The Interactive Gambling Act, in Australia, provides the framework within which companies can offer gambling services on-line. If money can be won or lost, then it's covered by the legislation, but only if the rewards are real world.
Jagex have dodged this bullet by ensuring that all of the potential prizes in Squeal of Fortune can only be used within Runescape. It may be an XP lamp, which boosts the player's skill abilities, or a weapon which gives an edge in combat. But they are all fundamentally pixels.
Anna Gordon continued, "The amendment proposed will mean that if actual money can be lost on the game it will be defined as a “gambling service” and therefore prohibited."
Jagex is likely to argue that no money is ever 'lost', because the player always wins something. It might be a relatively useless in-game item like a cabbage, but it's still a prize. This isn't a view shared by Federal Senator Nick Xenophon, who will be advising that these are precisely the kind of loopholes which have to be plugged.
These are big stakes for both parties. If Xenophon is successful, then it's inconceivable that Jagex will side-step the problem by making Runescape unavailable in Australia. That would be a massive player-base locked out and a hit to their profits which couldn't be absorbed. Nor would they simply stop Squeal of Fortune being available in that country only. The logistics of altering the game code would be very cost prohibitive.
In short, if the feature can't be run in Australia, then it's unlikely to be included anywhere else. It could well mean the end of the unpopular cash-cow for the whole of Runescape.