Gambling giants Tatts and Tabcorp will take on the Victorian Government in the High Court today, in a battle over more than $1 billion compensation over lost gaming licences.

In reforms introduced by the Victorian Government, Tabcorp and Tatts were stripped of their long-standing poker machine duopoly in Victoria.

They had held the duopoly for 18 years, with 27,000 machines across the state.

The reforms, which came into effect in 2012, allowed pubs and clubs to take control of pokies outside Crown Casino.

Last year, the Victorian Government was ordered to pay more than $450 million in compensation to Tatts after the group cited a termination agreement.

But Tabcorp's claim under a similar arrangement for nearly $670 million was rejected.

Tabcorp claimed money it paid in advance for its gambling licence should have been returned when the reforms were introduced.

It said the state's obligation to pay the compensation dated back to its privatisation of the TAB and listing of Tabcorp on the ASX in 1994.

It claimed that obligation was recognised by the state, including in its annual budget papers, over a 14-year period from 1994 to 2008.

The Government argued the legislation relied upon was repealed in 2008.

The Tatts Group said it was entitled to the lost funds because the Government never issued a new gaming licence as part of the restructure.

But the Government said the new licences were so different that past agreements did not apply.

The High Court will now be asked to rule on whether the termination arrangements claimed by the gambling groups were valid.