The case involves the income tax treatment of payments for licenses and authorities, specifically relating to legal compliance. Tabcorp has fully paid the disputed amount of tax liabilities and interest, resulting in a refund of 20% of the disputed amount. The taxpayers’ proceedings will be dismissed in accordance with the settlement agreement reached with the Australian Taxation Office (ATO). As part of the settlement, Tabcorp will pay approximately $37.0m to The Lottery Corporation Limited (TLC) under the businesses’ separation deed, as outlined in their demerger scheme announced in March 2022. This demerger, which concluded in June of the same year after a process initiated in July 2021, will result in Tabcorp recognizing a benefit of around $45.0m after tax from the ATO settlement. This financial gain will be reflected in their year-end financial statements for 2024 and treated as a significant item. To ensure compliance with future license renewals, Tabcorp has agreed to treat license fees as capital expenses, with certain limitations in place. Tabcorp believes this will not have a significant impact on their future results.
The Lottery Corporation (TLC) was created as a result of the strategic review conducted by Tabcorp. During the review, options for the spin-off of the lotteries and keno arm were considered, including the potential sale of Tabcorp’s wagering and media business. Unsolicited proposals were received from Entain, Betmakers, and Apollo Global; however, Tabcorp determined that these offers did not accurately reflect the division’s true value. Consequently, Tabcorp chose to retain its wagering arm and spun off the lotteries business, resulting in the establishment of two separate companies. The Lottery Corporation, which mainly comprises the former Tatts business, now operates without gaming services. The other entity, named New Tabcorp, encompasses the wagering and media arm, as well as gaming services.
The settlement agreement brings positive news for Tabcorp following a record fine imposed on them in Victoria. The Victorian Gambling and Casino Control Commission (VGCCC) recently fined Tabcorp $1.0m for their conduct during a system outage that occurred in 2020. The outage, which lasted for approximately 36 hours during the Spring Racing Carnival, violated the requirements of the Wagering and Betting Licence and Agreement, which mandates continuous availability of Tabcorp’s Wagering and Betting System (WBS). The VGCCC launched an investigation and criticized Tabcorp for their insufficient cooperation, leading to the imposition of the record fine. The regulator expressed doubts about Tabcorp’s ability to prevent similar outages in the future, citing the company’s repeated failure to comply with directives during the investigation.
