If your business charges customers a membership or subscription fee and gives them regular chances to win cars, cash or other high-value prizes, the rules are changing.
The Interactive Gambling Amendment (Gambling Reform) Bill 2026 (Cth) passed Federal Parliament in August 2026. Its changes to trade promotions start on 1 January 2027.
The reforms are not aimed at the ordinary “buy a product and go into the draw” promotion. They are aimed at a harder question: when does a trade promotion stop being a promotion and start looking like a lottery business?
That distinction matters for businesses built around memberships, subscriptions, rewards programs and recurring prize draws.
This article explains the new federal rules and how to tell whether your model is caught. For practical guidance on marketing and running a subscription giveaway, including advertising, influencer content and State permits, see our companion article How Subscription Giveaways Can Go Wrong.
Why the change matters
The Interactive Gambling Act 2001 (Cth) generally prohibits offering online lotteries and games of chance to customers in Australia unless the service is licensed or falls within an exception. A “trade promotion gambling service” is one of the main exceptions, and it is the reason most online competitions and giveaways can operate.
From 1 January 2027, that exception is narrowed. A promotion that falls outside it is likely to be a prohibited interactive gambling service, unless it holds a State or Territory gambling licence.
The four conditions your promotion must meet
From 1 January 2027, an online prize draw will only be a trade promotion under the federal law if all four of the following conditions are met:
- The sole or primary purpose of the draw is to promote trade.
- The draw is incidental to the supply of the business’s goods or services.
- Entry does not require payment of any fee, other than a fee for goods or services at fair market value.
- Participation is not offered on an ongoing or recurring basis as part of a system of continuous or repeated draws.
Failing any one of them is enough to take a promotion outside the exception.
The simplest way to think about it
Imagine two businesses.
A retailer sells its usual products at the usual price. For one month, every customer goes into the draw to win a car. That is a traditional trade promotion. The business makes money by selling its products, the prize helps promote those sales, and the campaign has an end date.
Now imagine a business charging $30 a month for membership. Members receive discounts and other perks, but one of the biggest selling points is regular entry into draws for cars, cash and holidays, for as long as they stay subscribed.
The second business is the kind of model the new rules target. The draws may be its main attraction rather than incidental to it, part of the fee may be paying for entries rather than for goods or services at fair market value, and entries are ongoing rather than campaign-based.
What the Explanatory Memorandum tells us
The Explanatory Memorandum to the Bill explains how the Government expects the conditions to apply. Four points stand out:
- The draw should not be a core part of how the business operates, its main value proposition to customers or the main driver of its revenue.
- A reasonable person should not consider entry into the draw to be the primary purpose or benefit of buying the goods or services.
- A business cannot avoid the rules by attaching entries to an overpriced product. If a product that usually sells for about $10 is sold for $50 with draw entries, the extra amount may be treated as an entry fee.
- Subscription-based or recurring entry systems may not qualify. The Explanatory Memorandum gives the example of a model where a one-month subscription equals one entry into every draw that month and a six-month subscription equals six entries into each draw.
Would customers still pay if the prizes disappeared?
This is the most useful question for businesses reviewing their model, because it goes to both the “incidental” and “fair market value” conditions.
A membership might include discounts, digital content, merchandise or exclusive offers. But adding extra benefits does not necessarily make the prize draws incidental. Labels are not decisive either. Calling something a “product”, “membership” or “service” will not determine how the arrangement is treated. What matters is how the offer works in practice and what customers are really paying for.
Warning signs
A business should take a closer look at its structure if any of the following apply:
- Customers pay recurring membership or subscription fees and receive draw entries for as long as they stay subscribed.
- Paying more, or staying subscribed longer, gives customers more entries.
- Prize draws dominate the business’s advertising.
- The non-prize benefits have relatively little standalone value.
- Customers are unlikely to subscribe without the competitions.
- Regular high-value draws are a central part of the business model or its revenue.
