Rod Sims says Bet365 s scheme was the worst in the broader crackdown on free offers made by companies online.
But, to receive the free bets, customers had to deposit and gamble $200 of their own money first.
In practice, punters had to wager a minimum $1,200 before being allowed to cash any winnings.
The lawsuit was brought by the Australian Competition and Consumer Commission as part of a broader crackdown on free offers made by companies online.
The ACCC chairman, Rod Sims, said Bet365 s scheme was the worst of those free offers but other online betting companies had similar promotions.
As a licensed and regulated Australian betting operator which strongly supports the promotion of responsible gambling, bet365 takes very seriously its obligations to comply with all regulatory and legislative requirements, it said.