Federal gambling reforms target booming lottery‑style giveaway industry

The Albanese Government is moving to shut down a regulatory grey zone that has allowed a number of “giveaway” businesses to operate as trade promotions, skirting tight lottery regulations.

The reforms come amid increased scrutiny of subscription‑based rewards clubs — including LMCT+, RS Rewards and the fast‑growing Victorian operator Horsey People — offering high‑value prize draws.

LMCT+ was recently fined over 10 breaches for running an illegal lottery in South Australia, Horsey People is said to be refunding some customers who were able to enter draws despite state laws excluding them, and RS Rewards has been barred from operating in one state.

The federal intervention also follows a series of cases in which Australians who thought they had won homes, cars and major prizes missed out because they did not meet residency requirements — raising questions about fairness, compliance and whether the booming industry has been allowed to operate as de‑facto lotteries.

The government’s new gambling reforms passed parliament in August, forming part of what Communications Minister Anika Wells described as “the most significant in Australia’s history”.

Among the changes, a legitimate trade promotion must be tied to a genuine product or service, with the prize incidental to the business — not the central reason customers sign up.

Subscription‑based businesses offering repeated chances to win high‑value prizes would instead be treated as gambling services requiring proper licensing, or as lotteries.

A properly licensed lottery or gambling service must go through a formal approval process, including detailed applications, background checks, compliance assessments and ongoing reporting obligations. Operators are required to demonstrate the integrity of their draw systems, show how customer funds are handled, and pay the relevant state or territory fees.

Regulators say this level of scrutiny is designed to protect consumers and is far more involved than the lighter‑touch permits issued for standard trade promotions.

For example, charity or non-profit lottery systems ask for a customer’s address on entry to their site to lock out any potential customer that is not covered by their lottery permit, such as Mater Lotteries, which only shows prizes the particular customer is eligible for.

A ministerial spokesperson said the reforms were designed to close loopholes that had allowed some operators to rely on state trade promotion permits for services that did not meet the Commonwealth definition of a trade promotion.

“This includes addressing regulatory gaps that some operators may be exploiting to offer lottery products under the guise of trade promotions,” the spokesperson said.

“The reforms … will support small businesses run by mums and dads like newsagencies, charities and legitimate Australian lotteries that generate revenue for state and territory governments.”

The government says it will continue working with states and territories to build a nationally consistent approach.