A State permit will not protect you
Many of these businesses hold trade promotion permits or authorities from State and Territory regulators. Under the new rules, that is not enough. The reforms expressly provide that a service which does not meet the federal definition is not protected merely because a State or Territory has authorised it as a trade promotion.
The Minister can also decide, by legislative instrument, that a particular service is or is not a trade promotion. Fundraising draws run by registered charities are treated separately and remain within the exception.
Payment providers and penalties
The reforms also require banks and other payment providers to take reasonably practicable steps to prevent payments to illegal online gambling services. Internet service providers, app stores and search engines must take steps to block access to them, and penalties under the Act increase.
For a subscription business on the wrong side of the line, the practical risk is not only a fine. It may be losing the ability to take payments altogether.
Ordinary trade promotions are not disappearing
The reforms do not mean Australian businesses have to stop running promotional competitions. A supermarket giveaway, retailer competition or genuine purchase-to-enter promotion is very different from a business whose main attraction is paying for repeated opportunities to win.
Federal law is also only part of the picture. State and Territory trade promotion rules continue to apply, including permits, competition terms, draw procedures and winner notification. For practical guidance on running and marketing a subscription giveaway, see our article How Subscription Giveaways Can Go Wrong.
What to do before 1 January 2027
For some businesses, complying will involve more than updating competition terms and conditions. If prize draws sit at the heart of a membership model, the options are likely to include:
- Restructuring draws as time-limited campaigns rather than an ongoing entitlement of membership.
- Removing entries that accumulate or multiply with subscription length or tier.
- Making sure the subscription price reflects the genuine value of the goods or services members receive.
- Rebalancing marketing so it leads with the product or service, not the prizes.
- Obtaining a State or Territory gambling licence, where one is available, or winding the draw component down.
It is also worth speaking with your payment provider early, as they are likely to review these models closely. These changes are easier to make before the rules start than afterwards.
A quick sense-check for your business
Question | Why it matters |
What are customers really buying? | This goes to whether the draw is incidental and whether the fee is for goods or services at fair market value. |
What happens if the competitions disappear? | If customers would stop paying, the draw may be the main attraction rather than a way of promoting the business. |
What does paying more get you? | If higher tiers or longer subscriptions mainly mean more entries, that points to an ongoing or recurring draw system. |
What does your marketing focus on? | If the prizes dominate your advertising, that may say something about what is really being sold. |
Are the competitions promoting the business, or are the competitions the business? | This may be the most important question. If the business offering is incidental to the draws, the promotion is unlikely to meet the new conditions. |
Not sure how your promotion will be affected? Prosper Law’s trade promotion team can review your competition structure, membership model and terms and conditions against the new rules and identify what needs to change before 1 January 2027.
Frequently Asked Questions
Are trade promotion competitions being banned?
No. Genuine trade promotions remain permitted. The reforms narrow the federal exception for business models where payment and prize-draw participation are closely connected, particularly paid memberships and subscriptions with recurring draws.
Could paid membership prize draws be affected?
Yes. Some membership and subscription-based models may be affected if the Bill is passed. Businesses should consider what customers are paying for and the role prize entries play in the overall offering.
When do the new rules start?
The trade promotion changes start on 1 January 2027. They apply to existing promotions as well as new ones.
My business holds a State trade promotion permit. Am I covered?
Not necessarily. A State or Territory permit or authority will not protect a promotion that falls outside the new federal definition. You will need to check your model against the four conditions as well as the State and Territory rules.
Do the federal reforms replace State and Territory trade promotion laws?
No. The federal rules operate alongside existing State and Territory requirements, which may include permits or authorities, mandatory competition terms and rules about draws and winner notification.
What should my business do now?
Review your competition mechanics, membership structure, customer benefits, pricing, marketing and terms and conditions against the four conditions. If prize draws are a substantial part of your business model, start that review now so any changes are in place before 1 January 2027.
Contact Prosper Law’s trade promotions team for tailored legal advice.
About the Author
Farrah Motley
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