Australian gaming company Tabcorp has paid $410 million to run retail betting operations in Victoria, the country's second most populous state.

The 12-year licensing deal gives Tabcorp the right to operate the state's only off-course retail betting network as well as the tote and fixed-odds betting, according to a Reuters report.

The deal also strengthened its monopoly on Victoria's off-course gambling beating a rival bid from competitor, Tatts Group. Tabcorp has been operating Victoria's horse gambling system for 50 years.

Tabcorp would pay the Victorian state government a premium of $410 million for the license renewal for retail betting. The license would allow Tabcorp to run totalisator- a betting system for horse racing- and fixed odds betting.

"This is a license which has been evaluated based on technical ability, commitment to the racing industry in this state, probity, financial stability and also responsible gambling," said Gaming Minister Michael O'Brien.

The bid will be a windfall for taxpayers the Minister added and will give better returns to taxpayers.

"Tabcorp provided the stronger bid and that is the recommendation I received and that is the decision I have made," he said.

"The bid includes a premium payment up front of $410 million which in the current environment is a strong and fair value we think for this wagering and betting license."

British bookmaker Ladbrokes was also bidding for the license before it pulled out at the last minute.