Thu, Jul 4, 12:49am by Kevin Pitstock
The Tatts Group Limited gaming and lottery company is considering a bid to become the official national lottery organizers in Ireland. The tender process closes in September, and the winner of the bidding is likely to start operations as early as November 2013.
Tatts’ potential move is driven by a desire to expand. Saturation of the market and newly created restrictions place a certain limit on expansion inside Australia. The current political and economic environment keeps rapid expansion in Aussie gambling unlikely. If anything, gaming in Australia could be shrinking due to tough new laws.
Given such a reality, Tatts could look at foreign markets to expand. Lottery gaming is the obvious choice. Though Tatts has five distinct operating segments, 45% of its revenue comes from its current lottery business. Tattersalls operates everywhere in Australia except Western Australia, where gambling laws are stringent.
Tatts’ lottery products are found in Victoria, The Northern Territory, and Tasmania. Besides the lotto, Tattersalls also receives revenue from gambling machines, which account for another 32% of its business.
A subsidiary, TattsBet, provides totaliser and fixed betting in four different regions: Northern Territory, Tasmania, South Australia, and Queensland. The tab betting accounts for another 16% of the business, while two smaller segments contribute the final 8%. Tatts has yet to commit to a bid for the lottery draw.
Spokesmen have said they will take a look at the possibilities. While they may decide the competition is too fierce or the profits will be too small, controlling Irish lottery gambling could be a lucrative addition to their portfolio of revenue sources.
The Irish lottery business is estimated by some in the industry to be worth about $850 million. Others have suggested the final price is likely to be between $425 million and $565 million. While that’s a large discrepancy, the sale of the lotto to foreign interests is expected to cover current deficits in national financing.
Others expected to be in the competition are GTECH and the Ontario Teacher’s Pension Plan. GTECH is the current license holder for the Italian National Lottery. Though GTECH is headquartered in Providence, Rhode Island in the United States, the majority shareholder of GTECH is an Italian holding company, the De Agostini Group, which also has a majority stake in Lottomatica.
The Ontario Teachers’ Pension Plan might not sound like impressive competition, but the company purchased the Camelot Group in 2010. Controlling the Camelot Group means it’s the owner of the United Kingdom’s national lottery. With such stout competition, Tatts will have to make a strong bid to win.
Tatts’s finances are bolstered by news earlier this week it would not have to pay its share of a $42 million health levy imposed by the Victorian State Government. The Victorian Supreme Court ruled neither Tatts nor TABCORP would not have to pay these fees. It’s thought Tatts might divest itself of its gaming assets to facilitate the purchase of the Irish National Lottery. If so, TABCORP is the likeliest buyer of those assets.
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