A ban on betting on the outcome of lotteries or Keno will protect state and territory tax income, the federal government says.
Preventing people from moving away from traditional lotteries will also protect the revenue newsagents, pubs and clubs earn from lottery companies, Urban Infrastructure Minister Paul Fletcher says.
Introducing legislation to ban the so-called synthetic lotteries on Wednesday, Mr Fletcher said the traditional form provided around $1.1 billion in state and territory taxes in the 2016-17 financial year, and $350 million in commissions to 4000 lottery retailers.
"In contrast, lottery and Keno betting services are relatively new, they provide little taxation revenue and no benefits to the thousands of small business owners across Australia," he said.
"Furthermore with the light regulation imposed on these services, they can entice customers away from traditional lotteries and Keno games which further impacts the benefits to the community and small business."
South Australia has already banned lottery betting and the Northern Territory has banned betting on Australian lotteries, while Victoria, NSW, Tasmania and WA are considering introducing legislation.
Lottoland Australia's chief executive Luke Brill said on Tuesday that the legislation was misguided and unnecessary.
"The fact is that Lottoland does not offer betting opportunities on any Australian lottery, so our offering does not have a direct impact on newsagents," Mr Brill said in a statement.
"On the contrary, we want to work with newsagents to provide customers with greater choice and even better services, which have the potential to be highly beneficial for individual newsagents."
The ban would start six months after the bill passes parliament, to give gambling companies a transition period.