Why Tabcorp Holdings Limited and Tatts Group Limited could soar today

Verdict in billion dollar court case expected after market close today

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Gaming giants, Tabcorp Holdings Limited (ASX: TAH) and Tatts Group Limited (ASX: TTS) could see their share prices rise today, in anticipation of a win in their billion dollar court case against the Victorian government.

Here's the low down…

Tabcorp and Tatts held a duopoly over Victoria's $2.3 billion poker machine industry from 1994 until 2012, when their licences expired. The Victorian government restructured the pokies industry in 2008, assigning control of more than 27,000 pokies to the clubs and pubs from 2012.

When the Victorian government decided not to renew their licences, Tabcorp and Tatts claimed they were entitled to compensation as laid out in the 1994 Gaming and Betting Act. Tabcorp is seeking $686.83 million in compensation for the loss of the licence, plus more than $100 million in interest payments. Tatts Group is claiming $590 million plus interest.

The Victorian government claims the 1994 Act had been repealed and was no longer valid, so therefore it was not liable to pay any compensation to either company.

The gaming companies today announced that the verdict is expected to be delivered today at 4.30pm. Both companies will release announcements after that, but prior to the market opening tomorrow at 10am.

Regardless of whether they win or lose, Tabcorp and Tatts have an entrenched position in Australia's gambling industry – and we all know that Aussies love to have a flutter, whether it's on horses, dogs, sport, Kino or the lotteries.

Sporting fully franked dividend yields of 5.2% and 4.7% for Tatts and Tabcorp, respectively, both companies may be worthy of adding to your watchlist. Other gambling contenders for your portfolio include Aristocrat Leisure Ltd (ASX: ALL) and Ainsworth Gaming Technology Limited (ASX: AGI) – who manufacture and sell poker machines around the world.

Motley Fool writer/analyst Mike King doesn't own shares in any companies mentioned. You can follow Mike on Twitter @TMFKinga

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