TATTS Group boss Dick McIlwain has acknowledged the potential benefits of merging some of his empire with rival Tabcorp Holdings.
Mr McIlwain's comments yesterday will add fuel to speculation the gaming giants could consider a tie-up as they recover from the Victorian government's decision ending their duopoly over the state's gaming machines.
Mr McIlwain said Tatts had not spoken to Tabcorp about "a particular merger or anything like that".
"We are both aware that there's great benefits from putting parts of companies together," he told ABC TV's Inside Business.
"We've seen that through the consolidation that has already occurred in the industry particularly our consolidation in South Australia and the lottery's consolidation back into Queensland.
"These businesses lend themselves to consolidation.
Also, the ACCC (Australian Competition and Consumer Commission) seems to buy the idea that bigger pools are better for customers."
Tabcorp currently holds the wagering licence in Victoria but will face competition when it expires in 2012.
As part of the State Government's shake-up to the gaming industry, Tabcorp and Tatts will lose duopoly control over the 27,500 poker machines operating in pubs and clubs outside Crown Casino when their licences expire in 2012.
Under the new venue-based model, no single operator will be able to own more than 35 per cent of the machines in pubs.
Mr McIlwain said it was unlikely Tatts would itself move to buy pub and club venues.
Both Tabcorp and Tatts have signalled potential legal action to pursue what they say is an entitlement to compensation of $600 million each as a result of the restructure.
Mr McIlwain said the competition watchdog would not necessarily oppose a tie-up between the two gaming giants, even though it opposed Tabcorp's proposal to take over Queensland tote operator Unitab two years ago.
Tatts was itself successful in taking over the Queensland operator later in 2006.
"The environment has changed quite considerably since then so whether that is enough to shift the ACCC's view in this matter is another matter," he said.
"We haven't canvassed it, haven't talked to them about it."
Since coming into the Tatts stable Unitab has itself been considering bidding for the wagering licence in Victoria.
