Company Reports

Lottery Corp's fiscal 2026 underlying EBITDA was AUD 736 million, about 2% lower than last year on a below-average run of jackpots. The company estimates turnover was about AUD 700 million worse than a normal run of jackpots would produce.

The Lottery Corporation should continue to dominate lotteries in Australia. Regulation limits competition through compulsory licensing, thereby bestowing on Lottery Corp a near-monopoly over long-dated licenses in all Australian states and territories except Western Australia. No significant licenses are set to expire before 2050. Competition at license renewal is likely, and we anticipate a good chance that exclusivity may not be retained. But this risk is immaterial to our fair value estimate. We do not expect any significant regulatory changes, given the government and community's dependence on Lottery Corp's revenue.

The Lottery Corporation should continue to dominate lotteries in Australia. Regulation limits competition through compulsory licensing, thereby bestowing on Lottery Corp a near-monopoly over long-dated licenses in all Australian states and territories except Western Australia. No significant licenses are set to expire before 2050. Competition at license renewal is likely, and we anticipate a good chance that exclusivity may not be retained. Still, this risk is immaterial to our fair value estimate. We do not expect any significant regulatory changes, given the government and community's dependence on Lottery Corp's revenue.

Lottery Corp flagged annualized operating cost savings from next year of about AUD 10 million at its investor day, ostensibly in labor, to be invested in digital capabilities and product development. Separately, its exclusive Victorian lottery license has been extended to June 30, 2068.

The Lottery Corporation's interim 2026 EBITDA was AUD 367 million, about 1% lower than last year amid a below-average run of jackpots. The company estimates a turnover hit during the half from unfavorable jackpot sequencing of about AUD 400 million, worse than the AUD 200 million impact last year.

The Lottery Corporation should continue to dominate lotteries in Australia. Regulation limits competition through compulsory licensing, thereby bestowing on Lottery Corp a near-monopoly over long-dated licenses in all Australian states and territories except Western Australia. The only significant license set to expire before 2050 is the Victorian lottery license, which expires in 2028. Competition for the Victorian license at renewal is likely, and we anticipate a good chance that Victoria would grant a second lottery license. Still, this risk is immaterial to our fair value estimate. We do not expect any significant regulatory changes, given the government and community's dependence on Lottery Corp's revenue.

In the first 24 weeks of fiscal 2026, we estimate ticket sales for The Lottery Corporation's core games are down 4% on last year.

The Lottery Corporation should continue to dominate the Australian lottery landscape. Regulation limits competition through compulsory licensing, thereby bestowing on The Lottery Corporation a near-monopoly over long-dated licenses in all Australian states and territories except Western Australia. The only significant license set to expire before 2050 is the Victorian lottery license, which expires in 2028. Competition for the Victorian license at renewal is likely, and we anticipate a good chance that Victoria would grant a second lottery license. Still, this risk is immaterial to our fair value estimate. We do not expect any significant regulatory changes, given the government and community's dependence on The Lottery Corporation's revenue.

The Lottery Corp should continue to dominate the Australian lotteries landscape. Regulation limits competition via compulsory licensing, bestowing Lottery Corp with a near-monopoly on long-dated licences in all Australian states and territories except Western Australia. The only significant licence due to expire before 2050 is for the Victorian lottery, which expires in 2028. We think competition for the Victorian licence on renewal is likely and anticipate a good chance Victoria would grant a second lottery licence, but the risk is immaterial to our fair value estimate. We do not expect any significant changes in regulation due to the government and community's dependence on The Lottery Corp revenue.

Lottery Corp's fiscal 2025 underlying EBITDA fell 9% to AUD 749 million. Powerball lottery turnover was 26% lower, cycling a record fiscal 2024 with a below-average jackpot year. This was partially offset by an above-average year for Oz Lotto, growing 15%.

We take a fresh look at Jumbo Interactive's customer acquisition costs amid an apparent decline in fiscal 2025 lottery volumes. Fiscal 2024 was a bumper year. Last year's record AUD 200 million Powerball jackpot was a one-in-seven-year event, alone about 7% of Lottery Corp's lottery turnover.

