Gambling Reform Bill 2026: What the Proposed Reforms Mean for Businesses Running Trade Promotions
Gambling has rarely been out of the headlines in Australia. Following the Parliamentary inquiry into online gambling harms and the release of the influential You Win Some, You Lose More report (commonly referred to as the Murphy Report), gambling reform has become a significant political and regulatory focus.
More recently, Shaun Micallef's documentary series Going for Broke explored Australia's complex relationship with gambling, examining how the industry has expanded and questioning what that growth means for individuals, communities and the future of gambling regulation in Australia.
Against this backdrop, the Federal Government has proposed the Interactive Gambling Amendment (Gambling Reform) Bill 2026, a wide-ranging package of reforms aimed at reducing gambling-related harm and strengthening regulatory oversight.
While much of the public discussion has focused on wagering advertising, self-exclusion measures and illegal offshore gambling operators, businesses running trade promotions should also be paying close attention.
One particular area of focus is subscription-based prize draw models, which regulators increasingly view as sitting uncomfortably close to gambling products.
What is "Interactive Gambling"?
Interactive gambling refers to any form of gambling conducted digitally, including via the internet, mobile applications or telephone services.
The term broadly encompasses:
Online wagering on sporting and racing events;
Online lotteries and lottery-style products; and
Where legally permitted, online casino-style gaming.
The proposed reforms seek to strengthen Australia's existing interactive gambling framework and close perceived regulatory gaps that have emerged as gambling products and promotional models have evolved.
Why Trade Promotions Are Entering the Conversation
Australian trade promotion laws have long distinguished between a legitimate promotional activity and gambling.
The principle has always been relatively straightforward.
A business cannot charge consumers an entry fee to participate in a prize draw. If participants are effectively paying for the chance to win a prize, the activity may constitute a lottery or gambling product requiring separate regulatory authorisation.
Instead, businesses are generally permitted to offer entry into a prize draw when consumers purchase a bona fide product or service at its genuine retail price.
This distinction has existed for decades and has formed the foundation of trade promotion regulation across Australia.
While regulators have occasionally taken action against promotions that crossed the line, the proposed reforms suggest a much stronger enforcement environment may be on the horizon.
Importantly, the Bill proposes significantly increased penalties (much higher than the $40,000 in penalties issued to LMCT+ by the South Australian regulator earlier in the year).
That level of exposure is likely to attract the attention of businesses operating prize draw programs that may previously have viewed regulatory risk as relatively low.
The Rise of Subscription-Based Prize Draw Models
The emergence of subscription-based promotions has challenged the traditional distinction between trade promotions and gambling.
Many businesses now operate ongoing membership or subscription models where customers pay a recurring fee and receive entries into regular prize draws.
Some of these models provide substantial additional benefits, services or content to members.
Others, however, appear to offer little more than access to prize draws.
Particular scrutiny has been directed toward tiered subscription structures where the primary difference between membership levels is simply the number of entries received into prize draws.
For example:
Bronze Membership: $10 per month and 10 entries;
Silver Membership: $20 per month and 20 entries;
Gold Membership: $50 per month and 50 entries.
Where the only meaningful distinction between tiers is the amount paid and the number of entries received, regulators may reasonably ask whether the customer is purchasing a genuine service or simply buying lottery tickets under another name.
These are precisely the types of models that appear to have attracted regulatory attention.
The Proposed New Test
The Bill proposes a new framework designed to distinguish genuine trade promotions from lottery products that merely present themselves as trade promotions.
Under the proposed reforms, a promotion may lose its current exemption if all three of the following elements are present:
1. Participants Pay a Fee
The participant must pay a membership fee, subscription fee or similar payment to participate.
2. The Fee Provides Access to Prize Draws
That payment gives the participant access to one or more prize draws, including ongoing or recurring entries.
3. The Payment Is Effectively for the Gamble
The payment is not solely for the business's own goods or services but is effectively payment for access to the prize draw itself.
This third element is where things become particularly interesting.
The Duck Test
The proposed approach bears a strong resemblance to the classic "duck test".
If it walks like a duck, swims like a duck and quacks like a duck, then it is probably a duck.
In regulatory terms, if a business model looks, operates and functions like a lottery product, regulators may increasingly be prepared to treat it as one.
The challenge, however, is proving that it is a duck.
That exercise inevitably requires value judgments on individual business models .
Regulators will need to assess what a business is actually selling, whether consumers receive genuine value independent of the prize draw, and whether the subscription fee is reasonably attributable to those goods or services.
This is where the analysis becomes far less straightforward.
The Murky Area: Who Determines Value?
One of the more difficult questions arising from the proposed reforms is who gets to determine whether a business's goods or services provide sufficient value to justify the corresponding fee being charged.
Many subscription-based businesses provide products or services that are inherently difficult to value.
These may include:
Educational content;
Exclusive communities;
Networking opportunities;
Membership benefits;
Digital content libraries;
Lifestyle or entertainment services; and
Access to events or experiences.
Unlike physical goods, there is often no obvious market price against which these services can be measured.
This raises an important philosophical and commercial question.
Should regulators determine what a business's services are worth?
Businesses have traditionally enjoyed considerable freedom to determine their own pricing structures and commercial models. Consumers, in turn, decide whether those offerings represent value for money.
The proposed reforms appear likely to shift at least some of that assessment into the hands of regulators.
That creates uncertainty for operators whose business models sit somewhere between a traditional membership program and a prize-based promotional platform.
What Businesses Should Be Doing Now
Although the Bill has not yet become law, businesses operating subscription-based promotions should be reviewing their models carefully.
Key questions include:
What genuine goods or services are subscribers receiving?
Would customers still consider the subscription valuable if the prize draws were removed?
Are membership tiers differentiated by meaningful benefits other than additional entries?
Is there clear evidence that customers are purchasing the goods or services rather than merely purchasing access to a draw?
How would the business explain and justify its pricing model if questioned by regulators?
Businesses that can clearly demonstrate substantial value independent of the prize draw are likely to be in a much stronger position than those whose offering is largely built around prize entries.
It remains to be seen how regulators will apply these reforms in practice. Key questions include whether regulators will scrutinise not only the underlying business model, but also the way it is advertised and promoted. The timing of any trade promotion activity may also be relevant — for example, whether there is a meaningful period between the commencement of the business and the introduction of a prize draw offering. Businesses that launch with prize draws as a core feature may face greater regulatory scrutiny than established businesses that subsequently introduce a trade promotion as part of a broader and already proven commercial model.
Looking Ahead
The Gambling Reform Bill 2026 represents one of the most significant proposed changes to Australia's gambling and lottery regulatory landscape in recent years.
While the headline reforms focus on wagering advertising, illegal offshore operators and gambling harm minimisation measures, the proposed treatment of subscription-based prize draw models may ultimately prove equally significant for many businesses.
What appears clear is that regulators are increasingly concerned about business models that blur the line between trade promotions and gambling products.
What remains less clear is how regulators will assess value, determine whether a service is genuinely being purchased, and distinguish legitimate subscription businesses from disguised lottery products.
The Bill is expected to be introduced during the parliamentary session commencing 22 June 2026, with reforms anticipated to commence from 1 January 2027.
For businesses operating trade promotions, particularly those involving memberships or subscriptions, now is the time to review existing structures and assess whether they would withstand scrutiny under the proposed new framework.
The coming months should provide greater clarity on where regulators intend to draw the line. Until then, businesses operating in this space would be wise to keep a close eye on developments.
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