The Wild West of 'rewards clubs', a multi-million-dollar industry operating on the fringe of regulation
Collectively, these clubs claim to have given away more than $220 million in prizes. (Supplied: RS Rewards)
Despite the flashing lights, the wads of cash and seemingly endless supply of Italian sports cars, this isn't Vegas.
It is just one of Australia's many "rewards clubs" popping up all over the country, claiming to have given away millions in prizes.
More than 80 rewards clubs have popped up over Australia, sometimes attracting hundreds of thousands of social media followers. (Supplied: LXG)
The ABC has identified more than 80 companies that run on a rewards club model, where customers pay a monthly subscription to get "free" entries into prize draws of cars, houses and cash, often worth millions of dollars.
Collectively, they claim to have given away more than $220 million in prizes. Despite these businesses being run like gambling operations, the industry is almost entirely unregulated.
The range of niches is impressive.
Prizes offered range from luxury goods such as sports cars, handbags, houses and watches, to hunting equipment, Pokémon cards and heavy construction machinery.
The prizes offered range from handbags to firearms stores vouchers. (Supplied: L.L. Collective)
The companies rely on "trade promotion" permits, which are intended to promote a product or service, and are not meant to be the product themselves, such as the McDonald's Monopoly promotion.
Importantly, entry into the draws needs to be free.
Whilst turning over millions in revenue, these companies face none of the stringent regulation or consumer protections that gambling operators do, such as age verification, deposit limits and the self-exclusion register.
Collectively these rewards clubs claim to have given away more than $220 million. (Supplied: Hega)
Gambling licences are also extremely hard to acquire and cost potentially tens of thousands of dollars, whereas almost anyone with an ABN can obtain a trade promotion permit, costing about $500 a year.
Despite being just one of 11 gaming types in New South Wales, trade promotions make up more than 80 per cent of all gaming-related complaints received by the NSW Department of Fair Trading.
In the past financial year, there were over 60 complaints relating to trade promotions.
Anoulack Chanthivong says he is very concerned by the increase in the number of complaints against trade promotions. (AAP: Dan Himbrechts )
NSW Better Regulation and Fair Trading Minister Anoulack Chanthivong said he was very concerned about the growing number of complaints, and condemned attempts to mislead consumers.
"A giveaway business isn't legal. It's either gambling or a [charity] raffle," said Andreas Fung, a director at Trade Promotions and Lotteries.
His company helps businesses genuinely trying to promote a product or service follow trade promotion rules.
"It's just become gambling," he said of some rewards clubs.
RS Rewards says it has given away more than $10 million in prizes. One of them was a $2 million luxury home on the Gold Coast. (Supplied: RS Rewards)
'A membership to nothing'
Legally, these companies are "rewards clubs" or "lifestyle clubs", boasting exclusive discounts on brands and access to events, with the entries into prize draws a "free" extra.
But for many, the "exclusive benefits" they offer are often broken links, the occasional members' event or publicly available discounts.
The star of the show is the prize draws.
While these companies are legally businesses that sell a product or service, it is clear the focus is the giveaways. (Supplied: Freedom Giveaways)
"Because they don't have a business, they make up a product," Mr Fung said of rewards clubs.
"It's a membership to nothing."
Mr Fung said he got four or five phone calls a week from people wanting to set up rewards clubs and he tried to talk them out of it.
"I convince some to give up. Some go ahead with it and some just run without a permit," he said.
Early adopter supports more regulation
Adrian Portelli, also known as "Lambo Guy" for his love of Italian sports cars, said he was the first to use the model with his company, LMCT+, which has been running as a rewards club for almost 10 years.
The company says it has given away tens of millions of dollars in prizes.
Adrian Portelli's company was the first to use the model, and has been running for almost 10 years. (Supplied: LMCT+)
When asked whether the law needed to be changed, he said: "100 per cent. I've said this from day one. There needs to be stricter laws on this."
Mr Portelli said his company was genuinely trying to give customers good value and discounts exclusive to his club, but said he wanted to move away from the rewards club business model.
On Wednesday, the billionaire opened a petrol station in Melbourne, exclusive to subscribers, selling fuel for $1 a litre. The opening caused traffic chaos, leading to the police being called.
He expressed frustration at competitors trying to imitate his business model and their reckless approach to the law.
"A lot of people are trying to rip off the business and not do the right thing," Mr Portelli told ABC News in a phone call.
"They're just f***ing cowboys. They have no perception of the law."
LMCT+ has an entire team dedicated to making sure the prize draws follow the law, Mr Portelli added.
In March, the company was found guilty of running an unlawful lottery and fined $40,000. Mr Portelli was found not guilty on related charges and he said the company would appeal against the ruling.
