The state government has sold its ''licence to print money'' for $1.1 billion, offloading NSW Lotteries in a move which will wipe out its projected deficit for 2009-10 and give it additional fiscal firepower as it gears up for next year's election.

Tatts Group has agreed to pay $850 million for the licence to run NSW Lotteries for the next 40 years, with another $160 million, mostly cash, to be transferred from the lotteries business into government coffers before the sale is finalised.

The sale price was well above initial estimates that the business would sell for about $500 million. Based on the latest profit by NSW Lotteries, that estimate had risen to more than $700 million as the sale process began.

''We will be recovering some state debt,'' the Treasurer, Eric Roozendaal, said. The amount used to repay debt would be ''worked out through the budget committee process'' with other proceeds spent on frontline government services and infrastructure.