Australian Tatts to Bid for Irish Lottery

Friday 27 July, 2012 15:38

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Leading Australian gambling group, Tatts, is eyeing the lucrative Irish National Lottery license which is up for sale reportedly for a staggering sum of over $700 million.

Tatts has held talks with Irish authorities in the hope to advance its chances of getting its hands on the Irish license, despite the fact that there are many other gambling firms in the race.

Talks were held with the Irish Department of Public Expenditures to discuss its business model recently.

A spokesman for Tatts Australia, Michael Mangos said that the group would be examining the Irish Lottery's business and examining the direction it will finally take.

Success of Irish National Lottery

If Tatts Australia is successful in its bidding, it will be linking up with a highly successful lottery.

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The Irish Lottery had annual sales of nearly $900 million last year, despite the fact that numbers were down 1.4% due to what the business termed a "very challenging retail environment."

The lottery will issue a 20 year license to the right operator, and hopes to make enough money to build a state-of-the-art children's hospital with the revenues.

The 25 year old lottery employs over 100 people and sells its products via 3,800 retail outlets. Around a third of the revenue makes its way to good causes across Ireland.

"What started as a relatively modest business in March 1987 with just one Scratch Card game and sales of 130 million Euros has grown steadily to achieve total sales of over 12 billion Euros over the first 25 years," read the Irish Lottery's annual report last year.

In 2011, online game sales grew by 65%, added the group.

The lottery is currently operated by An Post, one of the contenders for the 20 year license.

Risky Endeavor for Australian Tatts

But while the appeal of earning this 20 year license to operate the Irish Lottery is obvious for Tatts, some analysts believe that it might be too risky an endeavor for the group, and Tatts' bid for the Irish lottery may not be such a good idea.

"With some potential for Irish exit of the Euro, we see too much incumbent risk for the buyer [Tatts], ie. a EUR exit is likely to see significant currency deflation which could present the risks of FX translation and potential write downs," said Mark Bryan, Bank of America Merrill Lynch analyst.

The analyst also didn't give Tatts a high chance of securing the license, saying: "We view success for Tatts as very remote and expect Camelot (UK) to secure the deal."

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