The Albanese Government is moving to shut down a regulatory grey zone that has allowed a number of “giveaway” businesses to operate as trade promotions, skirting tight lottery regulations.
The reforms come amid increased scrutiny of subscription‑based rewards clubs — including LMCT+, RS Rewards and the fast‑growing Victorian operator Horsey People — offering high‑value prize draws.
LMCT+ was recently fined over 10 breaches for running an illegal lottery in South Australia, Horsey People is said to be refunding some customers who were able to enter draws despite state laws excluding them, and RS Rewards has been barred from operating in one state.
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The federal intervention also follows a series of cases in which Australians who thought they had won homes, cars and major prizes missed out because they did not meet residency requirements — raising questions about fairness, compliance and whether the booming industry has been allowed to operate as de‑facto lotteries.
A national response The government’s new gambling reforms passed parliament in August, forming part of what Communications Minister Anika Wells described as “the most significant in Australia’s history”.
Among the changes, a legitimate trade promotion must be tied to a genuine product or service, with the prize incidental to the business — not the central reason customers sign up.
Subscription‑based businesses offering repeated chances to win high‑value prizes would instead be treated as gambling services requiring proper licensing, or as lotteries.
A properly licensed lottery or gambling service must go through a formal approval process, including detailed applications, background checks, compliance assessments and ongoing reporting obligations. Operators are required to demonstrate the integrity of their draw systems, show how customer funds are handled, and pay the relevant state or territory fees.
Regulators say this level of scrutiny is designed to protect consumers and is far more involved than the lighter‑touch permits issued for standard trade promotions.
For example, charity or non-profit lottery systems ask for a customer’s address on entry to their site to lock out any potential customer that is not covered by their lottery permit, such as Mater Lotteries, which only shows prizes the particular customer is eligible for.
A ministerial spokesperson said the reforms were designed to close loopholes that had allowed some operators to rely on state trade promotion permits for services that did not meet the Commonwealth definition of a trade promotion.
“This includes addressing regulatory gaps that some operators may be exploiting to offer lottery products under the guise of trade promotions,” the spokesperson said.
“The reforms … will support small businesses run by mums and dads like newsagencies, charities and legitimate Australian lotteries that generate revenue for state and territory governments.”
The government says it will continue working with states and territories to build a nationally consistent approach.
RS Rewards and LMCT+ are two of the biggest rewards club businesses in Australia. Credit: RS Rewards/LMCT+ Trade promotion or lottery? The line has blurred Trade promotions are intended as marketing tools — free to enter or tied to the purchase of a genuine product or service, such as spending a certain amount of money in store for a chance to win another product from the store.
Lotteries, by contrast, are built around the chance to win. Customers pay for entry and the prize draw is central to the business model.
That distinction has become increasingly blurry as subscription‑based giveaway businesses grow into multibillion‑dollar industries, heavily promoted on social media and often operating across multiple jurisdictions.
As examples, Horsey People runs a rapidly expanding membership club where customers pay recurring fees for discounts and repeated chances to win cars, cash and major lifestyle prizes.
LMCT+ offers paid memberships that unlock entries into frequent high‑value prize draws, with different tiers providing varying numbers of entries and access to daily cash giveaways.
RS Rewards promotes a monthly subscription that provides access to exclusive competitions and member‑only draws, alongside retail discounts.
In each case, the prize draws from a central part of the business model, with customers paying ongoing fees in exchange for repeated chances to win.
Several promotions across LMCT+ and Horsey People have inadvertently accepted entries from people who do not meet residency requirements, some who went on to “win” prizes they were ineligible for.
The national competition, consumer, fair trading and product safety regulator the Australian Competition and Consumer Commission told 7NEWS.com.au it was “not in a position to comment” on specific businesses, but urged anyone with evidence of unlawful lotteries to come forward.
Unlike traditional lotteries operating under gambling legislation, businesses offering trade promotions operate under a patchwork of community gaming rules that differ depending on state and the value amount of the prize.
Convictions and exclusions highlight the stakes In March, Xclusive Tech — which operates LMCT+ — was convicted of more than 10 breaches committed in 2023 and 2024 for running an illegal lottery in South Australia.
The court heard the company was formally put on notice in 2021 that its lotteries must exclude South Australian residents — a direction it ignored.