We expect The Lottery Corp to thrive now that it is unshackled from Tabcorp's competitively challenged wagering business. Regulation limits competition via compulsory licensing, bestowing Lottery Corp with a near-monopoly on long-dated licences in all Australian states and territories except Western Australia. The only significant licence due to expire before 2050 is for the Victorian lottery, which expires in 2028. We think competition for the Victorian licence on renewal is likely and anticipate a good chance Victoria would grant a second lottery licence, but the risk is immaterial to our fair value estimate. We do not expect any significant changes in regulation due to the government and community's dependence on The Lottery Corp revenue.

With tariff rates raised to levels not seen in a century, US President Donald Trump's "liberation day" has rattled global markets. Higher tariffs will likely set in motion a cascade of supply-demand side shocks, all acting to weigh on the rate of economic growth.

The Lottery Corporation reported interim 2025 underlying EBITDA of AUD 370 million, 7% lower than last year. A below-average period of jackpot sequencing during the period weighed on lottery performance, while higher operating costs now reflect full separation from Tabcorp.

We expect The Lottery Corp to thrive now that it is unshackled from Tabcorp's competitively challenged wagering business. Regulation limits competition via compulsory licensing, bestowing Lottery Corp with a near-monopoly on long-dated licences in all Australian states and territories except Western Australia. The only significant licence due to expire before 2050 is for the Victorian lottery, which expires in 2028. We think competition for the Victorian licence on renewal is likely and anticipate a good chance Victoria would grant a second lottery licence, but the risk is immaterial to our fair value estimate. We do not expect any significant changes in regulation due to the government and community's dependence on The Lottery Corp revenue.

Australian lottery prize pools are tracking broadly flat compared with fiscal 2024. In the first 24 weeks of fiscal 2025, aggregate prize pools for The Lottery Corp's four biggest games: Powerball, Oz Lotto, Saturday Lotto, and Weekday Windfall, are broadly flat compared with last year.

Fiscal-year 2024 was a bumper year for wide-moat Lottery Corp. Sales beat our expectations, led by outsized 15% growth in the core lottery segment. Oz Lotto and Powerball tickets, which surged in the second half on favorable jackpot sequences, more than offset modest sales declines across most base games. Higher commissions and higher margin digital sales underpinned operating margin expansion in lotteries. Underlying EPS jumped roughly 20% to AUD 18 cents per share, compared with our AUD 16 cents per share forecast.

We expect The Lottery Corp to thrive now that it is unshackled from Tabcorp's competitively challenged wagering business. Regulation limits competition via compulsory licensing, bestowing Lottery Corp with a near-monopoly on long-dated licences in all Australian states and territories except Western Australia. The only significant licence due to expire before 2050 is for the Victorian lottery, which expires in 2028. We think competition for the Victorian licence on renewal is likely and anticipate a good chance Victoria would grant a second lottery licence, but the risk is immaterial to our fair value estimate. We do not expect any significant changes in regulation due to the government and community's dependence on The Lottery Corp revenue.

Fiscal-year 2024 has been a rollercoaster for lottery volumes. Wide-moat Lottery Corp’s core jackpot games—Powerball, Saturday Lotto, and Oz Lotto—together accounting for around three quarters of turnover, had a very slow start to the year, with an unfavorable jackpot sequence failing to stoke demand for tickets. But this changed dramatically as we approached the end of calendar 2023, with a AUD 100 million Oz Lotto jackpot in December 2023 followed by a record AUD 200 million Powerball in February 2024. Since then, volumes have kept up, with another AUD 150 million jackpot in May 2024 rounding out the fiscal year.

Households are clearly under budget pressure and cutting back on lottery tickets, which is typically a resilient product for wide-moat Lottery Corp. An unfavorable sequence of Powerball jackpots didn’t help, and both revenue and underlying EBITDA from the core lottery segment, which accounts for around 86% of earnings, fell 2% on the previous corresponding period, or PCP. Partially offsetting was the AUD 90 million Oz Lotto draw toward the end of the half, with the game finally generating the larger jackpots expected since the May 2022 redesign. But Lottery Corp’s fortunes changed in the early weeks of the second half. The record AUD 200 million Powerball lottery, drawn on Feb. 1, 2024, has improved volumes dramatically—particularly against a soft PCP. Despite the soft start to fiscal 2024, we raise our group revenue forecast by 5% to AUD 3.8 billion, which lifts fiscal 2024 forecast earnings per share by 6% to AUD 0.16. Revenue and earnings forecasts from fiscal 2025 remain broadly intact. Shares trade at a modest premium to our unchanged AUD 5.00 per share fair value estimate.