The Lottery Corporation Limited (ASX:TLC) announced its results for the full year ended 30 June 2026 on 19 August 2026. Revenue was $3,582.5 million, down 2.7% from $3,682.7 million, and EBITDA before significant items fell 1.8% to $736.1 million. EBIT before significant items declined 4.2% to $622.3 million and NPAT before significant items declined 6.3% to $342.5 million.

Including significant items of $57.9 million after tax, NPAT was $284.6 million, down 22.1%. Earnings Per Share before significant items were 15.4 cents, down 6.1%, and 12.8 cents including significant items. The full year Dividend was maintained at 16.5 cents per share, fully franked.

The Lottery Corporation operates lotteries, Keno and digital businesses in Australia. It described a plan centred on the proposition 'Where Australia Comes to Play' and a new operating model.

Chief Executive Wayne Pickup said the company's infrastructure-like qualities were again evident, and that the Victorian licence extension has structurally lowered risk. He also said expense discipline was structural rather than a one-off, giving room to reinvest in digital, AI, product and customer capability.

Recent Development

In its 19 August 2026 release, the company attributed the revenue decline to historically low jackpot offers, which it described as a one-in-45-year outcome. There was no $100 million Powerball jackpot for the first time since FY21 and no $50 million Oz Lotto jackpot for the first time since FY17. These outcomes reduced revenue by about $350 million and variable contribution by about $90 million, compared with about $50 million and $10 million in the prior year.

Partly offsetting this were price changes to the two largest games. Price retention was 63% on Powerball after a November 2025 change and 100% on Saturday lotto following its May 2025 change. Lotteries revenue was $3,218.2 million, down 3.3%, and EBITDA was $626.6 million, down 3.0%. Group EBITDA Margin was 19.5% against 19.4%, and digital share of turnover rose to 46.6% from 45.7%.

Keno performed better, with revenue up 3.0% to $364.3 million, EBITDA up 6.2% to $109.5 million and margin at 30.1% against 29.2%. Operating expenses fell 3.6% to $295.9 million, while Depreciation and Amortisation rose 8.6% to $114.1 million and interest expense rose 4.1% to $123.3 million.

The final dividend is 8.5 cents per share, fully franked, payable on 24 September 2026 to holders registered on 27 August 2026, with an ex-dividend date of 26 August 2026. The full year payout equals 107% of NPAT before significant items. Leverage at year end was 3.1 times, and S&P Global reaffirmed its BBB+ rating on 4 May 2026. The company recently secured a 40-year extension of the Victorian lotteries licence, with a $1,145 million payment due in the first half of FY27.

The release also noted that tax expense fell 5.4% to $156.5 million and that the Impairment Reversal was $0.3 million compared with $5.2 million. Set for Life will rise in price from 60 cents to 70 cents from September 2026, subject to regulatory approvals.

Sector Context

Lottery results depend on jackpot activity, since large prize pools draw more players. The company said Division 1 offers were low across FY26 and that jackpot outcomes are inherently variable and even out over time. Customer numbers were also affected by the low jackpot offers.

The sector's Economics also depend on licences, and management described its licences as long-dated, with the Victorian extension lengthening the duration of its portfolio. The company noted that its growth plan includes bringing more than 4 million existing unregistered customers into its membership ecosystem, and refers to digital as its primary growth engine.

Regulation is part of the environment. Proposed amendments to the Interactive Gambling Act are before Federal Parliament and would prohibit foreign matched lotteries and keno from being offered online.

Keno depends on the venue network. Management said licensed venue footfall was resilient and that new terminals delivered early benefits, though digital turnover in Keno grew more slowly than retail.

Risks and Uncertainties

The company flagged that the proposed legislation, if enacted in its current form from 1 January 2027, would affect online Keno, which represented about 2% of Group turnover and about $25 million of EBITDA in FY26. Leverage is expected to rise materially in the first half of FY27 after the Victorian licence payment, likely beyond the long-term target range of 3.0 to 4.0 times.

Financial results also show pressure: revenue, EBITDA, EBIT, NPAT and EPS all declined, and the dividend payout exceeded earnings before significant items. FY27 operating expenses are guided to $305 million to $315 million, up from $296 million, and are subject to jackpot outcomes. Planned refreshes of Set for Life and Oz Lotto are subject to regulatory approvals.

What to Watch Ahead

For FY27, guidance is operating expenses of $305 million to $315 million, depreciation and amortisation of $125 million to $130 million and Capital Expenditure of about $100 million. From FY27 the dividend policy changes to 80% to 100% of NPATA before significant items, with licence amortisation after tax forecast at about $43 million.

Catalysts include the Set for Life price increase from 60 cents to 70 cents from September 2026, an Oz Lotto refresh planned for late calendar 2027, completion of new retail terminals in Victoria, Keno digitisation through bring-your-own-device capability, a new app targeted for the first half of FY28, and progress of the Interactive Gambling Act amendments.

Management's FY27 priorities also include deploying AI to optimise jackpots and extend major draw times, improving the appeal of Instant Scratch-Its tickets and building a daily and instant wins proposition, and reviewing its retailer commission structure. The new retail terminal rollout in Victoria is expected to be substantially complete, after Queensland, New South Wales and the ACT.

The Bottom Line

The Lottery Corporation's FY26 update showed lower revenue and earnings in a period of low jackpots, offset partly by price retention, cost reductions and Keno growth, with the dividend held at 16.5 cents. Jackpot outcomes, leverage after the licence payment and legislation are the next items to follow.