The prizes for the draws for some clubs are often worth hundreds of thousands or millions of dollars. (Supplied: LMCT+)
Fun for all ages
Unlike licensed gambling operators, there is no age verification, meaning anyone with a debit card or PayPal account can sign up to use these services.
Tucked away in the terms and conditions are small disclaimers saying that under-18s should not use the platform and are ineligible to win, but the ABC has not encountered a single website that verifies the user's age.
Some companies seem to be aware of under-18s using their platforms and encourage them to enter the prize draws.
Thomas Fu, director of Motor Culture Australia, a motoring rewards club, said: "I don't know if there are any under-18s. If they want to enter, they have to tick a box."
"If someone wants to sign up, 14 or 15 years old, they're able to sign up, but they can't win," Mr Portelli said.
He said they were using the platform for its intended purpose, which was for discounts and events.
"If I told you there wasn't anyone under the age of 18, I'd be lying,"Mr Portelli said.
Even the Wild West has limits
But even lax trade promotion laws can have an effect. RS Rewards, a club that claims to have given away more than $10 million in prizes, had its permit cancelled by the NSW Department of Fair Trading in March, finding the company had broken the law 29 times in 2025.
Despite this, the company has continued to run prize draws, collectively worth more than $1 million, promoting them to NSW residents even though they are not eligible to win.
The company's social media accounts are filled with stunts similar to those of US influencer Mr Beast, who is known for theatrical stunts and giving money to loyal fans.
RS Rewards's marketing is packed with well-known influencers and former AFL players, including Brendan Fevola, who has spoken publicly about his previous gambling addiction and once losing $300,000 in a weekend.
Brendan Fevola is a featured spokesperson for RS Rewards, appearing in promotional videos and helping with the draws. (Supplied: RS Rewards)
He is now a prominent spokesperson for the company, featuring in promotional videos, the company's website, and drawing the names of winners.
RS Rewards and Fevola did not respond to multiple requests for comment.
Not just a game
While these businesses style themselves as a "lifestyle", their subscribers tell a different story.
The marketing and social media accounts portray the prize draws as a bit of low-stakes fun, but to plenty of customers they are anything but.
When Mr Portelli asked LMCT+'s TikTok followers what they would do with $600,000, one user wrote: "I would get a powered wheelchair [and] other equipment for my disability's [sic] to have a better quality of life."
It was just one of many similar comments on the companies' social media accounts, hoping for the chance of a financial lifeline from these prizes.
"I would pay my medical bills off and buy a house and pay the rest of my debts off," another user wrote.
The ABC has reviewed social media comments from users of these platforms, and identified dozens of people who say they are entering the prize draws to pay off medical bills, support themselves or family members with a disability, to pay off debts, or who are homeless.
For some users the prizes draws are not just fun and games. (ABC News)
"They are ultimately going to hurt the consumer," Mr Fung said.
"I just think it's wrong. It's morally wrong."
"Don't like being a member, but always enter into the draws in hopes,"another user said.
Calls for urgent reform
The lax regulatory environment makes prosecuting dodgy operators difficult.
While there are penalties for running illegal lotteries, regulators can have a hard time proving the business is not honestly conducting a giveaway to promote a product or service, said Emma Tiberi, a lawyer from Born Legal who specialises in trade promotions.
In light of the recent action against LMCT+ and RS Rewards, Ms Tiberi said there may be "more scrutiny in this space".
Independent senator David Pocock has made strengthening gambling regulation a key issue, arguing the government needs to take a stronger stance on gambling ads and companies skirting the law.
David Pocock is calling for stronger gambling regulations. (ABC News: Matt Roberts)
"This is particularly concerning at a time when many people are feeling financially insecure and looking for ways to put food on the table," he previously told the ABC.
The lack of protections for consumers could have significant consequences.
Kei Sakata, an expert in gambling harm at the Australian Institute of Family Studies, warned: "Users may have no transparency about net losses, fewer limits on bonus-driven spend, and no access to self‑exclusion or other harm‑reduction tools."
Every expert the ABC talked to said the space needed more regulation and scrutiny.
"We are already the biggest losers in the world when it comes to per capita gambling losses, and predatory companies continue to find new ways to skirt regulations and exploit loopholes to fleece Australians," Senator Pocock said.
Earlier in the month, the federal government announced a crackdown on "dodgy lotteries". A federal government spokesperson told the ABC that subscription lotteries were a part of the reform, and the new laws would "clearly define lotteries to rule out the dodgy operators".
"The government is concerned by the emergence of new lotteries that undermine the work of Australia's charity lottery sector," the spokesperson said.
"We want to bring lotteries back to their real purpose, community-based and embedded in the principle of fairness."
NSW minister Mr Chanthivong said the state government was reviewing trade promotions with interstate regulators.
But for now, the difference between trade promotions and gambling rests largely on how they are classified, a gap that has proven to be durable and very lucrative.