If your business charges customers a membership or subscription fee and gives them regular chances to win cars, cash or other high-value prizes, proposed changes to Australia’s gambling laws are worth paying attention to.
The reforms are not aimed at the ordinary “buy a product and go into the draw” promotion.
Instead, 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.
The Interactive Gambling Amendment (Gambling Reform) Bill 2026 (Cth) (Bill) proposes to narrow the federal exemption that currently allows certain online trade promotion lotteries and competitions to operate without being treated as prohibited interactive gambling services.
The simplest way to think about the proposed changes
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 fairly traditional trade promotion. The business makes money by selling its products. The prize helps promote those sales.
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.
That is much closer to the type of model the Government appears to be targeting under this Bill.
The key question is not simply what the business calls the payment. It is: what is the customer really paying for?
Would customers still pay if the prizes disappeared?
This is a useful question for businesses reviewing their model. A membership might include discounts, digital content, merchandise or exclusive offers. But adding extra benefits does not necessarily make the prize draws “incidental”.
Look at the offer from the customer’s perspective:
- Would people still pay the same fee if there were no prize draws?
- Are the discounts or services valuable in their own right?
- Or are the cars, cash and other prizes doing most of the work in attracting customers?
The more the commercial model depends on selling opportunities to win, the more closely it may need to be examined under the proposed reforms.
Some warning signs
A business may want to take a closer look at its structure where:
- customers pay recurring membership or subscription fees;
- paying more 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; or
- regular high-value draws are a central part of the business model.
No single factor necessarily determines the outcome. The overall structure of the business will matter.
What does “own goods or services” really mean?
One of the more important parts of the proposed reforms appears in Schedule 4 of the Bill and focuses on payments for a business’s “own goods or services”.
In practical terms, the issue is this: selling something alongside competition entries may not, by itself, be enough to keep a promotion within the exemption.
A business might offer merchandise, discounts, memberships, digital content or other benefits. But the existence of those benefits does not automatically mean customers are really paying for them rather than for the opportunity to enter prize draws.
Businesses may need to look at the commercial reality of the offer. What value do the underlying goods or services provide? And how important are the prize draws in convincing customers to pay?
The key point is that labels are unlikely to be decisive. Calling something a “product”, “membership” or “service” will not necessarily determine how the arrangement is treated. What matters is likely to be how the offer works in practice and what customers are really paying for.
Ordinary trade promotions are not disappearing
The proposed reforms do not mean Australian businesses will 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.
That is really the line the reforms are trying to sharpen.
Businesses also need to remember that federal gambling laws are only part of the picture. State and Territory trade promotion rules can still impose permit, competition-term, draw and notification requirements.
Why businesses should look at this now
The proposed commencement date is 1 January 2027, subject to the Bill passing Parliament and the final legislation.
For some businesses, complying may involve more than updating competition terms and conditions.
If prize draws sit at the heart of a membership model, businesses may need to reconsider pricing, membership tiers, benefits, marketing or even the broader commercial structure.
Those changes are easier to consider before the legislation starts than afterwards.
A quick sense-check for your business
Ask yourself:
Question | Why it matters |
What are customers really buying? | This helps determine whether there is a genuine product or service with independent value, or if your customers are mainly buying chances to win. |
What happens if the competitions disappear? | Consider whether your customers still have a compelling reason to pay for your goods or services. |
What does paying more get you? | If higher membership tiers mainly mean more entries, that may be significant under the proposed reforms. |
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 last question may be the most important one. If your business offering becomes incidental to the competition offering, that could be a problem under the reforms (if enacted). |
Not sure how your promotion may be affected? Prosper Law’s trade promotion team can review your competition structure, membership model and terms and conditions against the Bill as it progresses and identify areas that may require attention.
Frequently Asked Questions
Are trade promotion competitions being banned under the proposed 2026 gambling reforms?
No. The Bill does not propose to ban genuine trade promotion competitions generally. It proposes to narrow the federal exemption for certain business models, particularly where payments and prize-draw participation are closely connected.
Contact Prosper Law for tailored trade promotion legal advice and to assess how your trade promotion or membership model may be affected if the proposed 2026 gambling reforms become law.
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.
Would the federal reforms replace State and Territory trade promotion laws?
No. The proposed federal changes are proposed to still operate alongside existing State and Territory requirements, which may include permits or authorities, mandatory competition terms and rules concerning draws and winner notifications.
What should trade promotion businesses do now?
Businesses can review their competition mechanics, membership structure, customer benefits (i.e. your “own” goods or services), pricing, marketing and terms and conditions while monitoring the Bill’s progress. If prize draws are a substantial part of the business model, early review may make it easier to respond if the proposed provisions become law.
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