Victoria’s long-term lottery licensing arrangement has returned to the political spotlight after new analysis highlighted the state’s comparatively high lottery tax collections and renewed questions about the government’s 40-year agreement with The Lottery Corporation.

The debate centres on two separate issues: how much tax Victorian lottery players contribute compared with residents in other states, and whether the process used to negotiate the licence extension delivered the best possible value for taxpayers.

According to data examined by the Herald Sun, Victoria applies the highest effective lottery tax rate in Australia. During the 2023–24 financial year, Victorians spent approximately A$2.125 billion on lottery tickets, less than players in New South Wales. However, Victoria collected around A$669 million in lottery taxes, exceeding New South Wales despite lower overall ticket sales. The effective tax rate equated to about 31.5 cents from every dollar spent on lottery tickets, compared with lower effective rates in several other states.

The renewed attention follows the Allan Government’s decision earlier this year to extend Victoria’s exclusive public lottery licence by 40 years. The agreement included an upfront payment of approximately A$1.145 billion and gives The Lottery Corporation certainty to continue operating public lotteries in Victoria until 2068. Government representatives have argued that the agreement represents strong value for taxpayers while providing long-term certainty for the lottery system.

Opposition politicians have questioned whether the licence extension was negotiated through a sufficiently open process. They argue that a competitive tender may have produced greater value for taxpayers and have sought additional government documents relating to financial modelling, valuation advice and negotiations surrounding the agreement. Some critics also argue that extending an exclusive licence for four decades limits future governments’ flexibility when considering gambling policy.

The Victorian Government rejects those criticisms. Officials maintain that the agreement was developed following commercial assessment and market testing, and they argue that lottery taxation remains an important source of revenue supporting the state’s Hospitals and Charities Fund. Government representatives also say the Victorian licence provides stronger financial returns than comparable arrangements elsewhere in Australia.

The Lottery Corporation has likewise defended the arrangement, stating that it continues to support hundreds of small retail outlets across Victoria while generating substantial lottery duty revenue for community services. The company has also emphasised that the long-term licence provides greater operational certainty and supports future investment in the Victorian lottery network.

The controversy has expanded beyond tax rates alone. Victoria’s Auditor-General has commenced a review examining whether the licence extension represents appropriate value for taxpayers and whether the government’s decision-making process met expected standards of governance and accountability. That review is expected to consider financial modelling, procurement processes and broader public interest considerations.

Policy specialists note that lottery taxation differs from many other forms of taxation because it is generated through voluntary participation rather than compulsory payments. Even so, they argue that long-term monopoly agreements involving public assets inevitably attract close scrutiny regarding transparency, competition and value for money, particularly when they extend across several decades.

Supporters of the current arrangement contend that securing a substantial upfront payment and guaranteed long-term revenue benefits Victorian taxpayers. Critics counter that the financial value of such agreements should be assessed over the full life of the licence rather than focusing solely on the initial payment. Those differing perspectives are likely to remain part of the public discussion while the Auditor-General’s review continues.

As the review progresses, debate over Victoria’s lottery system is expected to focus not only on how much revenue it generates but also on how governments balance fiscal priorities, transparency and long-term stewardship of valuable public licences.