The Australian state of Victoria will not host the 2026 Commonwealth Games, after the state premier, Daniel Andrews, said the cost had blown out and he was not prepared to redirect money from other parts of his government’s budget to make up the shortfall.

Tuesday’s sudden announcement means that with less than three years to go, one of the major events in many athletes’ calendars is now up in the air.

The decision by Victoria to scrap the Games just over a year after it announced the event to great fanfare is just the latest sorry chapter for the Commonwealth Games, as it struggles for hosts – and relevance.

What has happened in the Commonwealth Games and why?

The leader of the Australian state of Victoria, Daniel Andrews, says his decision simply came down to cost. It’s just 17 years since Victoria last hosted a Commonwealth Games, so when his government announced its bid it said it would be “different”. The government planned to host the event across five regional sites and predominantly outside the major city of Melbourne.

In April last year, when Andrews thanked the Games’ organisers for accepting his bid, he acknowledged it could be more difficult than other editions. “I’m sure from their point of view, it’s a bit riskier than just running it in the middle of a large city,” he said.

On Tuesday, Andrews said the cost of hosting had grown beyond his expectations. “What’s become clear is that the cost of hosting these Games in 2026 is not the $2.6bn (£1.3bn) which was budgeted and allocated,” he said. “It is in fact at least $6bn and could be as high as $7bn.”

Commonwealth Games Australia chief executive Craig Phillips has said that he sees the stated cost overrun as “a gross exaggeration”.

He added that “the Victorian government wilfully ignored recommendations to move events to purpose-built stadia in Melbourne and in fact remained wedded to proceeding with expensive temporary venues in regional Victoria.”

Andrews has said the government will still build the sporting facilities it had promised regional communities, but he would not take money from other parts of the budget, such as health, to deliver the games.

Who was set to pay for the Games?

The Victoria government had faced questions for some time over how the Games would be paid for. $2.6bn was initially allocated, but in the state’s May budget, no additional funding was set aside.

An argument over funding with prime minister Anthony Albanese’s federal government doesn’t appear to have helped matters.

While the federal government’s budget in May included more than $1bn for the 2032 Brisbane Olympic Games, nothing was allocated for the 2026 Commonwealth Games. Andrews vowed to not let the commonwealth “off the hook” for help to fund the event.

In June the federal sports minister, Anika Wells, told Guardian’s Australian Politics podcast that the Albanese government was “still working through with the Victorian government their proposal for federal support”.

What next for the 2026 Games?

Within hours of Victoria’s announcement, the neighbouring state of New South Wales – whose state capital Sydney hosted the 2000 Olympic Games – said it would not step in, citing budgetary pressures. The leaders of other Australian states, with the exception of Queensland, poured cold water on the idea, too.

The games have only been cancelled twice in their history – in 1942 and 1946, both due to the second world war. It’s unclear whether a new host will be able to be found in time, but the Games have form at finding willing and able cities to host at short notice.

In 2015, the South African city of Durban was awarded the 2022 Games after its only competitor in the bid – the Canadian city of Edmonton – withdrew citing cost concerns.

Just two years later though, the city was stripped of the rights to host after failing to meet promises contained in its bid. Like Andrews, South Africa’s sports minister cited financial constraints, saying “We gave it our best shot but we can’t go beyond. If the country says we don’t have this money, we can’t.”

In 2017, Birmingham and the British government stepped in to save the 2022 Games. The UK government stumped up more than £560m to ensure the Games could go ahead in the West Midlands city, and the local council putting in another £190m.

Birmingham had been scheduled to host the 2026 Games and so the 2022 decision left a hole in the schedule. The Commonwealth Games Federation was due to announce the 2026 host city in 2019, but the decision was postponed until 2020, and then again to 2021, and then again to 2022.

For the 2026 race, Kuala Lumpur, Cardiff, Calgary, Edmonton and Adelaide all pulled out from proposed bids because they were concerned about costs, leaving Victoria as the only viable candidate.

Is it just about money?

In recent years, criticism of the Games has expanded beyond just the financial burden. The colonial origins of the Games – they were once known as the British Empire Games – have also been a point of contention, as have their inability to attract younger audiences.

Prior to last year’s Birmingham games, British Olympic diver Tom Daley also condemned the homophobia across many Commonwealth countries.

Out of 56 member states, 35 criminalise same-sex relations, making up half of the countries globally that outlaw homosexuality. Seven Commonwealth nations have a maximum penalty of life imprisonment under laws imposed by Britain in the 19th century when it was a colonial power.

Dame Louise Martin, the president of the Commonwealth Games Federation, has said she recognises that the Games need to adapt and modernise in order to maintain their “relevance”. But after today’s announcement, that task will be all the harder. The CGF must find a new host for 2026, while at the same time securing a host for their centenary in 2030, after a bid from the Canadian city Hamilton collapsed earlier this year.