More than 80 companies are running subscription-based prize draw schemes claiming to have awarded $220 million in prizes, but the industry operates almost entirely unregulated despite functioning like gambling operations, an ABC investigation has revealed.
The "rewards club" model is deceptively simple: customers pay a monthly subscription—often $20 to $50—to receive "free" entries into prize draws for cars, houses, and cash jackpots worth millions. The companies claim they're not gambling because there's no individual wager on each draw. Regulators haven't figured out what to do about it.
New South Wales Better Regulation and Fair Trading Minister Anoulack Chanthivong told the ABC he was "very concerned" about the growing number of complaints and condemned attempts to mislead consumers. But concern doesn't equal action, and the industry continues to boom in a regulatory grey zone.
The ABC identified more than 80 active companies operating on this model across Australia. Collectively, they claim to have given away over $220 million in prizes—a figure that's impossible to verify because there's no oversight or reporting requirement. Some consumer advocates question whether all advertised prizes are actually awarded.
The schemes rely on aggressive social media marketing, often targeting younger Australians with flashy videos of prize winners and promises of life-changing winnings. The monthly subscription model means many customers forget they're being charged, racking up hundreds of dollars in fees while winning nothing.
Critics argue this is piecework gambling dressed up as a membership service. Traditional gambling is heavily regulated: casinos must report to authorities, lotteries are government-run or licensed, and betting agencies face strict advertising and consumer protection rules. Rewards clubs face none of this.
Mate, this is the Wild West of Australian consumer protection. You've got gambling-style operations with monthly subscriptions and zero oversight. The question isn't whether regulators should act—it's why they haven't already.
State governments are now under pressure to coordinate a response. Options include bringing rewards clubs under existing gambling regulation, creating new consumer protection rules specific to subscription prize draws, or banning the model outright. Industry lobbyists argue this would stifle innovation and consumer choice.
The federal government has not indicated whether it will pursue national regulation.
