AAP

Gaming firm Tatts Group Ltd has forecast flatter growth this financial year due to the effects of the economic downturn but is confident about expansion opportunities.

Sales in some parts of the business are expected to be down on last year but entry into the Victorian market of the NSW Lotteries and Maxgamings business units is expected to expand the business.

Chief executive Dick McIlwain told the lotteries, poker machine and wagering company's annual general meeting on Friday that the downturn continued to impact sales in the current financial year.

"The signs are already evident in our FY (fiscal year) 2010 sales that the typical customer response to more difficult economic conditions is now emerging," Mr McIlwain told the meeting in Queensland, where 55 per cent of the company's shareholders are based.

"The consequence of all of this is likely to be flatter growth, without a reduction in spending, across our total portfolio of services."

Tatts Pokies Victorian gaming machine operations is struggling to match the sales delivered last financial year, he said.

Tatts Lotteries, including Golden Casket, has delivered an eight per cent increase in net revenue so far this year.

"Earnings before interest, taxes, depreciation and amortisation (EBITDA) to net revenue margins improved during the first quarter of the financial year," Mr McIlwain said.

"A tough, or impossible, second half does not mean that the FY2010 will be a poor result.

"However, it probably means that the first half will be better than the second."

Tatts' Maxgaming and Bytecraft gaming models have improved their financial performance this financial year, he said.

"EBITDA for the first quarter from these businesses has increased by almost five per cent so far this financial year," Mr McIlwain said.

"Their profitability isn't affected by the seasonality experienced by the networked gambling businesses."

Tatts' international businesses in South Africa and UK were enduring mixed fortunes.

"The South African business is moving towards a sale," Mr McIlwain said.

"Sales in UK pounds are up 12 per cent this year with the benefit of the contribution from the two acquisitions we made during the 2009 financial year.

"Nevertheless, first half profits will be weaker when compared with the same period last year."

NSW Lotteries and Maxgamings potential entry into Victoria were "immediate opportunities", Mr McIlwain said.

"They offer the same prospects for seamlessly and profitably extending existing businesses within the Tatts portfolio," he said.

"Other opportunities continue to emerge."

In August, the company booked a net profit of $277.44 million for the year to June 30, 2009, up 7.7 per cent from $257.58 million in the prior year.

Tatts shares were up one cent at $2.48.