Lottery Corporation secures 40-year Victorian lottery licence extension

The Lottery Corporation Ltd (ASX: TLC) share price is in focus today as the company announced a 40-year extension of its Victorian Public Lottery Licence, a major win securing the business until 2068. This extension significantly strengthens the risks profile of its Lotteries business and supports future shareholder returns.

What did Lottery Corporation report?

• Secured 40-year extension for the Victorian Public Lottery Licence, now expiring 30 June 2068
• $1,145 million upfront premium payment for the licence, fully funded by new and existing debt
• No major lottery licence renewal required until 2050 (NSW)
• Dividend policy changing from 80–100% of NPAT to 80–100% of NPATA from FY27
• Pro forma leverage expected at upper end of 3–4x target range following payment

What else do investors need to know?

Lottery Corporation has held the Victorian licence since 1954, traditionally in 10-year increments. This early 40-year extension aligns the term with major state licences elsewhere in Australia, providing long-term security for the company’s national lotteries footprint.

The payment for the extension will be made in two instalments from existing cash and new debt, and the company is confident it will retain a strong investment-grade credit rating. Small business lottery retailers in Victoria will benefit from a 10-year extension of retail agreements and updates to their systems, further strengthening the retail network.

What did Lottery Corporation management say?

CEO Wayne Pickup, said:

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.

Typically, almost one in two adult Victorians play our lottery games each year – some of which are among Australia’s most recognised and iconic brands. Today’s licence extension allows The Lottery Corporation to continue to responsibly deliver safe, engaging and sustainable entertainment to Victorians for many years to come, while supporting a vibrant lottery retail network underpinned by small businesses, and generating material lottery duty revenue to fund state and community services.

What’s next for Lottery Corporation?

Looking ahead, Lottery Corporation plans to maintain steady operations under its expanded long-term licence footprint. The upcoming change to a more cash-based dividend payout ratio is designed to provide shareholders with consistent, reliable returns while keeping leverage in check.

The company will also explore long-term debt funding and continue to focus on strengthening its product range and retail network, taking advantage of the security and certainty delivered by the Victorian licence extension.

Lottery Corporation share price snapshot

Over the past 12 months, Lottery Corporation shares have risen 5%, trailing the S&P/ASX 200 Index (ASX: XJO) which has risen 7% over the same period.

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The post Lottery Corporation secures 40-year Victorian lottery licence extension appeared first on The Motley Fool Australia.

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Motley Fool contributor Laura Stewart has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended The Lottery Corporation. The Motley Fool Australia has recommended The Lottery Corporation. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips. This article was prepared with the assistance of Large Language Model (LLM) tools for the initial summary of the company announcement. Any content assisted by AI is subject to our robust human-in-the-loop quality control framework, involving thorough review, substantial editing, and fact-checking by our experienced writers and editors holding appropriate credentials. The Motley Fool Australia stands behind the work of our editorial team and takes ultimate responsibility for the content published by The Motley Fool Australia.