In November 2025, a South Australian woman missed out on a multimillion‑dollar mansion she thought she had won after failing to see she was ineligible to win major LMCT+ prizes.
South Australian residents are currently only eligible for $1000 daily giveaways from LMCT+.
LMCT+ offers various membership levels but SA remains excluded for the majority of them. Credit: LMCT+ Rule changes Horsey People is a Victorian‑based business that has rapidly expanded its membership model, with an emphasis on agricultural pursuits and horse trailers.
Following the LMCT+ court decision, it has changed its terms and conditions to exclude South Australian and Northern Territory residents from prize draws.
An Adelaide customer told 7NEWS.com.au they approached the company about that change and their 2025 and 2026 memberships and tickets were refunded.
However, ineligible customers are still winning. In March, a woman from Gawler in greater Adelaide won a major prize worth more than $100,000 however just her name was listed as a winner — while other winners’ states are listed beside their names.
Former Horsey People member Sharon, from South Australia, told 7NEWS.com.au such promotions “don’t pass the pub test” in terms of preventing non-eligible customers from entering.
“You don’t need to supply an address, all you need to supply is your email and bank details,” she said.
“Who can enter and who can’t enter isn’t mentioned anywhere other than … on their terms and services page, and Horsey People has just added that.
“If you look on their Facebook, you would think they have permits across all states.”
Legal experts warn the model is under pressure KHQ Lawyers senior associate Winnie Lok said many businesses were structuring their giveaways as trade promotions under existing state frameworks to obtain permits.
But Lok said the central question was what consumers were actually paying for.
“For these LMCT+-type giveaways … the issue is whether a paid subscription or membership is genuinely being purchased for its own value, or whether it is effectively an entry fee,” she said.
“Consumers should therefore pay close attention to what they are actually receiving for their money and whether the subscription or membership offers real value beyond entry into the prize draw.”
Lok said the federal reforms specifically target subscription and membership lottery schemes, making clear they do not qualify for the trade promotion exemption under the Interactive Gambling Act and will instead be treated as prohibited interactive gambling services.
RS Rewards banned after ‘persistent breaches’ RS Rewards, which describes itself as “Australia’s biggest rewards club”, has lost its NSW licence to conduct gaming and trade promotion activities for 18 months.
It follows 29 breaches including failing to notify the secretary of trade promotion activities and rules of such activities; conducting a “spin and win” activity on November 26, 2025 which is not a permitted gaming activity; offering an illegal trade promotion activity on September 19, 2025; accepted payment and allocated entries to a NSW resident in a trade promotion on May 8, 2026 at a time when no gaming authority was in force; and continued to conduct gaming activities in NSW following cancellation of its gaming authority on March 13 2026.
The NSW Department of Fair Trading said RS Rewards “failed to show an understanding of compliance requirements of trade promotions in NSW despite engagement with NSW Fair Trading”.
In NSW, businesses offering trade promotions worth $10,000 or more must apply for an authority under the state competition regulator.
RS Rewards continues to promote its membership nationally, despite restrictions on where its promotions can operate. Excluded states and territories are not listed alongside advertising, instead only appearing in individual terms and conditions.
RS Rewards does not hold permits for residents to win major prizes in SA, ACT and NT, and cannot operate in NSW until late 2027.
Residents in SA, ACT,NT and NSW cannot enter for major prizes on RS Rewards. Credit: RS Rewards Government draws a line Minister Wells said the reforms deliver “meaningful protections for Australians experiencing gambling-related harm”, including relief from wagering advertising and restrictions on predatory inducements.
“We are also cracking down on illegal gambling operators and other dodgy services that divert business from genuine lotteries and charities,” she said.
For consumers such as Sharon, the changes cannot come soon enough.
“If they simply had who could enter or who couldn’t enter on their social media posts that they bombard you with, and not hidden somewhere on their confusing and babbling terms and conditions page, I bet they will have less customers,” she said.
Wells said her concern was not with genuine loyalty programs but with an industry built around recurring memberships and increasingly valuable prizes operating somewhere between a trade promotion and a lottery.
The new laws are designed to draw that line more clearly.
Horsey People, LMCT+ and RS Rewards were contacted for comment.