Betting agencies such as Lottoland could soon be banned in Western Australia, in response to a big drop in Lotterywest revenue.

Lotterywest figures show a significant drop in the number of West Australians buying Lotto tickets, with sales revenue down by more than $60 million last financial year.

One of the reasons for the revenue drop is believed to be the emergence of online lotteries such as Lottoland which allow people to bet on the outcome of local and overseas draws, rather than purchasing a ticket.

Premier Mark McGowan announced the State Government would draft legislation to ban those sites in an effort to protect the future of Lotterywest.

"Organisations like Lottoland give nothing back. And that's not acceptable to me." Mr McGowan said.

"Lotterywest is the best organisation of its type in Australia, probably the world.

"It makes a big return to community groups and the broader community. We want to make sure it continues to do that.

"All that Lottoland does and those sorts of organisations, is suck money out of here, send it elsewhere and not give anything back."

Lottoland already banned in SA

If the legislation goes ahead, WA will become the second state in Australia to implement such a ban.

The Independent Gambling Authority of South Australia has made it an offence for Lottoland to sell products to South Australian residents.

"South Australia has outlawed Lottoland, we're going to do that as well," Mr McGowan said.

"The drafting process will take some time but we are keen to protect Lotterywest," Mr McGowan said.

Shadow treasurer Dean Nalder shared Mr McGowan's concerns.

"[Lotterywest] provides a lot of funding back to the community for charitable organisations and community grants," he said.

"I believe the whole online gambling, including Lottoland, needs to be looked at as to what contribution they are making back for the people of Western Australia."

No basis to 'smear campaigns': Lottoland

Lottoland's chief executive officer Luke Brill said the reason the company stood accused of not giving back to the WA community was because it was a licensed bookmaker in the Northern Territory.

"We pay gaming tax in the Northern Territory, we pay GST, we pay corporation tax as well so we contribute like any other bookmaker," he said.

"At the moment there's been no infrastructure to pay additional tax."

Lottoland's chief executive Luke Brill. ( Supplied: Lottoland )

Mr Brill said the point of consumption tax set to be introduced in 2019 would mean the company would have the ability to give back.

"We understand that we can be contributing more to the community and that's why we are fully behind the point of consumption tax," he said.

"It means 15 per cent of our gross profit will go back into the WA community once it comes into effect, which is obviously what we want.

"So any smear campaigns to say we're avoiding tax it is just simply not true."

The Lottoland CEO also rejected claims it was negatively impacting Lotterywest sales.

"The majority of the players that play at Lottoland didn't actually play the traditional lotteries," Mr Brill said.

"A lot of the younger generation had never been to the newsagents and purchased a lottery ticket, they just didn't find it appealing."

Mr Brill said he believed the impact on sales was more to do with the smaller size of the Lotterywest jackpots over the past six months.

"When the local jackpots are higher they make more revenue and when they are lower they make less revenue," he said.

The Lottoland CEO said he planned to speak with the McGowan Government in coming months.