Lottery Corp Bulls Bet the Jackpot Drought Will End as Licences Run to 2050

A rare run of bad luck has hit earnings, but fund managers see long-dated licences, online growth and game changes underpinning the case.

30 Sep 2026 · 6 min read

Fund managers who back The Lottery Corporation are treating its worst stretch of luck in decades as an opportunity rather than a warning. L1 Capital, which named the company as its most recent investment in a September 2026 article, said current earnings had been hit by an unusually unfavourable jackpot cycle. "Current earnings have been impacted by an unusually unfavourable jackpot cycle, being a one in 45-year jackpotting sequence, which we do not believe reflects the underlying quality of the business," L1 Capital said.

Current earnings have been impacted by an unusually unfavourable jackpot cycle, being a one in 45-year jackpotting sequence, which we do not believe reflects the underlying quality of the business

— L1 Capital, Article, September 2026

That framing runs through the most recent commentary. Investors Mutual Limited's August 2026 Monthly Report said a highly unusual lack of large lottery jackpots reduced the company's yearly profit, but that its longer-term prospects and market position remain unchanged. Perpetual Asset Management said in a September 2026 article that it had been "a very unlucky period" and that this offered "a really good opportunity" to own what it considers a highly defensive business at a reasonable valuation.

L1 Capital's James Hawkins, in another September 2026 article, said he expects jackpots to revert to a more normal pattern and start attracting the marginal player who does not necessarily buy weekly but responds to big promotional jackpots, which have been elusive. Hawkins described the earnings pressure as a temporary statistical anomaly that should reverse and lift earnings growth again.

A 40-year Victorian licence locks in the long-term case

The other pillar of the thesis is duration. Pendal Group's May 2026 Newsletter reported that Lottery Corp agreed to pay $1.15 billion to the Victorian Government for a 40-year lottery licence, taking effect when its current licence expires in 2028. Pendal said the length was a positive surprise, with the market having expected 20 years, and that it derisks the company, although the company paid more than expected, which resulted in downgrades.

Perpetual Asset Management described the extension as the big positive of the past 12 months. Perpetual said the average concession duration is now 25 years across the board, meaning the company does not need to spend on a big-ticket concession renewal for a long period, which "has implications for what the right debt to equity mix is within the capital stack." Perpetual acknowledged short-term earnings headwinds from extra interest and amortisation, but said "ultimately I think it greatly improves the quality of the Lottery Corp." In March 2026, Perpetual had suggested the licence could be an opportunity for the company to increase its target leverage range.

L1 Capital set out its framework in a June 2026 presentation, describing Lottery Corp as one of the highest-quality infrastructure-like assets in the Australian market, with no major licence renewals until 2050. "The simple way we think about TLC is that investors are getting a circa 3.5% fully franked dividend yield attached to a business that we believe can grow earnings at close to double-digit rates over time with very limited capital intensity," L1 said. It compared the company with a Transurban-style infrastructure asset, but with potentially stronger organic earnings growth and materially lower capital intensity.

Airlie Funds Management, in its March 2026 Monthly Report, said it does not own the company as a defensive per se, but because it is "a unique collection of long-dated licences with a significant long-term margin tailwind from the mix-shift to purchasing lottery tickets online," with a refreshed management team keen to drive opex discipline. L1 Capital added in September that, with the number of infrastructure and infrastructure-like companies on the ASX continuing to shrink, it sees an attractive outlook for the business over the next 12 to 24 months.

A unique collection of long-dated licences with a significant long-term margin tailwind from the mix-shift to purchasing lottery tickets online

— Airlie Funds Management, Monthly Report, March 2026

Digital adoption and game design as growth levers

Managers see a growth algorithm that goes beyond luck. Perpetual Asset Management explained in a March 2026 article that the company delivers mid-single digit top-line growth from turnover and a little price, with a structural tailwind to margins. "When more people buy tickets online, the margins are much higher because they're not paying commissions to the retail agents," Perpetual said, adding that this can support high single-digit growth that it considers sustainable for a long period.

Blackwattle Investment Partners pointed to product design as an extra catalyst. In a September 2026 article, Blackwattle said "we're optimistic on the game change that they're looking to do with Oz Lotto." It recalled that a Powerball change at the end of FY2018 made the division one prize harder to win, moving the odds from about one in 77 million to one in 135 million, which produced larger jackpots and helped lift FY2019 sales by 20%. Blackwattle said Oz Lotto's current odds of one in 63 million could be changed to one in 90 or 100 million, which would lift the jackpot prize pool and improve jackpot sequencing.

We're optimistic on the game change that they're looking to do with Oz Lotto

— Blackwattle Investment Partners, Article, September 2026

Leadership change is another lever. L1 Capital said in June 2026 that it rates new CEO Wayne Pickup highly, citing more than 25 years of lottery experience across multiple international markets, and said in September that it sees a genuine opportunity under him to grow the earnings base through operational improvements and new game initiatives. Pendal Group's February 2026 Newsletter said the new CEO presented a positive outlook highlighting increased digital penetration and new product offers. Investors Mutual Limited noted in its December 2025 Quarterly Report that a 17% Powerball price increase in November should help second-half earnings.

Not every milestone landed well. Pendal Group's June 2026 Newsletter said the investor day was received slightly negatively, as the strategy was largely more of the same, doubling down on digital to improve customer engagement. Pendal said a $10 million opex reduction in FY26 did not impress a market that had anticipated a larger cost-out program.

The cautious view centres on valuation and rotation

The more reserved commentary has focused on price and market rotation. Pendal Group said in February 2026 that the infrastructure nature of the business leads it to trade at 29x PE for only moderate growth, and that it saw other defensives, such as TLS, as more attractive. Alliance Bernstein's July 2026 Monthly Report said its overweight position detracted as investors rotated toward more cyclical and rate-sensitive areas, with sentiment weighed down by caution around jackpot activity, although it continued to view the company as a high-quality defensive business with a monopoly-like market position.

Others used the volatility to build positions. Ten Cap said in May 2026 that it added to the stock given its defensive earnings profile, dominant market position and resilient cash generation. Antares Capital initiated a position the same month, saying the company tends to perform better in stable to declining rate environments and that recent rate increases had created an attractive entry point. Plato Investment Management said in March 2026 that it expects profits and dividends to increase if luck turns back the company's way.

What managers are watching next

The thesis now hinges on time and probability. L1 Capital, Perpetual Asset Management and Investors Mutual Limited all expect the jackpot cycle to normalise, which L1's Hawkins believes should lift earnings growth again. Blackwattle Investment Partners is watching for the Oz Lotto game change, Perpetual is focused on what the longer licence profile means for the balance sheet, and L1 is looking to Wayne Pickup to cut costs and add products. With no major licence renewals until 2050, the supportive managers see the next 12 to 24 months as the window in which these levers can show up in earnings.