Victoria’s secret lotto licence extension to be probed by auditor-general

Victoria’s auditor-general will investigate whether the state’s 40-year lotto extension was good value for taxpayers amid criticism over the secretive process behind the exclusive deal.

The Allan government passed laws that allowed the multi-decade deal to be negotiated in private, a month after financial analysts praised The Lottery Corporation (TLC) for its “proactive” efforts to renew the licence early.

The Victorian Auditor-General’s Office has revealed it will now investigate how the government awarded the extension, including whether it was good value and truly competitive.

“It is important that the process adopted by the government was supported by robust analysis and advice, and that a credible threat of competition was maintained during negotiations to help optimise value,” the auditor-general’s office website says.

“We plan to examine if the public lottery licence extension optimised value for the state.”

The Department of Justice and Community Safety insists the deal was overseen by probity advisers and included a “market sounding process” to determine domestic and overseas interest, a claim at least one competitor has rebutted.

The shock 40-year extension of the licence was announced by TLC on May 5, the day the Victorian budget was released, through an announcement to the stock market.

In that notice, TLC said the deal came from “exclusive bilateral negotiations” including a $1.145 billion upfront “premium payment”.

The deal sparked criticism from the state opposition, competitors and anti-gambling advocates because of its length and the fact that there was no publicly visible tender process.

The Age can reveal the government was able to conduct these negotiations behind closed doors because of legislation it passed in June 2025. The new powers granted the minister the ability to extend the licence for a time of their choosing, compared to the 12-month extension previously allowed.

The law changes allowed the government to reach out to TLC and negotiate a multi-decade extension in secret, an option that was not on the table when the licence was subject to a bidding process in 2017.

Large gaming licences are typically canvassed about two years before they expire, with TLC’s 10-year licence not due to finish until 2028.

But in 2024 and 2025 financial analysts believed TLC was already pushing for a renewal, praising the company for its early approach to securing an extension.

Citi analysts provided advice in June 2024 that TLC was well-placed to improve its dividends to shareholders “as it attempts to renew its Victorian lottery licence earlier than the 2028 expiry”.

In March 2025, Citi analysts lauded departing chief executive Sue van der Merwe for her “proactive approach to seeking an early renewal of the Victorian lottery licence”.

A month later, the Allan government introduced new laws into parliament that allowed the minister to choose how long the lottery licence could be extended for and allowed negotiations to be held in private.

The Citi advice shows that financial analysts understood TLC to already be pushing for renewal at a time when the government was preparing this legislation. These laws were ultimately used to negotiate and approve a 40-year extension.

During earnings calls in February 2025, TLC chief financial officer Adam Newman answered a question seeking an update about the licence by saying that his team “have conversations with governments over time” that were “commercially sensitive in nature”.

He flagged TLC intended to use finances to employ its strategy, which included “licence enhancements”.

TLC did not directly answer when asked by The Age if it had discussed the licence extension before the laws were passed, whether it had advised the government on the laws and whether this was appropriate.

“The extension will allow TLC to continue to responsibly deliver our national portfolio of trusted and popular games to Victorians, support and invest in more than 800 largely small business lottery retailers and continue generating significant lottery duty revenue to fund state and community services,” a spokesperson said.

An Allan government spokesperson said the extension delivered Victoria the “highest value lottery licence return in the nation’s history”.

“The extension of the licence was independently overseen and puts us in line with NSW and South Australia.”

Opposition Leader Jess Wilson said the auditor-general probe confirmed there were questions to answer about the deal.

“In a desperate attempt to keep net debt under $200 billion, Labor has extended Victoria’s lottery licence without any proper transparency and in a way that has failed to maximise value for Victorians,” she said.

Alliance for Gambling Reform chief advocate Tim Costello said the decision to grant a 40-year extension had the “smell of a terminal government”.

“We had to find out from the stock exchange; it doesn’t get more cowardly and lacking transparency than that,” he said.

Costello welcomed the auditor-general’s investigation and said the agreement had made it difficult to trust the government.

Greens leader Ellen Sandell said the deal “smells fishy” and Victorians knew it.

“We should be taxing big gambling corporations and reining in predatory pokies, not giving them special deals,” she said.

Defending the 40-year extension, the Department of Justice said it brings Victoria in line with NSW, Queensland and South Australia, which all have licences that expire past 2050.

The department said the decision to negotiate with TLC was made after a comprehensive assessment of the public lotteries market, including a “market sounding” of potential interest from domestic and international participants, overseen by an independent probity adviser and the government’s Independent Review Panel.

“This extension was independently overseen and it has delivered the best return of a licence extension ever in Australian history,” a spokesperson said.

”The money received from the public lottery licence is invested in Victoria’s Hospitals and Charities Fund, which supports vital health services and facilities.”

The Lottery Office, one of TLC’s only competitors in Australia, repeated comments it made earlier this month when asked if it was part of this market sounding.

“To our knowledge, no other operator was invited to engage in or bid for the Victorian licence,” a spokesperson said.

”We believe arrangements of this scale should be subject to a transparent, competitive process – a single licence model is not necessary.”

Taxes on lotteries will bring $632 million into Victoria next financial year and increase to $736 million by 2029-30.

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