Lottery Corp. Ltd.

Overview Key strengths Key risks Leading market position in the highly regulated Australian lotteries and Keno sector. License renewal risks, including renewal on less favourable terms or outright loss of license. Exclusive and/or long-dated state and territory licenses creating high barriers to entry. Geographic expansion into less favorable offshore jurisdictions. High-quality cash flows driven by low capital intensity, low fixed-cost base, and the habitual nature of lotteries customers. Exposure to demographic shifts as well as changes in consumer tastes and preferences. Long track record of EBITDA and margin stability through economic cycles. Supporting this competitive position is the group's state and territory licenses, which create high barriers to entry into the retail distribution of lottery tickets in Australia; those licenses

...The Lottery Corp. Ltd. (TLC) maintains a strong competitive position within the heavily regulated Australian market. Supporting this competitive position is the group's state and territory licenses, which create high barriers to entry into the retail distribution of lottery tickets in Australia; those licenses are exclusive or long-dated or both. As a result, we believe the company has limited need to defend its market position through promotional activity. In our view, TLC's very strong position in the Australian market, in which consumers display a high propensity to participate in lottery games, differentiates it from global peers. In our view, TLC's lotteries cash flows have a long track record of being resilient through economic cycles. We believe the company's stable revenue and EBITDA margin generate high- quality cash flows akin to infrastructure assets. This positions the company well if persistent inflation and elevated interest rates cause a slowdown in discretionary consumer...

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