Lottery Corporation secures a 40-year Victorian licence, de-risking its runway to 2050

A jackpot-driven earnings wobble through late 2025 has given way to a defining strategic win for Lottery Corporation: a 40-year Victorian licence extension that L1 Capital says removes major renewal risk from the business until 2050.

30 Jun 2026 · 5 min read

Fund managers covering Lottery Corporation Ltd (ASX: TLC) spent late 2025 explaining away a run of jackpot bad luck before the company's Victorian licence negotiation delivered the defining strategic development of 2026. Investors Mutual Limited described the pattern clearly in December 2025, noting the stock underperformed by around 12% on a poor run of large jackpots that drove lower market earnings estimates, while maintaining its investment case was unchanged given TLC's long-term defensive growth from monopoly lottery licences and margin improvements through online adoption.

Jackpot luck turns, then a licence deal reshapes the story

By February 2026, Pendal Group reported the company had delivered a slight earnings beat despite record bad luck on jackpots in the first half, with a new CEO's positive outlook on digital penetration and new product offers helping sentiment, even as Pendal itself preferred other defensives such as Telstra given TLC's 29 times earnings multiple. The more consequential development arrived in May 2026, when Pendal reported TLC agreed to pay $1.15 billion to the Victorian Government for a 40-year lottery licence, taking effect from the expiry of its current licence in 2028. The length of the deal was a positive surprise against market expectations of 20 years, though the price paid was higher than expected, prompting earnings downgrades.

Following the recent finalization of the Victorian license, there are now no major license renewals until 2050, which gives the business a very long runway and exceptional earnings visibility.

L1 Capital, Presentation, June 2026

An infrastructure-like asset with a new CEO

L1 Capital framed the Victorian outcome as the clearest evidence yet that Lottery Corporation deserves to be valued alongside high-quality infrastructure assets. The fund said investors are getting a roughly 3.5% fully franked dividend yield attached to a business it believes can grow earnings at close to double-digit rates with very limited capital intensity and no major capex cycle expected for the next 25 years, drawing a comparison to Transurban while arguing TLC potentially offers stronger organic growth and lower capital intensity. L1 was also positive on the appointment of Wayne Pickup as CEO, who joined in late 2025 with more than 25 years of international lottery experience.

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 Capital, Presentation, June 2026

Some managers remain unconvinced on the digital strategy

Not every catalyst has landed as hoped. Pendal Group described TLC's June 2026 investor day as being received slightly negatively by the market, noting the company's strategy was largely more of the same, doubling down on its digital engagement push, while a modest $10 million FY26 opex reduction fell short of anticipation for a larger cost-out program. Airlie Funds Management, by contrast, said it does not own TLC as a simple "defensive" but because of its unique collection of long-dated licences and a significant long-term margin tailwind from the shift to online ticket purchasing, alongside a refreshed management team focused on opex discipline.

What managers are watching next

With new capital continuing to flow into the name, Ten Cap added to its position in May 2026 citing TLC's defensive earnings profile and resilient cash generation in an environment of softening discretionary consumer demand, while Antares Capital initiated a new position on the view that TLC tends to perform better in stable to declining rate environments. With the Victorian licence now locked in through 2028 and beyond, the next signposts fund managers are tracking are the pace of the digital engagement rollout, execution under the new CEO, and whether opex discipline can translate the newly secured licence runway into the double-digit earnings growth L1 Capital's thesis depends on.