Tricks of the trade – Promotion lotteries in government’s sights

The federal government has set out its plan to regulate trade-promotion gambling services and effectively ban lottery or sweepstakes products offered under its guise.

As part of its proposed broad-ranging changes to gambling promotion in Australia, which include major reform to gambling advertising laws, the Albanese government has published an overview of its intended Interactive Gambling Amendment (Gambling Reform) Bill 2026.

Among its many measures are proposals to end the use of lottery products being offered under the guise of “trade promotions”.

Trade promotion lotteries traditionally involve activities or events in which prizes are given away by any means that include an element of chance.

These usually involve ongoing membership fees for access to frequent prize draws for high-value items such as cars, houses, or large cash prizes.

Trade promotions have traditionally been used by charities and not-for-profit organisations to raise money and awareness, but legal allowances have also permitted commercial operators to target this market. These are usually regulated by state-based bodies.

Subscription-based LMCT+, run by prominent businessman Adrian Portelli, offers a rewards club for its members, and utilises a provision under the Interactive Gambling Act 2001 to fulfil the definition of a “trade promotion gambling service”.

It is believed that up to 80 companies are operating in a similar manner, drawing scrutiny from state-based regulators, but with an exemption under federal gambling laws.

The Straight understands that nearly all of Australia’s leading wagering companies have looked to trade promotion as a way to diversify their businesses.

It was recently revealed by the Australian Financial Review that one of these businesses, Sportsdream Rewards, was owned by Free To Play Australia Pty Ltd, which, in turn, is owned by Paddy Power, a subsidiary of Flutter, which owns Sportsbet.

Sportsbet opted not to comment on its connection to trade promotion, citing the federal government’s consideration of reform in this area.

The possible involvement of bookmakers in trade promotion products raised several interesting questions, including any requirement they may have to those self-excluded from gambling under the national self-exclusion program BetStop, which does not cover trade promotion products.

There is also the perception issue for wagering companies, which have come under increasing regulation, seeking to leverage their position to operate in an area widely perceived as a legal loophole.

It also raised questions of whether gambling-related revenue may be diverted away from areas that contribute directly back to the racing and sports industries through POCT and product fees.   

Conversely, former industry insiders, spoken to by The Straight on condition of anonymity, said it was in wagering companies’ best interests to explore how they could diversify their reliance on the traditional online wagering market, especially in an area with lower fees and taxation.

That argument may all become irrelevant should the federal government close the “loophole” with its new legislation.

The briefing released for the intended Bill sets out the intention to distinguish what it terms ‘legitimate trade promotion gambling services’ from lottery products offered under the guise of ‘trade promotions’.

“Many organisations in Australia operate genuine trade promotion reward club or loyalty programs. However, concerns have emerged that some operators are using these models to offer lottery-style products under the guise of trade promotions,” it read.

“Trade promotion lotteries are currently captured in the Interactive Gambling Act 2001 through the definition of a ‘trade promotion gambling service’ at section 8BB and are excluded from being an ‘interactive gambling service’ for the purposes of the prohibitions under section 5(3)(bb).

“This provision is intended to more clearly distinguish genuine trade promotion gambling services which are incidental to the overall business of those offering the service, compared to those services that are relying on this exemption for their overall business model.”

The Bill will seek to clarify that a service does not fall within the definition where:

1 –  participants must pay a membership, subscription or other fee to take part

2 –   that fee provides entry (including ongoing or multiple entries) into one or more draws or games

3 –  The payment is not solely for the provider’s own goods or services, but is effectively for access to the gambling service itself.

“As a result of this provision, services that meet these criteria would be classified as interactive gambling services and therefore prohibited, unless authorised under section 15AA (for example, under an appropriate State or Territory lottery licence),” it said.

The government is seeking feedback on whether allowing such services to be operated under a state or territory authorisation is appropriate. 

“The intent is that charity and other not-for-profit lotteries are not captured by this exclusion,” it said.