A combined Tabcorp and Tatts Group $11.3 billion wagering giant will have the firepower to hunt for acquisitions and bid aggressively for lotteries and wagering contracts overseas, and take on the international bookmakers who have wreaked havoc in the Australian market in recent years.

Tabcorp and Tatts have agreed to merge via a scheme of arrangement to create a group with annual revenues of more than $5 billion and pre-tax profits exceeding $1 billion.