A payout to gambling firm Tatts could cost Victoria $540 million, Treasurer Michael O'Brien says.
A Victorian Supreme Court judgment on Thursday means the state government has to pay $451 million plus interest to the company after Tatts and Tabcorp lost their duopoly on gambling machines outside Crown Casino in 2009.
A similar claim by Tabcorp for $686 million was rejected by Victorian Supreme Court Justice Kim Hargrave.
Mr O'Brien said Tatts' win could cost up to $540 million.
"This is a mixed outcome for the state," Mr O'Brien told reporters on Thursday.
"It's a very material blow to the state budget."
Mr O'Brien said the government had 14 days to weigh up an appeal.
He said the blame for the ongoing legal battle should land on former Labor gaming minister and current opposition leader Daniel Andrews, who was in government when changes to the gaming laws were made.
Mr O'Brien said a hearing on Friday would determine the amount of the interest payment.
Tatts and Tabcorp had terminal payment provisions in their gaming licences, requiring the government to pay fees if new licences were granted.
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