Vic govt to appeal Tatts, Tabcorp levy win

State to challenge ruling that will see groups avoid $49.1m hit.

The Victorian government is appealing a court win by Tabcorp Group Ltd and Tatts Group Ltd against the state over a levy on gaming machines they no longer operate, which would have delivered a collective $49.1 million hit to the groups' after tax earnings in the current fiscal year.

It emerged in May that the levy on gaming machines had been charged for the current full financial year despite Tatts and Tabcorp ceasing ceasing their operation after 46 days.

The state is appealing a Supreme Court of Victoria ruling last month that set aside the 'Health Benefit Levy' imposed on the gamers, saying the Victorian treasurer "erred in making the determination on the basis that he had no discretion".

The levy would have shaved an additional $24.8 million from Tatts Ltd's after tax earnings in 2012-13, on top of the $7 million provisioned for, and $18.3 million from Tabcorp's.

The Victorian government is now charged with issuing a new levy "in recognition that Tatts’(and Tabcorp's) Victorian gaming operations were conducted for only a 46 day period in FY13".

Tabcorp said the court had decided that the Victorian government did have a discretion under the Gambling Regulation Act 2003 (Vic) to calculate the HBL on a pro rata basis.

Tatts said operations for the 46 days generated earnings before interest, tax and depreciation of about $29 million, well short of the $42.607 million levy it had been told to pay.

The levy, known as the Health Benefit Levy, was introduced by the Victorian Government from July 2000 and applied to every electronic gaming machine operated by Tabcorp in the state.

Tabcorp and Tatts launched the suit against the Victorian government challenging the levy in mid-May.