As I noted in this article yesterday, shareholders would either be delighted or dismayed based on the verdict in the court case between Tabcorp Holdings Limited (ASX: TAH), Tatts Group Limited (ASX: TTS) and the Victorian state government.
Well shareholders in Tatts Group are smiling this morning after the Supreme Court judge ruled in favour of Tatts Group, and awarded the company $451 million, plus interest, which will likely be more than $100 million. Tatts Group shares are up over 3% today, following a strong rise yesterday.
Tabcorp shareholders will be disappointed, with the judge ruling against the company and dismissing Tabcorp's bid for compensation. Justice Hargrave said the decision was 'manifestly unfair and unreasonable', but 'this is an unfortunate case of the harsh reality of sovereign risk'. Tabcorp shares are down 4.9% in early morning trade.
The Victorian government may well appeal against the Tatts Group decision, while Tabcorp has 14 days to lodge an appeal, with the company indicating it is reviewing the court's judgement.
Tatts and Tabcorp were treated differently because Tatts had an agreement with the state government in 1995, while Tabcorp relied on the 1994 Gaming and Betting Act. Unfortunately for Tabcorp, the state government repealed the Act in 2009, three years before its pokies licence expired.
It seems unlikely that we've heard the last of this. Both losing sides (Vic government and Tabcorp) may well appeal against their respective verdicts. At current prices, both Tatts and Tabcorp are paying a decent fully franked dividend yield of 4.7%, and hold a strong position in Australia's gambling industry. Other stocks Foolish investors may want to consider in this space include Jumbo Interactive Limited (ASX: JIN) and eBet Limited (ASX: EBT). To find out how you could make $1,000,000 in the stockmarket, read on…
