Tabcorp vs The Lottery Corporation: Which ASX gaming share comes out on top?

Tabcorp vs The Lottery Corporation shares: Which is the better buy this week?

Choosing between Tabcorp Holdings Ltd (ASX: TAH) and Lottery Corporation Ltd (ASX: TLC) feels like picking a ticket in two different draws. Both companies should be pretty familiar to Aussie investors, especially after the 2022 demerger that left them operating in distinct (yet related) corners of the gaming and wagering industry. If you’re weighing up Tabcorp vs The Lottery Corporation shares this week, here’s a closer look at the core points of difference.

The case for Tabcorp

Tabcorp is one of Australia’s best-known gambling companies, now focusing on wagering and gaming services after spinning off its lotteries and keno business in 2022. Its well-known TAB brand offers betting both online and in a broad network of retail venues outside Western Australia, covering more than 90% of the population according to its most recent public description. Tabcorp also provides gaming solutions to clubs and pubs through its MAX business, and remains a major racing broadcaster with Sky Racing and Sky Sports Radio.

Looking at the numbers:

• Tabcorp’s market cap stands at $2.09 billion, making it significantly smaller than its old lottery sibling.
• The current P/E ratio is elevated at 45.05, indicating investors are paying a hefty price for current earnings compared to profits.
• The dividend yield is 3.30%, but notably, its most recent dividends have been unfranked, a big shift from its fully franked payouts prior to the demerger.

Looking through Tabcorp’s dividend history, you’ll see a marked reduction in dividend size (now just 3 cents per share over the last year, with recent payments unfranked) since lotteries and keno departed, and a share price that’s lost about 5.1% year to date.

The case for Lottery Corporation

The Lottery Corporation is Australia’s largest and most established lotteries and keno business. If you’ve ever bought a Powerball or Oz Lotto ticket, you’ve experienced its reach. The Lott holds long-term or exclusive lottery licenses in every state and territory except WA and boasts an enormous distribution network — more than 3,800 retailers plus online, as per its company profile. Its keno games are available in over 3,400 venues. Its brands permeate Aussie culture, and it’s tough to walk into a newsagent and not see their logo.

Fundamentally, the post-demerger Lottery Corporation is showing strong profit metrics:

• Market cap is $10.71 billion — five times larger than Tabcorp in today’s figures.
• P/E ratio is 37.58, not exactly low, but lower than Tabcorp’s, reflecting the lottery business’s healthy margins and consistent demand.
• It’s offering a 3.43% dividend yield, with all recent dividends fully franked — a clear tick for income seekers, especially compared to Tabcorp’s recent unfranked payments.

The Lottery Corporation’s year to date return is -3.6%, a bit better than Tabcorp’s, and it has steadily paid fully franked dividends, including a special dividend after the demerger.

Valuation comparison

Here’s how both companies stack up on the numbers that actually matter:

Note: Tabcorp’s reported P/E ratio may be based on a different earnings measure (e.g. underlying or forward earnings) than the EPS figure shown, which is why they may appear inconsistent.

The big standout here is the greater yield and full franking at The Lottery Corporation — a meaningful difference for Aussie income investors. Tabcorp’s much higher P/E and lower earnings per share suggest less bang for your buck on recent earnings, at least for now.

Recent share price performance

Comparing recent momentum up to 25 September 2026:

• Tabcorp closed at $0.91 on 25 Sept 2026, down 1.1% that day and showing a year to date return of -5.1%.
• The Lottery Corporation finished at $4.81, also down on the day by 1.6%, but its year to date return is a slightly smaller -3.6%.
• Both stocks have faded in 2026 so far, but The Lottery Corporation has been less volatile, with tighter daily moves on average.

Which is the better buy?

If I could only choose one this week, my pick would be The Lottery Corporation. Here’s why: it trumps Tabcorp on profitability, pays out a higher and fully franked dividend, and has a much bigger (and arguably more defensive) business model thanks to its exclusive lottery licences and huge retail reach. While both shares have dipped this year, The Lottery Corporation is holding up a little better, and its lower P/E ratio means you’re paying less for each dollar of earnings despite the higher quality and predictability of those earnings.

Tabcorp’s business, now leaner post-demerger, seems to be offering smaller, unfranked dividends and isn’t showing clear earnings momentum — while still being more “expensive” on a P/E basis. Absent any strong short-term catalyst or evidence of a turnaround, I find The Lottery Corporation a much more compelling option for both stability and income, even if it’s not exactly cheap.

The post Tabcorp vs The Lottery Corporation: Which ASX gaming share comes out on top? appeared first on The Motley Fool Australia.

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Motley Fool contributor Laura Stewart has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended The Lottery Corporation. The Motley Fool Australia has recommended The Lottery Corporation. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips. This article was prepared with the assistance of Large Language Model (LLM) tools for the initial draft. Any content assisted by AI is subject to our robust human-in-the-loop quality control framework, involving thorough review, substantial editing, and fact-checking by our experienced writers and editors holding appropriate credentials. The Motley Fool Australia stands behind the work of our editorial team and takes ultimate responsibility for the content published by The Motley Fool Australia.