Australia tightens rules for subscription-based prize draw businesses
Australia is preparing to impose tougher federal rules on subscription-based rewards clubs and giveaway businesses whose customers pay recurring fees for chances to win high-value prizes.
The Interactive Gambling Amendment (Gambling Reform) Act 2026 passed Parliament on August 19 and received royal assent on August 26. Its main provisions are scheduled to take effect on January 1, 2027, with the Australian Communications and Media Authority responsible for monitoring and enforcement.
A clearer test for genuine trade promotions
Traditional trade promotions are marketing activities used to support the sale of genuine goods or services. Under the new federal definition, a prize draw must primarily promote trade and remain incidental to the underlying business.
Entry cannot require a separate fee, except for payment covering goods or services supplied at fair market value. The promotion also cannot form part of an ongoing system of continuous or repeated draws.
These conditions are intended to prevent businesses from presenting lottery-style products as retail promotions when the main reason customers subscribe is to receive entries into regular prize draws.
- The promotion must support a genuine trade activity.
- The draw must be secondary to the goods or services being sold.
- Customers cannot effectively pay an entry fee disguised as a membership charge.
- Continuous or recurring prize draws will not ordinarily qualify for the exemption.
Recurring membership models face greater scrutiny
A growing number of Australian rewards clubs offer memberships that combine retail discounts with entries to win cars, property, cash and other major prizes. Different subscription tiers may provide customers with varying numbers of entries or access to additional draws.
Under the reforms, operators will need to demonstrate that customers are paying fair market value for a genuine product or service rather than purchasing lottery entries through a subscription. A state or territory trade promotion permit will not override the federal definition if the service does not meet the new test.
Registered charities retain specific recognition under the legislation, allowing eligible not-for-profit entities to continue conducting fundraising lotteries within the applicable regulatory framework.
State enforcement has highlighted consumer risks
The federal changes follow several disputes involving operators that accepted entries from people living in jurisdictions where they were not eligible to participate or claim major prizes.
In March 2026, South Australian authorities announced that Xclusive Tech, the operator of LMCT+, had been found guilty of ten counts of conducting unlawful lotteries. The company was fined A$40,000 after the court heard that the promotions were run between January 2023 and May 2024 despite earlier warnings about the state’s licensing requirements.
RS Rewards has also faced regulatory action in New South Wales, where its authority to conduct gaming and trade promotion activities was removed for 18 months following repeated compliance breaches.
The cases have increased pressure on businesses to display residency restrictions clearly, verify entrants’ eligibility and ensure that customers understand what they receive in return for membership payments.
National rules will supplement state regulation
Trade promotion requirements have traditionally varied between states and territories, creating a complex system for businesses operating national campaigns. Permit thresholds, eligible participants and prize conditions can differ depending on where entrants live.
The Commonwealth reforms establish a firmer federal boundary for online promotions while leaving relevant state and territory requirements in place. The government has indicated that it will continue working with the jurisdictions towards a more consistent national approach.
For consumers, the changes should make it easier to distinguish an ordinary promotional competition from a service built around paid, repeated chances to win. For operators, they create a deadline to review subscription structures, advertising, eligibility checks and the commercial value of any benefits offered outside prize draws.