Tabcorp is currently pursuing a merger with fellow gaming giant Tatts Group, and the settlement of the case will remove one of the potential roadblocks for the deal.
Tabcorp has pledged to better monitor customer transactions to prevent money laundering activities.
Tabcorp is currently pursuing a merger with fellow gaming giant Tatts Group, and the settlement of the case will remove one of the potential roadblocks for the $11 billion deal.
AUSTRAC, the government's financial intelligence agency, launched a civil suit in the Federal Court against the gaming company in 2015 after concerns it had not properly monitored the behavior of its customers as directed by current legislation.
It added extra contraventions to its claim in April 2016, taking the total number of alleged breaches to 236.
The company faced a multi-billion fine as each contravention carried a $18 million penalty under current legislation
The company said in a statement to the Australian Securities Exchange on Thursday that its contraventions were not a deliberate breach of money laundering and counter terrorism laws.
Tabcorp chief David Attenborough said the company was pleased to have reached an agreement with AUSTRAC.
"We will continue to work cooperatively with AUSTRAC going forward," Mr Attenborough said.
Tabcorp said it had tightened up its compliance on money laundering and counter terrorism funding by introducing a new internal monitoring program it describes as "a material improvement on its former program".
It has also made a "substantial" investments in improving its monitoring of customers transactions by employing a chief risk officer, establishing a financial crime risk team and expanding its anti-money laundering and counter terrorism financing teams.