Nick Xenophon, whose votes will be crucial for media ownership reform to pass the Parliament, is using a ban on betting ads during sporting broadcasts as a bargaining chip in his negotiations with the government.

Even betting operators such as Tabcorp and commercial TV bosses have admitted to concerns about the surge in gambling advertising over recent years. More than one in every six ads broadcast during AFL matches last year were for gambling companies.

Fairfax Media understands the government is willing to commit to slashing TV gambling advertisements in exchange for the support of the three Nick Xenophon Team (NXT) senators on media ownership deregulation.

Communications Minister Mitch Fifield has been working closely with Senator Xenophon on his proposals, which also include forcing Facebook and Google to compensate traditional media companies for the use of their content.

Banning gambling ads during sporting events would be a financial blow to the TV networks, which raked in approximately $120 million from gambling advertising last year.

The loss of revenue would be offset by a reduction - or even the total abolition - of TV licence fees, which cost broadcasters around $112 million a year in payments to the government.

Total gambling advertising across all media ballooned from $91 million in 2011 to $236 million in 2015.

The government wants to abolish the "two out of three rule" - which bans media owners from controlling a TV network, radio station and newspaper in the same market - and the "reach rule" preventing TV networks from broadcasting nationally.

The government has listed its media ownership bills for debate in the Senate over the next fortnight - more than a year after Senator Fifield's media reform package was approved by cabinet.

Labor and the Greens are opposed to the change on the grounds it could reduce media diversity.

Senator Xenophon, who entered politics as an anti-pokies campaigner, told Fairfax Media: "The saturation of gambling advertising during sporting broadcasts is a major community issue that must be a part of negotiations with the government over media reform."

Fellow NXT senator Stirling Griff said it was "outrageous" that a loophole allows bookmakers, who are otherwise banned from advertising during children's viewing hours, to bombard viewers with punting enticements during sporting contests.

A source familiar with negotiations said: "Fifield wants to do something reasonable to accommodate Xenophon's demands. The government is talking to him about how they can bring it about."

Senator Xenophon is concerned about the concentration of media ownership so would require a significant trade off from the government for his vote.

His proposals would not affect horse racing broadcasts.

A spokeswoman for Senator Fifield said: "The Minister continues to have constructive discussions with his crossbench colleagues.

"Licence fees are being examined in the budget context and the Government does not comment on Budget speculation."

Tabcorp chairwoman Paula Dwyer has said there were "legitimate community concerns" about the volume of gambling advertising on television.

Tim Worner, the chief executive officer of Seven West Media, also admitted to concerns but said a ban would be "draconian and unnecessary".

The gambling industry has been ramping up its political connections by hiring former Labor senator Stephen Conroy and Liberal senator Richard Colbeck to lead a new lobby group, Responsible Wagering Australia.

Limiting gambling advertising on television - which would require separate legislation to the media ownership changes - would have strong support across the Parliament.

The Greens back a ban while Labor frontbencher Mark Dreyfus told Parliament earlier this year it was 'imperative" for the government to begin phasing out betting ads during live sporting programs.

The government would still need to secure the support of the four One Nation senators, who have expressed reservations, to pass its media ownership changes.