned by small businesses and generating material lottery duty revenue to fund state and community services.
Small business lottery retailers will benefit from a 10-year extension of Victorian retailer agreements and a refresh of hardware and operating systems. Victorian franchisees of Tattersall’s Sweeps who hold a current franchise agreement as at the announcement date will be offered a renewed agreement with an extended term through to 2038, subject to meeting eligibility criteria including minimum sales and compliance requirements. The hardware and systems refresh is designed to enhance responsible play delivery and the digitally enabled player experience.
The extension includes improved terms compared to the existing Public Lottery Licence, appropriate for a long-term licence. These terms provide the company with operational flexibility and the opportunity for stronger future innovation and growth potential through its long history of Victorian licence operation and deep customer insights. The company gains confidence and long-term certainty over a significant portion of its operations and cashflows without medium-term renewal risk, enhancing competitiveness and growth potential across the national portfolio.
Key benefits of the Victorian Licence Extension:
- Secures exclusive commercial lottery provision in Victoria until 30 June 2068
- Increases average remaining term of national lottery licence portfolio to over 25 years
- Eliminates major lottery licence renewal events until 2050 (NSW)
- Provides long-term earnings certainty in the company’s second largest jurisdiction by turnover
- Enables continued innovation and growth through established Victorian customer base
- Supports small business lottery retailers with extended agreements and systems upgrades
- Aligns with Federal Government’s proposed online lottery product reforms
The transaction was advised by Macquarie Capital and approved by the board. The announcement represents a material strategic milestone that reshapes the risk profile of The Lottery Corporation’s operations and extends visibility over a core earnings stream for more than four decades.
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