Vic govt weighs up Tatts payout appeal

The Victorian government has to pay $451 million to gambling firm Tatts.

Gambling company Tatts looks set to reap $540 million in compensation after it won a court battle against the Victorian government.

But a similar bid from Tabcorp for $686 million failed in the Victorian Supreme Court on Thursday.

Victorian government lawyers are weighing up an appeal after Victorian Supreme Court Justice Kim Hargrave ordered the government pay $450 million plus interest to gambling firm Tatts.

Tatts and Tabcorp lost their exclusive duopoly on gambling machines outside Crown Casino in 2009.

Tatts chief executive Robbie Cooke said they expected more than $89 million in interest on top of the $450 million.

"Further details will be provided once orders on interest and costs have been made and once it is known if the state will appeal the decision," Mr Cooke said in a statement.

A statement from Tabcorp said it was reviewing the judgment before deciding whether to appeal.

Treasurer Michael O'Brien said the state government's lawyers had 14 days to decide whether to appeal against the decision, which is likely to cost $540 million.

He said the decision to change the Gambling Regulation Act was made by the previous Labor government.

"Should the Tatts Group decision stand it will result in a significant cost to the Victorian community," Mr O'Brien told reporters on Thursday.

"It's a very material blow to the state budget."

A Labor spokesman said contracts signed by the Kennett Government with Tattersalls in 1995 were to blame for the payout.

"However if the government is confident of its case than it should strongly consider appealing," the spokesman said.

Justice Hargrave accepted the state government's argument that awarding new licences in 2008 and 2009 did not trigger a terminal payment provision in the contract with Tabcorp.

"In the context of the clear purpose of the terminal payment provision, the court noted the unfairness of this result, but concluded that the statutory language was too strict to allow the alternative interpretation contended for by Tabcorp," Justice Hargrave's judgment said.

But Justice Hargrave did uphold a similar claim by Tatts, which also had a terminal payment provision included in its gaming operator's licence when Tabcorp was privatised in 1995.

He said changes to the Gambling Regulation Act in 2009 did not override Tatts' entitlement to a payout.

Tabcorp had argued that when the government privatised the Victorian TAB and listed Tabcorp on the share market in 1994, it enacted a law that guaranteed Tabcorp a payment when its 18-year licence expired.

Tatts' claim had sought compensation following the expiration of its gaming operator's licence under an agreement made in 1995.

Mr O'Brien said a hearing on Friday would determine the amount of interest the court required the government to pay.