By Emma Farncomb and Matt Hansen

Monday, 15 June 2026

The Australian Government (Department of Infrastructure, Transport, Regional Development, Communications, Sport and the Arts) has released an exposure draft of the Interactive Gambling Amendment (Gambling Reform) Bill 2026 (“Bill”), proposing significant changes to Australia’s interactive gambling framework under the Interactive Gambling Act 2001 (Cth) (“IGA”). Among the proposed amendments are reforms aimed at clarifying the scope of the exemption for trade promotion gambling services, in light of concerns that some operators are exploiting regulatory gaps to offer lottery-style products under the guise of trade promotions.

The Bill forms part of the Government’s broader response to recommendations of the Murphy Report (the report of the House of Representatives Standing Committee on Social Policy and Legal Affairs, chaired by the late Labor MP Peta Murphy and released in June 2023) and introduces a package of reforms to Australia’s online gambling framework. The reforms are structured across four schedules, addressing wagering advertising restrictions, enforcement against illegal gambling services, the BetStop self-exclusion register, and amendments to lottery-style products and trade promotion gambling services.

This article will focus on Schedule 4, outlining amendments concerning the trade promotion gambling services exemption under the IGA.

The proposed reforms in Schedule 4 seek to draw a clearer distinction between genuine trade promotions and subscription-based prize draw models that lack a legitimate promotional purpose. If enacted, the reforms will result in certain subscription-based trade promotion activities being treated as “interactive gambling services” and, therefore, prohibited under the IGA.

What is the current legal position under the IGA?

The IGA prohibits the conduct of “prohibited interactive gambling services” in Australia, which are defined as gambling services conducted over internet, broadcasting, datacasting or any other carriage or content service, unless the service is expressly excluded by the IGA.

Generally, trade promotion lotteries can be lawfully conducted by businesses to promote their goods or services, provided entries are offered free of charge alongside the purchase of those goods or services. Such lotteries are typically conducted with online entry mechanics, such as entries being collected via online forms, through interaction on social media posts, or winners being determined instantly through use of QR codes or texts.

Because it was not the intent of the IGA to capture trade promotion lottery activities, such activities are defined as a ‘trade promotion gambling service’ under section 8BB of the IGA and excluded from the definition of a prohibited ‘interactive gambling service’. In other words, section 8BB allows genuine trade promotions to operate without being treated as illegal under the IGA.

Whilst many businesses conduct legitimate trade promotion rewards clubs or loyalty programs under this exemption, there has been growing concern that some operators are exploiting this exemption to conduct what the Government refers to as ‘shadow lottery products’.

What are shadow lottery products?

Shadow lottery products involve operators selling memberships or subscriptions at a fee to individuals who, in return, receive entries into prize draws for the chance to win giveaways (generally high-value items such as cars, holidays, houses or money). These types of subscription-based models differ from genuine trade promotions in a fundamental way. Rather than a membership providing individuals with benefits that are connected to a business’s goods or services, such as loyalty points redeemable for discounts on goods sold by the business, the primary benefit of the membership appears to be, to obtain entries into a prize draw, with no connection to the promotion of goods or services whatsoever outside of the prize draw itself. Many such subscription models also scale the number of entries provided depending on higher priced tiers of membership, without a noticeable increase in other membership benefits outside of the additional entries.

As discussed in our earlier article, “Pyrrhic victory against Lambo Guy lotteries in Adelaide Magistrates Court could represent turning tide against subscription promotions“, the Consumer and Business Services South Australia (“CBS”) has made its view very clear on this, noting that subscription-based models such as the LMCT+ platform (whereby entry into a prize draw is contingent upon purchasing a monthly subscription) are illegal in South Australia. This is on the basis that such lotteries are not considered “trade promotion lotteries” and are rather defined as “standard lotteries”, which can only be conducted by charities under a specific licence. CBS aligned with the view that LMCT+ prize draw activities are not truly free, as the entries into draws are considered the “primary product” consumers are paying for. As such, unless a business can offer a subscription-based model that provides entries as a purely demonstrable secondary product, with the primary product being of quantifiable value, CBS considers the subscription-based activity as unlawful in South Australia, and the Adelaide Magistrates Court has upheld this view.

Although other States and Territories have not yet expressed their public view on subscription-based models, the changes proposed by the Government here reflect a similar policy position to that of South Australia and signal an intent to promote regulatory consistency across all States and Territories.

Closing the Loophole

As detailed in Schedule 4 of the Bill, section 8BB of the IGA will be amended to include a new provision that expressly outlines that lottery activities do not fall within the definition of a trade promotion gambling service under section 5(3)(bb), if: (a) participants are required to pay a membership, subscription or other fee to participate; (b) that fee provides participants with entries (including ongoing or multiple entries) into one or more draws or games; and (c) the payment is not genuinely for the provider’s goods or services, but is in substance for the sole purpose of accessing the gambling activity itself.

The Bill makes it clear that services caught by these criteria would be classified as ‘interactive gambling services’ under the IGA and therefore prohibited, unless authorised under an appropriate State or Territory lottery licence. It is also worth noting that the Government has expressly stated that charity and not-for-profit lotteries are not intended to be captured by this clarification.

What does this mean for operators of subscription-based trade promotions?

If this proposed change to section 8BB of the IGA is enacted, operators running subscription-based models will need to carefully assess whether their arrangements fall within the amended definition. Where they do, operators will need to either restructure their model so that the subscription delivers genuine, quantifiable value through goods or services, with prize draw entries as a purely incidental benefit, or cease operating the model altogether.

For marketing agencies, any trade promotion T&Cs drafted for clients operating subscription-based models should be reviewed as a priority, and new arrangements should be structured to reflect the amended framework well ahead of 1 January 2027 (when the reforms are expected to commence).

Looking Forward

While the Bill is currently in draft form and subject to change, the consultation period has now closed. It is expected that the Bill will be introduced in the parliamentary session commencing 22 June 2026, with reforms anticipated to commence on 1 January 2027.

Operators of subscription-based activities are urged to take proactive steps to review and restructure their arrangements now, rather than waiting for the Bill to be formally enacted.

If you would like additional information on the above and how these reforms may impact you or your business, please contact one of our experts below. We can provide tailored advice to assist with reviewing your trade promotion lottery concepts, terms and conditions and related advertising materials, as well as general advice on compliance with trade promotion lottery regulations in all States and Territories.

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