One of Australia’s biggest “rewards clubs” has been banned from running any gaming activity in New South Wales for 18 months after allegedly breaking the law.
RS Rewards, which claims to have given away over $10 million in prizes, charges a monthly subscription that gives members access to prize draws and other benefits such as discounts.
Following an investigation by NSW Fair Trading, the company has been accused of “persistent breaches” of the law and is now prohibited from running gaming activity, including its popular giveaways, until December next year.
In March, the NSW Fair Trading cancelled the company’s licence needed to run trade promotions that operate under community gaming laws rather than more stringent gambling regulations.
The department said despite losing its licence, the company continued to run gaming activities in the state, naming dozens of alleged breaches.
“NSW Fair Trading is satisfied that RS Rewards broke the law on these occasions,” the department told ABC News.
RS Rewards operates nationally; however recently added a disclaimer to its website noting that NSW residents cannot win major prizes.
But ABC News has seen social media advertisements as recently as mid-June, continuing to promote the draws to customers in NSW.
RS Rewards declined requests for comment.
NSW Fair Trading alleges ‘ongoing and misleading conduct’
The rewards club industry has exploded in popularity across Australia and is worth hundreds of millions of dollars.
The industry operates on the fringe of current regulations, relying on community gaming laws allowing “trade promotions”, which are designed to promote a product or service, and not be the product itself.
The laws stipulate that companies cannot charge for entry into the draws, but NSW Fair Trading has alleged that RS Rewards accepted payments for entries on numerous occasions, including in September 2025 and May 2026.
The department also accused the company of running a roulette-style competition called “spin and win” in November last year.
In a statement, the department said the company “does not have systems or compliance in place to follow the law and is unlikely to introduce them to a level which would ensure compliance”. It said it engaged in “ongoing and misleading conduct”.
RS Rewards has been prohibited from holding a licence until December 2027, and if it fails to comply, it could face a $5,500 penalty.
The company’s current prize draw is a Toyota Land Cruiser and a caravan worth $200,000. Earlier this year, it promoted a giveaway of a luxury home on the Gold Coast worth $2 million.
RS Rewards claims to have given away more than $10 million in prizes. (Supplied: RS Rewards)
“Where we identify potential breaches, we will act to protect consumers and maintain confidence in the integrity of promotion activities,” NSW Fair Trading commissioner Natasha Mann said.
“We will not tolerate any attempts to manipulate or deceive the hard-working people of NSW,” NSW Fair Trading Minister Anoulack Chanthivong said.
New laws threaten rewards club model
Proposed federal laws targeting rewards clubs by tightening trade promotion rules have left the industry scrambling to find new ways to retain subscribers and stay on the right side of the law.
The draft bill would prohibit clubs from selling subscriptions or recurring payments to trade promotions, which are currently the main way most clubs generate revenue from their customers.
Trade promotions are regulated at a state level, but enforcement of the laws has been limited, despite the complaints stacking up.
In response, some clubs have begun expanding their business models. RS Rewards has announced it will be opening a supermarket exclusive to subscribers, while rival LMCT+ has already opened a petrol station selling fuel for cost price.
