Late Labor MP Peta Murphy handed down a landmark review in 2023 calling on the government to phase out all gambling ads across three years to allow sporting codes to find replacement revenue.

Reports suggest the federal government won't adopt the centrepiece measure but will instead impose a limit on when gambling ads can be shown.

Australians lose more money gambling per capita than anyone else in the world, with $25 billion lost on legal forms of gambling every year, according to the Australian Institute of Health and Welfare.

Alliance for Gambling Reform chief advocate Tim Costello likened the watered-down proposal to the partial ban placed on tobacco advertisement during the 1970s.

Senior minister Clare O'Neil said the government was taking the issue seriously.

"Peta Murphy was a friend of mine and a dear friend of many people in the caucus, as is her husband," she told ABC radio.

"She's a big motivator for us in parliament, and there was no stronger advocate for these reforms than Peta Murphy - so we'll be thinking of her.

"We're really concerned about what's going on with gambling advertising, and we're looking at this."

With AAP.